Markets Open Flat

As expected in our morning update, the Indian markets opened in the flat, negative territory today. Yesterday, in a statement given to the media, the RBI governor said that inflation is still at high levels but also admitted that the growth slowdown needs to be addressed by some easing of the monetary policy rates.

The markets are hoping for a rate cut by the RBI in its quarterly meet today afternoon, which is expected to boost the sentiment. No change in the policy rate will impact the rate-sensitive stocks such as Bankex and Auto. The Sensex is marginally up by 0.02 points at 17154 and Nifty is 0.06 points down at 5223. Among the sectors, Metals, PSU, Power, etc. are trading higher between 0.47%-67%. Consumer Durables, Bankex and Pharma are trading lower by 0.92%, 0.68% and 0.17% respectively.

Other Asian markets too are range-bound, with a cautious approach over weak US retail data and the persisting Euro zone sovereign debt problem. Foreign Direct Investment into China has dropped for the fifth month, which has dampened the investors' hope over the growth of the Chinese economy. Hang Seng and Shanghai are trading lower by 0.58% and 0.18% respectively, while Nikkei is trading marginally in the green zone.

Back home, Consumer Durables and Bankex stocks have declined on the back of expectations that the RBI may not cut the rates in its monetary policy meet today. HDFC Bank, ICICI Bank and SBI are among the leading losers, down by 1.03%, 0.74% and 0.17% respectively.

Coal India is leading the 30-share BSE Sensex, with gains of 2.30% at Rs 347 on the back of news that the company will divert lesser coal from e-Auction to the power companies, which will help it to sustain its margins.

On the other hand, Metals stocks are trading higher. Hindalco, Jindal Steel, Sterlite, Tata Steel, etc. are trading higher with losses of 0.24%, 0.45%, 1.32% and 0.32% respectively.

The market breadth, which indicates the overall health of the market, is positive. On the BSE, 1111 shares rose and 808 shares declined. 86 shares remained unchanged.

We expect the market to remain volatile for the day, with a negative bias.