Rising CPI weighs on rate sensitives; Nifty hovers near 8,450

Rate sensitive sectors capped upside gains as rising CPI dashed hopes of rate cut by RBI

Markets continued to trade with marginal losses in noon trades on Tuesday weighed down by rate sensitive shares after June consumer price inflation which surged to nine-month high of 5.40 per cent in June dashed hopes of a rate cut by the central bank.

At 1:15PM, the 30-share Sensex was down 42 points at 27,919 and the 50-share Nifty was down 12 points at 8,448.

In the broader market, the BSE Mid-cap and Small-cap indices were trading 0.4-0.6% higher. Market breadth was positive with 1,474 gainers and 1,074 losers on the BSE.

The Indian rupee was trading marginally higher at 63.47 against the US dollar compared to the previous close of 63.51.

ECONOMY

The Consumer Price Index (CPI)-based inflation rose to nine-month high of 5.40% in June, on the back of increased rate of price rise in food items, data released by government showed on Monday.

Wholesale Price Index-based inflation (WPI) for the month of June continued to be in the deflationary territory for the eighth straight month, backed primarily by lower commodity prices, as per government data released today.

GLOBAL MARKETS

Asian markets were trading mixed with shares in China and Hong Kong witnessing profit taking after gains in the previous few sessions. China's Shanghai Composite was down 1.1% while Hang Seng eased 0.6%. Meanwhile, Japanese shares extended gains and the Nikkei ended up 1.5% while Straits Times was trading with marginal gains.

European shares were trading marginally lower in early trades as investors booked profits after recent gains post the agreement between Greece and eurozone leaders for a debt bailout package. The CAC-40, DAX and FTSE-100 were down 0.1-0.4% each.

SECTORS & STOCKS

The BSE Bankex and Auto indices were the top losers down 0.5% each while FMCG index was trading with marginal losses.

Among the financials, HDFC, SBI, ICICI Bank and HDFC Bank were down 0.2-1.2% each.

In the auto pack, Tata Motors was down over 2% on concerns over slowdown in Jaguar Land Rover sales in China. Further, for the April-June 2015 quarter, Kotak Institutional Equities expects standalone operations of Tata Motors to remain under pressure due to losses in the passenger car business. M&M was down 0.6%.

FMCG major ITC was down over 1.1% after rising consumer price inflation raised worries over slowdown in volume growth going forward. However, its peer HUL was trading with marginal gains.

Metal shares continued to witness profit taking at higher levels. Vedanta, Hindalco and Tata Steel were down 0.4-1.4% each.

Among other shares, Thomas Cook India was up nearly 3% at Rs 225.50 on the Bombay Stock Exchange after the company said it has received approval from the High Court of Bombay for its merger with Sterling Holiday Resorts (India) Ltd, vide order dated July 2, 2015.

NIIT Technologies surged by 6% to Rs 443 on the BSE after reporting a strong 35% year-on-year (yoy) growth in its consolidated net profit at Rs 58.50 crore for the first quarter ended June 30, 2015 (Q1), on back of strong operational performance.