Markets Trading Very Flat

As mentioned in our morning update, the Indian markets opened marginally in the positive territory and are now in a consolidated mode. At present, the Sensex and Nifty are almost unchanged and are trading with minimal losses. This is after the markets rallied almost 4% in the past four trading sessions. Market participants might now go for profit booking, taking the indices backwards.

Among the sectoral indices, Power, Teck, IT and FMCG are trading higher by over 0.5% each. On the other hand, Metals, Oil & Gas, Capital Goods and Auto are in minimal losses.

Further, investors should watch out for the CPI data for Aug 2012, which would probably not be bode too well for the markets. The WPI for Aug had come on the higher side on a MoM basis and the CPI data would probably show the same trend. The CPI for Jul 2012 had come in at 9.86% and we estimate that it could come in the range of 10.25%-10.75% for Aug.

The other Asian markets are trading in the negative territory. The Hang Seng, Nikkei and Shanghai are down in the range of 0.1%-0.7% following a dispute between China and Japan. According to a Bloomberg report, China and Japan’s worst diplomatic crisis since 2005 is putting at risk a trade relationship that has tripled in the past decade to over US$ 340 billion. Further the report said that the tensions between China and Japan are complicating policy makers’ efforts to fortify growth in Asia’s biggest economies as the European debt crisis saps the demand for exports.

Back home, BHEL is the leading index gainer, trading higher by 2.27% at Rs 218.25. IT heavyweight Infosys is also up by 1.8% at Rs 2608.80. FMCG majors ITC and HUL have gained 1.68% and 0.06% respectively. GAIL India, SBI and Bharti Airtel are trading higher by over 1% each. Stocks like Maruti Suzuki, Bajaj Auto, Tata Power, NTPC, etc. are trading with minimal gains so far.

Wipro is the leading index loser, trading lower by 1.68% at Rs 377.70 per share. HDFC and ICICI Bank are down 1.34% and 1.13% respectively. Investors and traders booked profits as the scrips had appreciated a lot in the previous trading sessions. Metals stocks like Hindalco and Tata Steel are also lower by 1.54% and 0.49% respectively. Other stocks like ONGC, L&T, Cipla, TCS, etc. are marginally in the red zone.

Cords Cables zoomed higher by 9.33% to Rs 24.60 per share after the company made an announcement on the exchange that has bagged an export order valued at over US$ 2.18 million from its worldwide recognized French customer for supplies to the state of Kuwait.

The market breadth, which indicates the overall health of the market, is strong as of now. On the BSE, 1354 shares advanced, 628 shares have declined and 63 shares are unchanged.

We expect the markets to consolidate further. Markets participants are eyeing the CPI data which is expected to be released around noon today.