MARKETS TRADE IN A NARROW RANGE

The Indian equity markets continue to trade in a narrow range band with negative bias in late morning session due to lack of buying and sustained profit booking from investors. The other Asian markets were trading in mixed and US index futures were in red terrain, the global markets were trading subdued ahead of Bank of England and European Central Bank policy rate announcement. These negative cues has also dampened sentiments back home where in sectoral space, Realty , Capital Goods (CG) , Health Care (HC) Metal and Consumer Durables (CD) counters were showing some buying interest while Information Technology (IT), TECk , Auto , Oil & Gas and Bankex  shares were witnessing profit booking  . However, the broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices gained 0.88% and 1.07% respectively.  The overall market breadth on BSE was in the favour of advances which outnumbered declines in the ratio of 1701:896, while, 85 shares remained unchanged.

The BSE Sensex declined 44.87 points or 0.23% at 19567.33. The index touched a high of 19,620.88 and a low of 19,537.02.

The BSE Mid cap and Small cap indices gained 0.88% and 1.07% respectively. 

The top gaining sectoral indices on the BSE were, Realty up by 1.91%, Capital Goods (CG) up by 0.72%, Health Care (HC) up by 0.46%, Metal up 0.34% and Consumer Durables (CD) up by 0.30%. On the other hand, Information Technology (IT) down by 0.94%, TECk down by 0.78%, Auto down by 0.38%, Oil & Gas down 0.15% and Bankex down 0.10% were the only losers on the index.

The top gainers on the Sensex were Hindalco up by 1.74%, HDFC up by 0.97%, Tata Power up by 0.88%, DLF up 0.85% and L&T up by 0.57%.

On the flip side, TCS down by 2%, NTPC down by 1.78%, HDFC Bank down 1.30% Maruti Suzuki down by 1.16% and Bharti Airtel down by 1.08% were the top losers on the index.

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.

It however cautioned that the ongoing high inflation was a risk to long term growth sustainability. 'High inflation could derail India's stable macroeconomic and interest rate environment. An average increase of more than 17% in the prices of primary articles in 2010, including food items, indicated that price stability in India remains vulnerable to international commodity prices and the monsoon,' said the S&P.

The agency believes that India's fiscal consolidation will continue in coming years but the weak fiscal position at the moment did remain a drag on country's economic strength. "...the country's weak fiscal profile and structural problems temper its strengths. Structural problems not only constrain efficiency but also preclude a large share of the population from benefiting from the country's rising prosperity," it noted.

On the growth front, it expects continued strong performance. It expects the GDP for the current financial year to expand by 8.3% on annual basis guided by good overall investment atmosphere. Further, strong international reserves also support India's external position and the agency expected reserves to reach $377 billion at the end of March 2012, or 207% of India's short-term external debt. The strong commitment of the central and state governments to the medium-term fiscal consolidation plan set out by the 13th Finance Commission also helps improve outlook on the fiscal front.

Currently the sovereign rating of India by S&P is lowest in the investment grade with a stable outlook.  However, it feels that ratings could be raised if the Indian government is able to significantly reduce general government deficits. The government could undertake several measures to reduce deficits, such as initiatives to lower and promote more efficient use of the subsidies on fuel, fertilizer, and food. These initiatives could improve the expenditure structure of the budget and reduce the negative influence of potential external shocks on India's fiscal position, said the S&P. 

The S&P CNX Nifty shed 15 points or 0.25% at 5,876.75.The index has touched a high of 5,889.80 and a low of 5,866.25 respectively.

The top gainers of the Nifty were BPCL up by 1.95%, Hindalco up by 1.88%, Tata Power up by 1.22%,  Ambuja Cements up by  0.96% and DLF up by 0.89%.

NTPC was down by 2.14%, Sesa Goa down by 2%, TCS down 1.94%, Maruti Suzuki down by 1.43% and Tata Motors down 1.22% were the major losers on the index.

The  other Asian markets were trading mixed bias; Shanghai Composite gained 0.12%, KLSE Composite gained 0.27%, Nikkei 225 rose 0.07% and Taiwan Weighted surged 0.23% while  Jakarta Composite added 0.20%,Hang Seng declined 0.16%, Straits Times shed 0.08% and Seoul Composite trimmed  0.21%.