ITC, HUL Weigh Markets Down

The Indian markets opened positive today, but inched towards flat trades as time passed. Trading has been rather lacklustre and range-bound today. This has been the course of the markets despite a positive global sentiment. The major reason for this is the downward movement in individual stocks that are weighing on the markets.

The Asian markets have been positive today as the Bank of Japan has been expected to implement a more aggressive monetary easing policy. This has resulted in the Nikkei trading higher by 1.69%.

Apart from this, the positive sentiment has been afloat on account of the asset buying programme extension by the US Federal Reserve.

Europe too is likely to open positive today as the European Union financial ministers struck an agreement on making the European Central Bank a regulator for all banks with either more than 30 billion euros in assets or those which have a large presence within a member economy. This is a small step towards the notion of moving towards a banking union.

Domestically, the market breadth is currently neutral, with 1347 (48.12%) advances and 1314 (46.95%) declines. The Sensex is trading lower by 29.76 points or 0.15% at 19325.50 and Nifty is down 4.20 points or 0.07% at 5883.80.

Although the broader indices are trading lower, there is some strength in midcaps and smallcaps, which are higher by 0.25% and 0.20% respectively. Of the 13 sectoral indices, 5 are trading negative. The highest losses are seen in the BSE FMCG index, which has lost 2.45% so far. This index and the broader indices are heavily weighed down by the downward movement in ITC. Heavyweight ITC is currently trading lower by 3.97%. It has spiralled downwards to such an extent as the FTSE lowered its free float weightage for the cigarette maker in its global equity index series.

HUL too has been extending yesterday’s losses, trading lower by 1.11%. There have been increasing concerns that HUL may have to pay a higher amount of royalty to Unilever PLC. Recently, Unilever Indonesia agreed to pay a higher amount of royalty to Unilever, sparking these concerns and affecting stock prices of HUL.

Due to the downward movement in individual stocks, we expect the markets to remain capped on their gains today. The trend is expected to remain subdued and flat over the rest of the trading session.