Benchmarks trade flat after a soft start

The Indian equity markets are trading on a flat note after making a soft start in the early trade. The US markets made a mixed closing on Thursday after the report of rise in new jobless claims, while the decline in retail sales too weighed on the markets, though, the Asian markets were trading mostly in the positive terrain at this point of time. Back Home, the investors remained cautious after sharp rise in inflation and the International Monetary Fund (IMF) stating that India might need to increase policy rates to contain inflation. The BSE's -- Sensex -- and NSE's -- Nifty -- were trading below their crucial level of 20,200 and 6,050 respectively. On the sectoral front, realty, fast moving consumer goods and software were the top gainers in trade; on the other hand auto, capital goods and metal were the major losers on the BSE sectoral space. Meanwhile, the cement stocks viz. ACC, Ultratech Cement, Samruddhi Cement and Ambuja Cements all were trading with a cut of about one percent despite reporting rise in despatches for the month of December. As a Fitch Ratings report released on Thursday forecasts local cement demand to grow 10% this year while supply will likely gain 12% as firms build more factories. The broader indices too were trading flat. The market breadth on the BSE was positive; there were 847 shares on the gaining side against 798 shares on the losing side while 57 shares remained unchanged.

The BSE Sensex opened at 20,163.85; about 21 points lower compared to its previous closing of 20,184.74, and has touched a high and a low of 20,210.62 and 20,127.60 respectively. The index is currently trading at 20,185.94, up by 1.20 points or 0.01%. There were 18 stocks advancing against 12 declines on the index.

The overall market breadth has made a positive start with 49.76% stocks advancing against 46.89% declines. The broader indices too were trading flat; the BSE Mid cap was down 0.06% while Small cap was up by 0.02%.

The top gaining sectoral indices on the BSE were, Realty up by 0.70%, FMCG up by 0.53%, HC up by 0.42%, IT up by 0.33% and CD was up by 0.30%. While, Auto down by 0.91%, CG down by 0.28%, Metal down by 0.25%, Bankex down by 0.25% and PSU down by 0.01%, were the major losers on the index.

The top gainers on the Sensex were Bajaj Auto up by 1.79%, ICICI Bank up by 1.42%, Reliance Infra up by 1.19%, DLF up by 0.96% and Reliance Communication was up by 0.89%.

Sterlite Industries down by 2.01%, M&M down by 1.71%, HDFC Bank down by 1.20%, Tata Motors down by 1.13% and Maruti Suzuki down by 1.87% were the top losers on the index.

There is room for further monetary policy tightening in the country as the inflation continued to rule higher than the comfort zone, said the Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan. He however added that by the end of the current fiscal the headline inflation would come down to 6-6.5%.

'We have always thought that inflation rate should remain close to 4%. Therefore, I would regard any inflation above that level as uncomfortable and may need the RBI to take some action... Inflation is likely to be around 7% by December end and between 6% and 6.5% by March end,' Rangarajan said while talking to reporters on the sidelines of a function.

India's headline inflation slowed to 7.48% in November from 8.58% in October, but the prices of food articles have gone up sharply in recent weeks. In fact the food inflation that had gone down into single digit by end of November has surged again to 14.44% for the week ending December 18, on account of high onion and milk prices. As such, the outlook of inflation remains rather mixed despite the Kharif crop making a strong growth last season.

Chief Economic Adviser to the Finance Ministry, Kaushik Basu, who was also present at the function, blamed the recent surge in prices of some of the food commodities like onions on supply chain issues and cartelization by traders. He said greater investment in back-end infrastructure would be needed to rein in food inflation in the medium term. The RBI has also been doing a study on surging food prices and had said recently that as the average income level increases in a rapidly growing economy, people tend to buy more protein based food which was the main reason behind high food inflation.

The S&P CNX Nifty opened at 6,030.90; about 18 points higher compared to its previous closing of 6,048.25, and has touched a high and a low of 6,051.20 and 6,027.50 respectively. The index is currently trading at 6,046.40, down by 1.85 points or 0.03%. There were 28 stocks advancing against 22 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 1.97%, HCL Tech up by 1.74%, Bajaj Auto up by 1.62%, ICICI Bank up by 1.52% and Reliance Infra up by 1.25%.

The top losers of the index were Sesa Goa down by 2.32%, M&M down by 2.20%, Ambuja Cement down by 1.95%, HDFC Bank down by 1.73% and SAIL was down by 1.49%.

Asian markets were trading mixed; Shanghai Composite was up 38.66 points or 1.37% to 2,862.86, Hang Seng was up 74.96 points or 0.32% to 23,861.26, KLSE Composite was up 2.41 points or 0.15% to 1,570.78, Nikkei 225 was up 8.10 points or 0.08% to 10,537.86 and Seoul Composite was up 4.24 points or 0.20% to 2,081.85.

On the flip side, Jakarta Composite was down 77.44 points or 2.07% to 3,658.82, Straits Times was down 12.86 points or 0.39% to 3,266.84 and Taiwan Weighted was down by 92.91 points or 1.05% to 8,790.30.

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