Benchmarks trade choppy after a flat start

The Indian equity markets are trading choppy after a flat start in the early trade, tracking weak cues from Global markets. The US markets closed marginally lower on Friday as the much awaited jobs data was not so encouraging, meanwhile the financial stocks dragged the markets lower on a ruling in a foreclosure case, on the same time all the Asian counterparts were trading in the negative terrain at this point of time, indicating somber investors' sentiments. Back Home, sharp rise in inflation and increase in food prices has put tremendous pressure on the key heavyweights; the selling pressure was also witnessed in the broader indices stocks, which dragged the benchmarks BSE's -- Sensex -- and NSE's -- Nifty -- from their crucial level of 19,600 and 5,900 respectively. On the sectoral front, software, technology and realty were the top gainers in trade; on the other hand consumer durables, capital goods and metal were the major losers on the BSE sectoral space. Meanwhile, Banking Stocks viz SBI, PNB, ICICI Bank and Canara Bank all edged higher in the trade after RBI said that the liquidity situation in India has improved due to government spending and open market operations. The broader indices were going neck to neck with benchmarks. The market breadth on the BSE was negative; there were 599 shares on the gaining side against 1,274 shares on the losing side while 68 shares remained unchanged.

The BSE Sensex opened at 19,714.42; about 23 points higher compared to its previous closing of 19,691.81, and has touched a high and a low of 19,720.43 and 19,470.23 respectively. The index is currently trading at 19,574.93, down by 116.88 points or 0.59%. There were 22 stocks advancing against 8 declines on the index.

The overall market breadth has made a negative start with 30.86% stocks advancing against 65.64% declines. The broader indices too were trading in line with benchmarks; the BSE Mid and Small cap were down by 0.63% and 0.70% respectively.

The top gaining sectoral indices on the BSE were, IT up by 0.94%, TECk up by 0.64% and Realty was up by 0.11%. While, CD down by 1.87%, CG down by 1.61%, Metal down by 1.06%, Auto down by 0.84% and Bankex down by 0.83%, were the major losers on the index.

The top gainers on the Sensex were Infosys up by 2%, Reliance Infra up by 1.32%, DLF up by 0.58%, Reliance Communication up by 0.43% and SBI was up by 0.31%. Sterlite Industries down by 2.29%, HDFC Bank down by 2.10%, L&T down by 2.04%, HDFC down by 1.68% and BHEL down by 1.67% were the top losers on the index.

Meanwhile, the Reserve Bank of India (RBI) said on Friday that it was good to have more planned policy reviews than hiking the rates in middle of the reviews as it brings more acceptability to policy changes. The central bank had recently started conduction mid-quarterly reviews, which increased the total number of reviews in a year to eight from earlier four.

Governor of the RBI D. Subbarao said that when reviews are more frequent, it would not need to take policy decisions in middle of reviews or what is generally called mid-cycle moves. This will reduce the element of surprises in monetary policy. This is somewhat contrary to one of the orthodox schools which contended that surprises were a key part of overall monetary policy conduct. Subbarao said that surprise should be avoided until it is actually a part of real policy action.

The Governor however added that more reviews do not mean that RBI has surrendered the flexibility in policy maneuvering and rates can be changed whenever need arises. 'While we have not surrendered our flexibility to take policy action as and when warranted, more frequent scheduling of policy reviews reduces the need for off-cycle action and thereby minimizes the surprise element,' Subbarao said.

The RBI is due to review its monetary policy on Jan 25 and is widely expected to raise rates by at least 25 basis points, after having left them unchanged in the December mid-quarterly review, as inflation has been on the rise again over last few weeks. Food inflation has, after going down into single digit, again surged to nearly 18% in the latest reported week, putting pressure on the RBI to check inflation expectations which can further feed the tendency of rise in prices.

The RBI Chief also admitted that complete coordination between the central bank and government was not possible. 'I do not think in a democracy it is possible to have complete coordination (in) what the RBI says and what the government says', he said adding that 'There is a pluralism of opinion... across the government, there is not one opinion but several opinions'.

The S&P CNX Nifty opened at 5,901.30; flat compared to its previous closing of 5,904.60, and has touched a high and a low of 5,907.25 and 5,832.90 respectively. The index is currently trading at 5,869.50, down by 35.10 points or 0.59%. There were 12 stocks advancing against 37 declines while one scrip remained unchanged on the index.

The top gainers of the Nifty were Infosys up by 1.89%, Reliance Infra up by 1.15%, Power Grid up by 0.61%, Gail up by 0.56% and DLF up by 0.45%.

The top losers of the index were Kotak Bank down by 3.73%, HDFC Bank down by 2.44%, HDFC down by 2.33%, Sesa Goa down by 2% and Jindal Steel was down by 1.86%.

All the Asian markets were trading in the red; Shanghai Composite was down 11.66 points or 0.41% to 2,827.14, Hang Seng was down 39.47 points or 0.17% to 23,647.16, Jakarta Composite was down 129.44 points or 3.56% to 3,502.01, KLSE Composite was down 5.17 points or 0.33% to 1,567.04, Straits Times was down 3.42 points or 0.10% to 3,257.93, Seoul Composite was down 14.40 points or 0.69% to 2,071.80 and Taiwan Weighted was down by 1.10 points or 0.01% to 8,781.62.

Stock markets in Japan remained closed today on account of a national holiday.

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