Markets drift lower, metal shares weigh

The markets were trading marginally lower in the afternoon session ahead of derivatives expiry.

After opening marginally firm, the Nifty witnessed a choppy session as traders’ rolled over positions from August to the September series. The Nifty touched a low of 4,838 and was hovering around 4,865, down 23 points. The Sensex was at 16,234, down 52 points.

On the macroeconomic front, the government released the inflation data. The food price index rose 9.80%, while the fuel price index climbed 13.13 in the year to August 13. Primary articles inflation came in at 12.40%.

Analysts said that high inflation and tight liquidity were factored into the valuations. According to Bloomberg, the Sensex was currently trading at 13.5x 1 year forward price to earnings multiple, which is lower than 10 year average of 15x. Jyoti Vaswani, CIO & Director Fund Management, Aviva India said, “The equity correction, which was a part of a global trend, brings forth some opportunities in the form of lower valuations.”

Vaswani finds Consumers, pharmaceuticals and telecom as defensive bets due to the relatively inelastic nature of consumer spends on these services.

Gains were visible across most Asian markets as the manufacturing data from the Unites States provided some optimism to investors that the economy was not falling off the cliff. The Nikkei, Hang Seng and Shanghai ended up over 23% each. European markets too followed suit and were trading on a firm note with FTSE, CAC 40 and DAX trading between 0.3-1% higher.

Back home, Sun Pharma, ONGC and Tata Motors (up between 2-3%) were prominent gainers on the Sensex. Among the losers, Jindal Steel was down over 4% followed by HDFC and Larsen & Tourbo.

The BSE Metal index lost ground among the sectoral indices. JSW Steel was among the key losers, slipping over 2%. Tata Steel and JSW Steel were also trading lower, down over 1% each.

BSE IT index was the worst hit ; Mphasis, Oracle and HCL Technologies were down down 4-6% each.

The market breadth was extremely negative. 1000 stocks advanced, for 1620 stocks which declined.