Markets continue to trade flat; Infosys up 2%

Markets continued to trade flat with negative bias as high inflation raised the probability of a rate hike by the RBI

Markets continued to trade flat with negative bias in noon trades on Monday as higher-than-expected November wholesale price inflation raising the probability of a rate cut by the Reserve Bank of India in its upcoming monetary policy review.

At 1:15PM, the 30-share Sensex was down 53 points at 20,662 and the 50-share Nifty was down 16 points at 6,152.

The Wholesale Price Index (WPI), a measure of inflation at wholesaler's level, rose to 7.52% in November from 7% a month ago mainly due to continued rise in vegetable prices. This takes the wholesale price inflation to a 14 month high. Markets were expecting inflation to be around 7%.

The prices of vegetables went up by 95.25% in November against a price rise by 78.38% in the previous month, marked by a rise in the prices of potato this time.

Stocks in Asia were trading weak as investors remained cautious ahead of the US Fed's 2-day policy meet. The Shanghai Composite and Nikkei down 1.6% each. China's benchmark stock index, the Shanghai Composite was down after factory output was marginally down in December compared to the previous month. Among other indices in the region, Straits Times and Hang Seng were down over 0.4% each.

The BSE Oil and Gas index was the top loser among the sectoral indices followed by Auto and Power indices. Meawhile IT index was the top gainer up 1.7% followed by Capital Goods index.

Among the index heavyweights Reliance Industries was down over 1.5% and ONGC was down 1.6%.

FMCG majors ITC and Hindustan Unilever were down 1% each after high inflation levels are likely to reduce spending power thereby hurting volume growth going forward.

Other Sensex losers include, Sun Pharma, HDFC, Mah&Mah and Tata Motors.

IT shares firmed up after the rupee weakened agains the US dollar. Infosys was up 2.4% and TCS gained 1.2% and Wipro was up 0.7%.

Other Sensex gainers include ICICI Bank and L&T.

Among other shares, Elder Pharmaceuticals was down 7%, extending its Friday’s 9% fall, after the company sold its domestic formulations business in India and Nepal, to Torrent Pharmaceuticals for Rs 2,004 crore.

The company’s branded domestic formulations business in India and Nepal business accounts nearly 60% of the company’s total turnover.

In the broader market, the BSE Mid-cap index and Small-cap index were trading flat with positive bias.

Market breadth was weak with 1,255 losers and 965 gainers on the BSE.