The benchmarks indices have gained some strength and are trading in positive terrain in the early noon session, the broader markets continue to remain in green and have strengthened by now. Though, the markets were still facing stiff resistance with bears not in mood to lose control, BSE Mid-cap and Small-cap indices were up by 1.00% and 1.22%, respectively. Some BSE sectoral indices like Realty, Capital Goods, Health Care, Metal, Consumer Durables, PSU, Bankex, Power and FMCG are trading in green on the same time IT, Teck, Auto and Oil & Gas are in red. The market breadth on the BSE was in favour of advances in the ratio of 1802:916 while 90 scrips remained unchanged. On the global front the Asian markets continue to trade mixed, Seoul Composite, Strait Times, and Jakarta Composite were reeling in red. Meanwhile, inflation has moderated marginally for the week ended March 19. According to the data released by the ministry of commerce and industry on Thursday, food price index rose 9.18% on annual basis during week-ended March 26, as compared with 9.50% recorded in the previous week.
Global rating agency Standard & Poor's (S&P) on Wednesday cautioned that high and sticky inflation if not brought down could derail India's growth story. The agency however maintained stable outlook for India's long term sovereign rating in light of strong external position and good investment climate in the country. "We affirmed the 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on India. The stable outlook reflects our view that India's external flexibility and fiscal performance will temper the effects of inflation and political uncertainty," said the rating agency in a Press Release. "The ratings on India reflect the country's good economic growth prospects and its fairly strong external position," it added.
The BSE Sensex lost 1.73 points or 0.01% at 19,610.47. The index touched a high and a low of 19,620.88 and 19,537.02 respectively.
The BSE Mid-cap and Small-cap indices gained 1.00% and 1.22%, respectively.
The sectoral indices trading in the green on the BSE are Realty up 1.85%,Capital Goods up 0.83%, Health Care up 0.47%, Metal up 0.39% and Consumer Durables up 0.38%.
On the flip side, IT down 0.67%, Teck down 0.64%, Auto down 0.20% and Oil & Gas down 0.02% were the major losers.
The top gainers on the Sensex were Hindalco up 1.67%, HDFC up 1.66%, Tata Power up 1.13%, DLF up 1.02% and L&T up 1.02%.
On the flip side, NTPC down 1.93%, TCS down by 1.89%, Bharti Airtel down 1.43%, Sterlite Industries down 1.33% and Maruti Suzuki down 1.27% were the major losers on the index.
Meanwhile, Indian businesses are getting increasingly concerned with the high inflation currently prevailing in the economy and have urged the Reserve Bank of India (RBI) to ensure the inflation comes down while at the same time asking the central bank to ensure interest rates do not spike too much.
At a pre-policy consultation meeting between the central bank and representatives of trade bodies, credit rating agencies, and corporate houses, it emerged that majority of the firms felt inflation and successive rate hikes were beginning to have a bearing on industry's performance. Industry bodies also pointed out to a recent Business Confidence Survey which had shown increasing concerns of industry about high inflation and continued tightening in monetary policy as a result that can have significant impact on investment climate in the economy.
Quarterly manufacturing survey by industry body Ficci also showed a significant fall in the overall sentiment and expectations of the manufacturing industry. In the Survey for fourth quarter, only 60% of industry leaders expected their profitability to increase going forward. This compares with 68% responding positively in third quarter and 71% responding positively in the second quarter.
Ficci said that further rate hikes by the central bank to tame an increasingly sticky looking inflation could certainly impact plans of investing community and dampen potential growth. However, at the same time various industry bodies also want the RBI to ensure a lower inflation. High inflation has resulted in significant increase in cost of production due rising prices of inputs and wage inflation. Although domestic demand has been strong, rising prices could impact consumer spending in medium run as well.
Industry bodies also remain wary of the fact that a high market borrowing requirement of government can further push market interest rates amidst continued tightening in policy stance by the central bank. 'The worry, however, remains that with inflation remaining stubbornly high, and with the borrowing calendar of the sovereign kicking off from the first week of April and liquidity conditions expected to remain in the deficit mode, further rate hikes by RBI could impact investment plans and activity levels adversely going forward,' the FICCI said in a press release.
The RBI had raised its key policy rates including the repo and reverse repo eight time in the last financial year. However, headline inflation in the country still continues to remain at above the 8% level compared with RBI's comfort zone of 4-5%. Further, even as food inflation showed significant decline in the month of February, non-food manufacturing inflation, also called core inflation, has picked up significantly in the latest reported month, indicating capacities were coming under pressure. This will make the growth-inflation balancing act of RBI all the more difficult.
The S&P CNX Nifty was down by 5.50 points or 0.09% at 5886.25. The index touched high and low of 5891.30 and 5866.25, respectively.
The top gainers on the Nifty were HDFC up 2.02%, Hindalco up 1.65%, BPCL up 1.58%, Tata Power up 1.27% and L&T up 1.14%.
On the other hand, SesaGoa down 2.47%, NTPC down 2.27%, TCS down 1.88%, Maruti down 1.54% and Bharti Airtel down 1.49% were the major losers on the index.
Asian markets were trading mixed, Seoul Composite down 0.21%, Strait Times down 0.01%, and Jakarta Composite was down by 0.48%.
The gainers were Hang Seng up 0.16%, Shanghai Composite up 0.22%, KLSE Composite up 0.22%, Nikkei up 0.07% and Taiwan Weighted advanced 0.56%.
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