Markets turn choppy; broader indices outperform

The benchmark equity indices trading choppy with slightly negative bias in late morning session  as Prime Minister Manmohan Singh's is addressing much awaited media interaction. Meanwhile majority of other Asian markets too have turned negative while US index futures were showing uptick in screen trade , these mixed global cues have added to the confused sentiments of the local traders. NSE Nifty and BSE Sensex  were trading  around their psychological level 17,300 and 4,480 levels while other sectoral indices Metal, FMCG, Health Care (HC), Capital Goods (CG)  and Consumer Durables (CD) counters were trading  in green and giving  some support to the market  while Auto ,Realty , IT , TECk   and PSU counters were dragging the index down . The broader markets were in comperatively better position than the benchmarks. The BSE Mid cap and Small cap indices were up by 0.16% and 0.81% respectively. The overall market breadth on Bombay Stock Exchange (BSE) is in the favour of advances which have flogged declines in the ratio of 1468:972, while 110 shares remained unchanged.

The BSE Sensex was down by 17.71 points or 0.10% at 18256.09. The index touched a high of 18,349.17 and a low of 18,236.32 respectively.

The BSE Mid cap and Small cap indices were up by 0.16% and 0.81% respectively.

In BSE sectoral indices, Metal up 0.93%, FMCG up 0.63%, Health Care (HC) up 0.49%, Capital Goods (CG) 0.45% and Consumer Durables (CD) up by 0.24% were the main gainers.

On the other hand Auto down 0.91%, Realty down 0.39%, IT down 0.36%, TECk down 0.23%  and PSU down 0.04% were the main losers on the BSE sectoral space.

The top gainers of the BSE Sensex were JP Associates up 3.25% ,Tata Steel up 3.02%, Jindal Steel up 1.93%, L&T up 0.99% and State Bank of India was up by 0.76%.

HDFC down 2.79%, Mahindra & Mahindra down 2.62%, Hindalco Industries down 1.88%, DLF down 1.56% and Tata Motors down 1.44% were top losers on the BSE Sensex.

The Reserve Bank of India (RBI) may hike its key short term lending rates by 25 basis points (bps) in its next month's mid-quarterly monetary policy review to check an increasingly sticky looking inflation, said the global financial services conglomerate Goldman Sachs.

'We expect the RBI to hike policy rates by 25 bps in the March 17 policy meeting and by a cumulative 100 bps in calendar year 2011,' the Goldman Sachs said in a recent policy research note. The central bank will meet on March 17 for the last mid-quarterly policy review for the current financial year.

Headline inflation in the country as measured by the wholesale price index (WPI) dipped marginally in January to 8.23% from 8.43% in the previous month. In an absolute sense, however, the number remains stubbornly high and way above the comfort zone of the Indian monetary authority. The central bank had also substantially raised its inflation target for the fiscal-end to 7% in its January policy review from 5.5% given earlier.

What is critical is that most of the contribution to inflation continues to come from the primary commodities, especially the food items. There were a lot of expectations that as the Kharif harvest comes into markets, food inflation will begin to come down. However, so far, neither the record Kharif harvest, nor the extremely strong outlook of the Rabi crop has been able to impact food inflation which remains stubbornly high in the range of 10-20%.

The RBI had in its last policy review too hiked policy rates by 25 bps. In fact, the central bank has been rising rates in all of its last eight policy reviews but the December one.  However, it has been keeping its upward movement of rates quite calibrated so as to ensure that the recovery in Indian economy does not fault. Economists in this wake have been dubbing the central bank's stance as being 'behind the curve' and pressure on RBI has been increasing to take some bold measures to bring down the sticky inflation.  

The S&P CNX Nifty trimmed 8.80 points or 0.16 % to 5,472.20. The index touched high of 5,497.50 and a low of 5,466.80 respectively.

The top gainers of the Nifty were JP associates up 3.13% ,Tata Steel up 3.10%, Ambuja Cement up 2.14%, Jindal Steel up 1.84% and Sun Pharma up by 1.46% .

The top losers of the index were IDFC down 4.18%, HDFC down 3.14%, M&M down 2.87%, Hindalco Industries down by 1.74% and DLF down by 1.50%.

Majority of the Asian markets had dipped in red; Straits Times was trimmed 0.23%, KLSE Composite  shed 0.18% , Jakarta Composite declined 0.48%, Seoul Composite declined by 0.48%, Taiwan Weighted  dropped 0.10%.While Shanghai composite surged 0.39%, Nikkei 225 gained 0.57% and Hang Seng climbed 0.62%.

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