Benchmarks cut short losses; broader indices pare gains

In the range-bound session of trade, Indian equity markets are currently trading off lows, as some buying seems to be picking up at the lower levels. Marking the second range-bound session of trade, local equity markets are trading sideways in the absence of any positive upside trigger. However, with the support emerging at lower levels, benchmarks now appear at the verge of breaking out in green. Paring losses, 30 share barometer index of Bombay Stock Exchange (BSE)-Sensex, is trading above the 17500 psychological level, while 50 share index of National Stock Exchange (NSE), Nifty, is trading  a tad below the neutral line, holding its 5300 bastion. Meanwhile, showcasing a different trend, broader indices have pared some of their early gains.

On the global front, Asian markets were trading lower on Monday as hopes of stimulus from central banks met with data that showed Japan's economy growing at a weaker-than-expected pace in the April-June quarter, which added to the evidence of a worsening slowdown in China. Additionally, European got off a muted start, with investors likely to bend on the side of caution as weaker-than-expected Japanese data added to concerns about global growth.

Sentiment back home in early trade were pounded after Fitch Ratings Agency, which recently lowered India’s credit outlook to negative, said that possibility of downgrading the country’s sovereign rating is more than 50 per cent in the next 12-24 months. However, undoing the losses, were stocks from Realty, Oil & Gas and Public Sector Undertaking counters, while stocks from Auto, Bankex and FMCG stocks emerged as the only weak spells. The overall market breath on BSE was in the favour of advances which thumped declines in the ratio of 1214:1163, while 121 shares remained unchanged.

The BSE Sensex is currently trading at 17552.62 down by 5.12 points or 0.03% after touching a high of 17594.55 and low of 17528.63. There were 17 stocks advancing against 13 declines on the index.

Barring the trend, the broader indices pared gains; the BSE Mid cap index was up by 0.16%, while Small cap index was up by 0.18%.

The top gainers on the BSE sectoral space were, Realty up by 0.81%, Oil & Gas up by 0.66%, PSU up by 0.36%, Technology up by 0.30% and CD up by 0.28%, while Auto down by 0.56%, Bankex down by 0.37%, Fast Moving Consumer Goods down by 0.21% and were top losers on the index.

Maruti Suzuki up by 2.28%, HDFC up by 1.53%, Bharti Airtel up by 1.47%, Sterlite Industries up by 1.47% and BHEL up by 1.07% were major gainers on the Sensex, while Tata Motors down by 2.24%, Hindalco Industries down by 1.83%, Hero MotoCorp down by 1.66%, ICICI Bank down by 1.33% and ITC down by 1.18% were major losers on the index.

Although concerned over Moody’s downgrade on India’s growth estimate, Prime Minister (PM) Manmohan Singh is confident that fundamentals of the Indian economy remained strong and that the economy would be able to do better than the 6.5% growth recorded in 2011-12, as investment and savings in the country remain highest in the world. Seconding Prime Minister’s views, Economic Advisory Council Chairman C Rangarajan also expects that the overall growth rate for the current year could be slightly better than last year’s 6.5%, as the chances of industrial production picking up in the second half of the year are likely with the agriculture activities’ contribution to GDP also being higher.

Attending the swearing-in ceremony of Vice-President Hamid Ansari, Prime Minister Manmohan Singh, averred that Moody’s analysis of the Indian economy, is a cause of concern, but one should not draw unwarranted conclusions. Citing a deficient monsoon and lack of progress on economic reforms, Moody’s Analytics, research unit of ratings agency Moody’s Investors Service, downgraded India's growth estimate for 2012-13 to 5.5%.

Several economists and research agencies, by now, have downgraded India's growth forecast on account of erratic rains, high interest rates, stubborn inflation, sliding industrial growth and delay in implementing policies. Adding to the flow of negative news, Fitch Ratings, which recently lowered India's credit outlook to negative, has now averred the possibility of downgrading the country's sovereign rating is more than 50 per cent in the next 12-24 months.

Prompting calls for action, India’s growth slowed to a nine-year-low of 5.3% in the January-March quarter while overall economic expansion slowed to 6.5% in 2011-12, lower than the government's estimate of 6.9%. Although Finance Minister P Chidambaram vowed to reverse the trend and has unveiled a roadmap to tackle the slowdown but a major breakthrough solution is yet to evolve.

The S&P CNX Nifty is currently trading at 5315.65, down by 4.75 points or 0.09% after trading in a range of 5,330.05-5310.35. There were 27 stocks advancing against 23 declines on the index.

The top gainers on the Nifty were Maruti Suzuki up by 2.07%, Bharti Airtel up by 1.68%, HDFC up by 1.60%, Sterlite Industries up by 1.31% and ACC up by 1.19%. While, Tata Motors down by 2.16%, Hindalco Industries down by 1.99%, Hero MotoCorp down by 1.52%, Ranbaxy down by 1.46% and JP Associates down by 1.33% were top losers on the index.

Mostly Asian indices were trading in red; Kospi Composite Index declined by 0.72%, Nikkei 225 slid 0.07%, Jakarta Composite lost 0.16%, Taiwan Weighted dropped 0.06%, Hang Seng index shed 0.41% and Shanghai Composite plunged by 1.29% while KLSE Composite up by 0.19% and Straits Times added 0.17% were only the gainers.

European markets have got off to muted start; CAC 40 declined by 0.11%, DAX lost 0.07% and FTSE 100 surrendered 0.14%.