Indian equity benchmarks continued to trade in an extremely narrow range with a negative bias in afternoon session amid selling witnessed in IT, Tech and Auto stocks. Weak global cues and depreciation in rupee value against the dollar weighed on the sentiments. Prevailing caution ahead of RBI’s policy review on January 28, 2014, is mainly weighing on the sentiment after earlier expectations for the RBI to hold rates have been thrown into doubt after the central bank recommended keeping a high consumer inflation in check a priority. Meanwhile, market losses remained capped as buying was witnessed in capital goods and healthcare stocks. Sentiments got some support as the Moody’s Analytic, in its report titled 'India Outlook: Steady Growth, Lower Risk' has noted that the worst is over for the India’s economy with GDP expansion likely to touch 5 to 5.5 percent this year and more than 6 percent in 2015. Capital Goods index was the top gainer among the sectoral indices up by over 2.16% on the BSE amid better than expected result of Larsen & Toubro for Q3 FY14.
Benchmark 10-year bond yield is trading in a range at 8.62 per cent as investors are waiting for the upcoming RBI policy review next week. Uncertainly over the likelihood of a rate pause has risen after a central bank panel recommended making retail price inflation a primary indicator while setting monetary policy. Market participants are not expecting a rate hike in the policy review but the chances of a rate cut, as was popularly expected, has come down.
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