Markets volatile ahead of Fed meet, CPI data eyed

REUTERS - India's stock markets traded marginally higher in a volatile day of trading with wary investors shying away from building huge positions as global markets speculated whether the U.S. Federal Reserve will raise rates for the first time in almost a decade.

Asian shares also came under pressure after Chinese markets were hit by soft economic data.

"Nobody will create big positions, either short or long ahead of the Fed event. Highly volatile movements are expected," Alex Mathews, head of research at Geojit BNP Paribas said.

The BSE Sensex gained 0.29 percent, while the Nifty was up 0.28 percent by midday on Monday.

 

Indian investors are also keenly awaiting retail inflation data that will be released later on Monday. Slowing retail inflation would provide the Reserve Bank of India wiggle room to cut interest rates, a move that companies say is essential to jump-start growth.

India's wholesale prices fell for a tenth straight month in August, tumbling an annual 4.95 percent primarily on the back of a sharp cooling in fuel costs, government data showed on Monday.

All sectors were trading in the green barring resources companies.

Financial stocks led the gains. Axis Bank gained 1.8 percent, ICICI Bank rose 0.7 percent, while State Bank of India was up 1 percent.

Kesoram Industries rose as much as 13.6 percent after selling its tyre manufacturing unit in northern India for 22 billion rupees ($331.6 million) to JK Tyre & Industries .

Meanwhile, resources stocks Reliance fell 0.7 percent, Coal India was down 0.5 percent, while Cairn India slipped 2.5 percent.

($1 = 66.3400 rupees)

(Reporting by Karen Rebelo in Mumbai; Editing by Anand Basu)