MARKETS IN RED

Local bourses have trimmed some losses as optimistic investor's drawing some positive from Chief Economic Advisor Kaushik Basu's comments of reducing the interest rates to maintain the momentum of growth in the economy, indulged in bargain buying. Earlier local bourses along with Asian indices plummeted in early trade in reaction to an unproductive European finance ministers' meeting in Poland on Saturday after the European policymakers failed to come up with a plan to stem the region's debt crisis. Eurozone finance chiefs said last week that there is no room for tax cuts or extra spending to spur an economy on the brink of stagnation. However, the surge of the US stocks for the fifth consecutive session on Friday also failed to boost the markets. U.S. stocks rose for a fifth day in a row on Friday and the S&P 500 scored its best week since early July on signs euro zone leaders were acting together to limit any damage from its sovereign debt crisis. Meanwhile, the US future indices too were showing a downtick in the screen trade. Backhome, stocks from CD, Auto and TECk enticing major gains, were aiding bourses in trimming losses, while stocks from CG, Bankex and Metal counters languishing at the bottom were facing maximum brunt of profit booking. 30 share index- Sensex-offloading over 100 points was trading sub 16900 mark, while 50 share index- Nifty- trading lower over by 25 points was trading sub 5000 mark. The broader indices outperforming the larger peers had magnified their gains. The overall market breadth on BSE was in the favour of advances which outpaced declines in the ratio of 1201:909, while 99 shares remained unchanged.
The BSE Sensex is currently trading at 16,838.69 down by 95.14 points or 0.56%. The index has touched a high and low of 16,865.93 and 16,772.45 respectively.  There were 8 stocks advancing against 22 declines on the index.
The broader indices were outperforming the benchmarks were trading in green; the BSE Mid cap index up by 0.15% while, Small cap index was up by 0.42%.
The top gaining sectoral indices on the BSE were, CD up by 0.68%, Auto up by 0.26%, TECk up by 0.10%, Oil & Gas up by 0.04%. While, CG down by 1.17%, Bankex down by 0.91%, Metal down by 0.89%, FMCG down by 0.67% and Realty down by 0.63% were the top losers on the index.
The top gainers on the Sensex were Bharti Airtel up by 1.00%, Maruti Suzuki up by 0.84%, ONGC up by 0.73%, Tata Motors up by 0.68% and Wipro up by 0.47%.
On the flip side, DLF was down by 2.01%, Sterlite Industries down by 1.78%, Hindalco Industries down by 1.62%, L&T down by 1.62% and ICICI Bank down by 1.58% were the top losers on the Sensex.
Meanwhile, stating that the high interest rates has limited role in controlling inflation, the Chief Economic Advisor Kaushik Basu has advocated for reducing the interest rates to maintain the momentum of growth in the economy. 'I believe that is something (reduction of interest rate) which ought to be considered. When you have high inflation, the central bank's standard response is to increase the interest rate and my view is that we have done it. It had some impact, but not at the level which we had expected,' Kaushik Basu said.
Last week, in order to control inflation, the Reserve Bank of India, hiked its short term lending and borrowing rates, by 25 basis points, this was 12th hike in last one and half year. However, headline inflation, has been hovering around two digit mark from the last few quarters.
Stating need for different approach to tackle inflation Kaushik Basu said, 'so try something different, on which we are beginning to get evidence.' He said this with reference to Turkey, which had mange to control inflation by reducing interest rates. 'We are in a new world. Many countries are facing this problem. We have to try a different policy, because we don't want to damage India's growth story,' he added.
Kaushik Basu expects inflation to come down by middle of 2012, however, RBI in its midterm quarterly review has indicated that inflation to moderate to 6-5% by second half of current fiscal. The headline inflation for August surged to 9.78% from 9.22% in July. On RBI's strategy in controlling inflation he said, the Reserve Bank needs to think out-of-the-box and come out with steps to tackle high inflation.

Basu expects India to grow by 8.1% in the current financial year, provided, eurozone crisis does not become recession. On the policy front, he expects that Direct Taxes Code (DTC) will replace the Income tax Act 1961 in current financial year. However, for Goods and Services Tax (GST) he said, 'I don't think GST will happen in April, 2012.'The S&P CNX Nifty is currently trading at 5,054.40, lower by 29.85 points or 0.59%. The index has touched a high and low of 5,068.40 and 5,035.50 respectively.  There were 17 stocks advancing against 33 declines on the index.

The top gainers of the Nifty were GAIL up by 1.75%, Ranbaxy up by 1.65%, IDFC up by 1.65%, ACC up by 1.26% and  Reliance Power up by 1.20%.
On the flip side, Sterlite Industries down by 2.11%, Reliance Infra down by 2.03%, DLF down by 2.01%, ICICI Bank down by 1.95% and Siemens down by 1.81% were the major losers on the index.
All the Asian equity indices were trading in the red; Shanghai Composite was down by 1.49, Hang Seng was down by 2.10%, Jakarta Composite was down by 1.29%, KLSE Composite down by 0.86%, Straits Times was down by 0.77%, Seoul Composite down by 0.55% and Taiwan Weighted down by 1.17%. Meanwhile, Nikkei 225 was closed for trade today.