Benchmarks continue its weak trade; Sensex below 18,200 mark

Indian equity indices are trading weak with negative bias as investors are having conservative approach and are cautious ahead of the central bank's mid-quarter monetary policy meeting scheduled on Thursday. Investors are speculating that RBI will take a calibrated approach and hike rates by 25 bps which will be its 10th hike in just 16 months to tame inflation. Traders were seen piling up the positions in defensive counter like Health Care sector while, selling was witnessed among rate sensitive sectors like Realty and Bankex along with IT. Majority of Asian markets were trading in green barring Shanghai Composite, Hang Seng and Straits Times which were trading lower while the European markets were trading weak in red spilling pessimism in the local market. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,500 and 18,200 levels, respectively. The market breadth on the BSE was in favor of declines in the ratio of 1186:1543 while 123 scrips remained unchanged.

Moreover, with concerns that RBI would further its hawkish stance against the towering inflation and raise key policy rates, rate sensitive sectors like Banks and Realty have taken a beating. Among the banking space ICICI Bank lost 1.44%, HDFC Bank lost 0.18%, Kotak Bank lost 1.74%, Axis Bank lost 1.82%, Yes Bank lost 1.11%, SBI lost 2.24%, Canara Bank lost 0.84%, PNB lost 0.58% and whereas in realty sector DLF, Unitech, HDIL, Godrej Properties, Indiabulls Real Estate, Sobha Developers, Parsvnath Developers, Orbit Corporation and DB Realty lost 2.03%, 0.88%, 0.80%, 0.74%, 2.23%, 0.76%, 0.69%, 0.68% and 0.67% respectively.

The BSE Sensex is currently trading at 18,161.01 down by 147.65 points or 0.81% after trading as high as 18,308.69 and as low as 18,138.21. There were 5 stocks advancing against 25 declines on the index.

The BSE Mid cap and Small cap indices were down by 0.36% and 0.35% respectively. 

The sectoral gainers on the BSE was Health Care up by 0.10% while, Realty down 1.22%, Bankex down 1.20%, IT down 1.19%, Consumer Durables down 1.14% and PSU down by 0.98%, were the major losers on the index.

The top gainers on the Sensex were R Infra up by 1.35%, HDFC up by 0.90%, HUL up by 0.24%, Tata Motors up by 0.21% and Tata Steel up by 0.12%. On the flip side, Wipro down by 2.84%, DLF down by 2.26%, SBI down by 2.23%, Sterlite down by 1.81% and Hindalco down by 1.78% were the top losers on the index.

Meanwhile, the delay in Empowered Group of Ministers' decision on revision of fuel prices has raised the concern on the impact of rising fuel subsidy on government finances. Expressing concern over the delay in revision of fuel prices the Planning Commission Deputy Chairman Montek Singh Ahluwalia said, 'Failure to pass on the energy prices will effectively kill the energy sector and therefore killing its capacity to invest in exploration and development."

Expressing similar view, C Rangarajan, Chairman of Prime Minister's Economic Advisory Council (PMEAC) said, 'the OMCs (Oil Marketing Companies) are losing in a big way. If the diesel prices are not raised then the burden on the budget will also increase'. C Rangarajan is supporting deregulation of diesel price to reduce the subsidy burden of the government. At present around 9% of India's GDP is being spent on the energy and other subsidies. He also said the timing has to be decided but 'I think the direction in which we have to move is very clear. We need to move towards adjusting diesel prices in line with the international crude prices."

On the issue of protecting common man from increased oil prices Montek Singh Ahluwalia said, 'It is painful, it is difficult, we have to protect the poor and all the rest of it... but no strategy that fails to pass on the higher energy prices is going to be consistent with growth. Unless you believe that budgetary resources will somehow fill the gap. But, as we have already seen... budgetary resources are not there. 'There is absolutely no doubt in my mind that if global energy prices were to fall, it would benefit India's growth rate. It does not however, mean that since those energy prices are not going to fall, we should keep the energy prices low... in order to benefit our growth rate,' he added.

Ahluwalia's comment comes at a time when government is fighting with escalated inflation, the wholesale price index for month May rose to 9.06% from 8.66% April. This increase in inflation was due to increase in the price of manufactured products and petrol prices.

As per the oil ministry, presently OMCs are losing Rs 450 crore every day and delay in price hike will worsen the financial condition of OMCs. Last month, OMCs had hiked petrol prices by 8.6% on account of increased international crude oil price. OMCs are demanding to increase in the price of diesel, kerosene and cooking gas to bridge the gap between buying cost and selling price. Presently OMCs have to sell these petroleum products at regulated price and this is the main reason of increasing revenue losses.

The S&P CNX Nifty is currently trading at 5,456.35, lower by 44.15 points or 0.80% after trading as high as 5,499.35 and as low as 5,449.15. There were 12 stocks advancing against 37 declines while 1 stock remained unchanged on the index.

The top gainers of the Nifty were R Infra up by 1.29%, HDFC up by 0.83%, Sun Pharma up by 0.72%, Sesa Goa up by 0.48% and Ranbaxy up by 0.37% while, IDFC down by 3.01%, SAIL down by 3.00%, Wipro down by 2.56%, DLF down by 2.07% and SBI down by 2.02% were the major losers on the index.

Most Asian markets are trading mixed as Jakarta Composite climbed 0.56%, KLSE Composite increased 0.50%, Nikkei 225 added 0.28%, Seoul Composite gained 0.47% and Taiwan Weighted inched up 0.03%. On the other hand, Shanghai Composite declined 0.90%, Hang Seng eased 0.68% and Straits Times eased 0.06%.

The European markets are trading in red, with France's CAC 40 slipped 0.45%, Germany's DAX eased 0.45% and London's FTSE shed 0.30%.

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