Benchmarks continue to trade on a subdued note; Sensex down 0.57%

Local frontline indices continue to tread cautiously in the mid afternoon session of trade as investors carried on to book profits at every rise, however the indices recovered some part of losses after touching intraday lows in the early afternoon session as rally in consumer durable stocks like Bajaj Electricals and Whirlpool which garnered 4.70% and 3.73% respectively lent some support. However, the plunge of over a percent in information technology heavyweights like Infosys and Wipro is restricting the bourses from bouncing back into the green. While the weakness in oil and gas counters on the back of spiraling crude oil prices has kept the indices well below the neutral line. On the global front, cues remained pessimistic as most Asian indices finished in the mixed territory while the European counterparts traded in the negative zone. Meanwhile, resilient broader markets bucked the somber trend of their larger peers and are trading with conviction as investors continue to pile up positions in undervalued shares from the midcap and small cap space. The market breadth on the BSE too remained strongly in favor of advances in the ratio of 1727: 1076 while 84 scrips remained unchanged.

The BSE Sensex lost 111.78 points or 0.57% at 19,589.95. The index touched a high and a low of 19,770.21 and 19,523.54 respectively.

The BSE Mid-cap and Small-cap indices gained 0.58% and 1.00%, respectively.

On the BSE sectoral front, Consumer Durables up 2.06%, PSU up 0.06%, Health Care up 0.06%, Power up 0.06% and Realty was up by 0.02%.

On the flip side, IT down 0.66%, Oil & Gas down 0.54%, Auto down 0.34%, Teck down 0.31% and CG down 0.30% were the major losers.

The top gainers on the Sensex were BHEL up 1.35%, Cipla up 1.30%, RCom up 1.15%, SBI up 0.86% and Tata Motors up 0.86%.

On the flip side, M&M down 1.69%, Tata Power down by 1.65%, DLF down 1.53%, Wipro down 1.29% and HDFC down 1.24% were the losers on the index.

Meanwhile, India's central bank accepted on Tuesday that inflation in the country continue to remain at elevated and unacceptable  levels despite the continued monetary tightening delivered by it throughout the last financial year. The Reserve Bank of India (RBI) had hiked its key policy rates including repo and reverse repo eight times over the fiscal 2010-11.

Deputy Governor of the RBI Subir Gokarn said that inflation was still at higher levels despite policy rate hikes and the recent surge seen in international crude oil prices has only aggravated inflationary pressure. Brent crude oil prices continue to remain above the $110 a barrel level following political unrest in Middle-East. Since India relies on imported crude for nearly 80% of its needs, elevated global crude prices can result in imported inflation. 

Gokarn said that the view of the RBI was that economic growth has been more robust during the low inflation period, and therefore the challenge for monetary policy would now be to prevent the supply side inflation from spilling into generalized inflation. This, according to the Deputy Governor, can be achieved by managing expectations and reigning in excess demand without causing any particular disruption in growth and investment activities.

"The challenge for the fiscal policy is to bring down fiscal deficit on revenue account. This needs to be done by effective implementation and ensuring resource allocation in backdrop of global uncertainties and rising oil prices," he said adding that the RBI will continue to balance its policy formulation in a way that both growth and inflation concerns are addressed.

There has been some pressure on the RBI to speed up the process of monetary tightening as so far the inflation has not shown much response. Not only the elevated food inflation is a concern, but even the core inflation is becoming a worry. In the month of February, core inflation had shown a significant increase reflecting that capacities were coming under pressure and the RBI might just be 'behind the curve' in checking demand side of the economy.

The S&P CNX Nifty lost 33 points or 0.56% at 5,875.45. The index touched high and low of 5,928.65 and 5,855.85, respectively.

The top gainers on the Nifty were Sesa Goa up 6.75%, RCom up 3.58%, Ranbaxy up 3.13%, Sterlite up 2.68% and Ambuja Cement up 2.49%.

On the other hand, Tata Power down 1.91%, M&M down 1.76%, HUL down 1.56%, L&T down 1.50% and DLF down 1.32% were the major losers on the index.

In the Asian markets, Jakarta Composite closed lower by 0.43%, KLSE Composite declined by 0.16% and Nikkei closed lower by 1.06% while the gainers were Straits Times up 0.64% and Seoul Composite up 0.69%.

Meanwhile stocks markets in China, Hong Kong and Taiwan remained shut on account of a local holiday.

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