Markets Trading Lower, Metals Stocks See Profit Booking

As expected in our morning update, the Indian markets opened sideways though in the negative territory, taking cues from other Asian markets. At present, both the indices are trading lower, with the Sensex down by 50 points and Nifty down by 19 points. Among the sectoral indices, Auto, Oil & Gas and Metals are trading in the negative territory, while Consumer Durables, Realty and Heathcare are trading higher in positives.

Meanwhile, the other Asian markets too are witnessing pessimistic trades. The Hang Seng, Nikkei and Shanghai are trading in the red zone, down by 0.4%-0.5%. This is despite China, one of the world’s largest economies, slashing its key rates in order to fuel growth in the economy. Yesterday, the People’s Bank of China lowered the benchmark one-year lending rate by 0.31 percentage points and the one-year deposit rate by 0.25 percentage points, effective from today.

Back home, the Metals stocks are witnessing some profit booking after seeing a northwards move in the past 3-4 trading sessions. Jindal Steel is the leading index loser, down 3.07% at Rs 455.60. Other Metals stocks like Sterlite Industries and Hindalco are also trading lower by 1.5% and 1.48% respectively. The IT pack, which includes stocks like Wipro, Infosys and TCS, are trading lower in the red zone after a leading business newspaper reported that the Jun 2012 quarter performance is not likely to be encouraging. Other stocks like Bharti Airtel, HDFC Bank, Hero MotoCorp and ITC are trading marginally in the red zone.

The gainers list is short, and includes just 4 index stocks. Mahindra & Mahindra, HUL, Tata Motors and HDFC are trading in the positive territory, up in the range of 0.3%-1%.

Jain Irrigation is trading 3.93% higher at Rs 91.15 after the company made an announcement on the exchange that it has obtained a regulatory nod for the launch of a new agri NBFC. Other stocks like Tata Coffee and LIC Housing Finance are down by 1.56% and 1.44% respectively after they turned ex-dividend today.

The market breadth, which indicates the overall health of the market, is weak. On the BSE, 1174 shares have declined and 1029 shares have advanced, while 99 shares are unchanged.

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