Flimsy Indian equity markets continue to touch new lows in the Thursday afternoon trades India's inflationary pressures and macro-economic problems dampened investors' sentiments. The weekly inflation numbers showed that India's food price index moderated to 9.03% in the year to August 6 against 9.90% in the previous week but the ease in food inflation numbers failed to provide any kind of support to the domestic sentiments. Moreover, making matters worse were the reading of the fuel price index which climbed 13.13% in the period against 12.19% last week. Panic selling in rate sensitive counters like Banking and Automobile has dragged the benchmark indices below the psychological 5,000 and 16,600 levels. The technology and software shares too were not spared either as market participants took to relentless position squaring from the counters after Dell's disappointing outlook overnight fueled concerns about a slowing down global economy. Meanwhile, investors also overlooked encouraging reports that rain deficit in India as a whole during the monsoon season thus far has been reduced to one percent. This came about on the back of active monsoon conditions prevailed over parts of northwest and east and northeast India, with more rains being forecast later this week. Apart from some buying interests evident in the defensive - FMCG and the badly butchered Real Estate names all other sectoral indices. On the global front, the European markets have got off to a discouraging opening as all indices in the region are trading with large cuts of over one and half a percent.
Meanwhile, the broader markets showed little resilience and once again suffered nasty laceration amid volatile trades, performing in tandem with their larger peers. The bourses plummeted on large volumes while the market breadth on BSE was dominantly in favor of declines in the ratio of 1905:643 while 109 scrips remained unchanged.
The BSE Sensex is currently trading at 16,840.80 down by 263.86 points or 1.57% after trading as high as 16,916.81 and as low as 16,556.56. There were 8 stocks advancing against 22 declines on the index.
The broader indices were trading on a bleak note; the BSE Mid cap index slipped 1.56% and Small cap shed 1.64% respectively.
On the BSE sectoral space, FMCG up 0.26% and Realty up 0.18% were the only gainers while IT down 3.88%, TECk down 2.79%, Bankex down 2.72%, Metal down 1.93% and PSU down 1.88% were the major losers on the index.
DLF up 2.59%, Hero Moto up 0.63%, HUL up 0.55%, ONGC up 0.27% and ITC up 0.24% were major gainers on the Sensex, while Wipro down by 4.55%, ICICI Bank down 4.35%, Jindal Steel down 4.15%, TCS down 4.07% and Infosys down 3.56% were the major losers on the index.
Meanwhile, Reserve Bank of India (RBI) will maintain its anti inflationary stance and expects inflation to be around 7% by March 2012. The RBI Deputy Governor K C Chakrabarty on August 17 said, 'whatever the inflation guidance is given in the quarterly statement (July) that stands as of today.' The RBI in its quarterly monetary policy statement, had revised upward its inflation projection for the March 2012, it has increased its forecast from 6% to 7%.
Headline inflation measured by the wholesale price index (WPI) for the month of July stood at 9.22% down from 9.44% in the last month. The government has also revised inflation numbers for the month of May from 9.06% to 9.56%. Earlier, the government revised inflation numbers for April to 9.74%. The non-food inflation or core inflation also increased for July, it stood at 7.5% from 7.3% in June. Looking at the trend of inflation data revision, if government revised inflation data for the month of July then it may touch the two digit mark.
From the monetary policy perspective, central bank has maintained its anti-inflationary stance by ignoring the slowdown in growth. Since March 2010, RBI has increased its key policy rates by 11 times, with headline inflation and core inflation expected to be at elevated level for coming few months. RBI is expected to continue its anti-inflationary stance. On September 16, it may increase its policy rates by 25 basis points.
On the New Banking license, the RBI Deputy Governor said the draft guidelines could be expected any time soon. RBI had submitted the draft guidelines on new banking licenses to the finance ministry for approval, which is believed to have been cleared by the ministry.
The S&P CNX Nifty is currently trading at 4,976.30, lower by 80.30 points or 1.59% after trading as high as 5,078.60 and as low as 4,966.75. There were 11 stocks advancing against 39 declines on the index.
The top gainers of the Nifty were DLF up 3.08%, R Com up by 1.93%, HUL up 0.76%, Hero Moto up 0.63% and Bharti Airtel up 0.45%.
HCL Tech down 6.18%, Axis Bank down 4.49%, ICICI Bank down 4.37%, Wipro down 4.31% and Infosys down 3.69% were the major losers on the index.
Asian markets traded on a somber note, Shanghai Composite plunged 1.41%, Hang Seng sank 0.98%, KLSE Composite eased 0.33% Nikkei 225 plummeted 1.25%, Seoul Composite got butchered by 1.70% and Taiwan Weighted sank 1.64%.
On the other hand, Jakarta Composite surged 0.94% and Straits Times gained 0.27%.
The European markets traded on bleak note as France's CAC 40 eased 1.59%, Germany's DAX shed 1.64% and London's FTSE slipped 1.22%.
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