Political Drama Pulls Markets Down, RBI Policy Awaited

After a positive opening in the first 3 days in this week, the Indian markets opened flat today. The slightly higher inflation numbers declared yesterday as well the political drama that unfolded in the capital has been seen negatively by the markets. The Feb 2012 inflation grew to 6.95% as compared to 6.55% in Jan. On the other hand, the Railway Minister came under fire after increased the fares, following which he tendered his resignation. The demand now is to roll back the tariff hikes. Hence, the future of the Railway Budget is under a shadow of doubt.

Ahead of the RBI’s much-awaited monetary policy review, the BSE Sensex has fallen by 67 points while the Nifty is short by 24 points from yesterday’s closing.

The other Asian markets are trading volatile at the moment. Shanghai and Hang Seng have declined, while Nikkei has advanced by 0.63%.

Earlier, the US markets remained mostly flat. The European markets also showed a mixed trend. There was nothing exciting about the global markets yesterday.

Back home, most of the sectoral indices are in the negative at the moment. Amid the high volatility seen in the opening session, the IT and Teck stocks have managed to keep their heads high. CD, CG, Realty and Metals have fallen over 1%, and we expect them to remain negative.

Among the Sensex shares, GAIL India, TCS, Hindustan Unilever, NTPC, Infosys and Sun Pharma are in a positive trend. All the other Sensex stocks are in the negatives, indicating that a negative sentiment is strong in today’s markets.

In other stocks, United Breweries has gone further down by 3.75%. The shares of Lanco Infra are also down by 3.42%. Apollo Hospital, which saw a surge yesterday, has snapped half of its gains and is down by 3.01%. Manappuram Finance has gained over 4%, as its founders sold about 4% stake in large private equity funds.

The market breadth, which indicates the overall health of the market, is stark negative. Out of a total of 1918 stocks, 732 stocks advanced and 1096 stocks declined. 90 stocks remained unchanged.

The reformist Railway Budget has come under serious threat. This situation will be taken very negatively by the markets, as the Union Budget is expected tomorrow. With the RBI's monetary policy announcement awaited and the political situation low, we expect markets to remain negative ahead today.