Markets In Choppy Trades

The Indian markets opened on a flat positive note today on the back of some buying seen in the rate sensitive stocks that were beaten in yesterday’s trade. However, they are showing choppy trades overall. The major rate sensitive stocks such as Banking and Auto were hammered yesterday after the RBI keep the rates unchanged. The Sensex and Nifty are both up by 0.80% and 0.83% respectively. Among the BSE sectoral indices, FMCG, Auto and Oil & Gas are leading with leading gains of 0.82%, 0.49% and 0.43% respectively.

Other Asian markets opened on a negative note today on the back of renewed concerns over increasing the bond yields in Spain and Italy that are sending weak sentiments across the globe. The major indices, Hang Seng, Nikkei and Shanghai are down by 0.27%, 0.30% and 0.47% respectively.

The elections in Greece came in favour of the markets, but the renewed fears over Spain's increasing borrowing costs due to the rise in the bond yield dented the market sentiments in Europe and the US. The Greek elections have just been a sideshow in terms of the Euro zone debt crisis, and the investing fraternity’s focus is now back on the structural problems faced by both Italy and Spain. On Monday, Jun 18, the yield on Spain's 10-year bonds hit a fresh high of above 7%, a key threshold above which the borrowing costs become too expensive for a country to be able to afford in the long term.

Back home, among the Sensex shares Infosys slid by 0.55% to Rs 2479 today on the back of news that the company will reduce its guidance further on the back of huge volatility in the global currencies.

In the individual stocks, Ashok Leyland is up by 0.40% to Rs 225.15 after the company secured an order worth US$ 6.5 million for 88 AC buses from Bangladesh Road Transport Corporation.

The aviation stocks are seen under pressure on news that the companies will slash fares by 5%-10% due to pressure from the government.

Reliance Communications slipped by 5% today after Veritas downgraded the stock to sell and cut the price target to Rs 15 as against the current market price of Rs 62 a share.

The market breadth, which indicates the overall health of the market, is negative as of now. On the BSE, 807 shares have declined and 726 shares have risen. 83 shares are unchanged.

In conclusion, we expect the markets to remain volatile and negative for rest of the day on the back of a weak global economic environment and persistent domestic issues.