Markets continue to trade lower, eye on inflation

Markets continued to trade weak after opening lower due to weakness in rate sensitive realty and banking stocks ahead of the April inflation data. The Nifty was down 22 points at 5521 and the Sensex  slipped 100 points, at 18,427/

The April inflation reading is expected to affect the Reserve Bank of India’s decision on rate hike. Reuters poll has predicted April Whole Sale Price Index at 8.58%. The inflation bias may remain on the upside after India’s state run gasoline companies raised prices by Rs 5 per litre soon after United Progressive alliance (UPA) and its allies won elections in three out of five states on Friday.

The BSE Realty and Banking index were off 0.8% each as investors feared that high inflation may lead to further tightening put pressure on credit demand for housing and banking loans. From the banking space Kotak Mahindra Bank slipped 1.7%, Axis Bank declined 1.4% and ICICI Bank was off 1.1%. From the realty sector, Sunteck Realty lost 10%, Godrej Properties and DLF were down over 1% each.

---------------------Updated 09:30am---------------------------------------

Markets opened lower tracking weak Asian peers and investors turning to the sidelines ahead of April inflation data. The S&P CNX Nifty dipped 20 points, at 5525 and the Sensex was down 92 points, at 18, 440

Analysts expect Indian markets to remain weak as Nifty has formed a bearish head on should pattern on the daily charts which indicates a major reversal in the bullish trend.

Most of the Asian markets were also trading in the red in the morning trades as sell-off in commodities weighed on resource shares.
Hong Kong's Hang Seng fell 0.4% led by losses in banking shares. Investors veered away from risky assets as the Dollar strengthened. Euro-zone debt worries also affected investor sentiment.  China's Shanghai Composite index was trading flat at 2,869. The Nikkei Stock Average slipped 0.6% as rising yen weighed on exchange rate sensitive stocks.  South Korea's Kospi Composite was down 0.6%, Singapore's Strait Times edged lower by 0.9% and Taiwan's weighted index was off 0.4%.

Among individual stocks, oil marketing companies were leading the gains. Bharat Petroleum and Hindustan Petroleum surged 2% each after they raised petrol prices by Rs 5 per litre.  Suzlon rallied 4% after the fifth largest turbine maker reported 20% jump in fourth quarter net profit. Glenmark rallied 8% after it signed a licensing deal with Sanofi which has marketing rights in Japan, USA and Europe.

BSE Healthcare index was leading the gains, up 1.3%. Besides Glenmark Pharma, Ranbaxy advanced 2.1%, Lupin zoomed
2% and Sun Pharma was up 1.9%.

Auto shares were leading the losses, BSE auto index slipped 1.2%. Maruti Suzuki, Bajaj Auto and Cummins India all fell over 1% each.

Only four shares on the Sensex were trading in the green, BHEL advanced 0.8%, TCS was up 0.9% and Reliance Communication gained 0.4%. Top losers were Mahindra & Mahindra, down 1.8%, ICICI Bank was off 0.4% and Tata Motors
declined 1.3%.

Broader markets were flat. Market breadth was negative,  749 stocks advanced for 833 stocks which declined.