Markets stay cautious ahead of Fed outcome; Coal India top loser

In broader markets, BSE Midcap was fell 0.03% while the Smallcap index gained 0.05%

Benchmark indices continued trading on a cautious note tracking mixed global cues as investors wait for the Fed policy outcome. Back home, retail inflation fell to 3.63%, a record low in the new series on demonetisation.

At 11:38 am, the S&P BSE Sensex was trading at 26,685, down 12 points, while the broader Nifty50 was quoting 13 points down at 8,208. In broader markets, BSE Midcap was up 0.14% while the Smallcap index gained 0.25%.
 
"Nifty has to cross and hold above 8,250 zones to witness an up move towards 8,280 and 8,335 zones amid the FOMC outcome on coming session. While on the downside if it fails to hold 8,150 and slips below support trend line then it may decline towards 8,080 and 8,055 zones. Overall index has been moving in between 8,055 to 8,275 zones from last three weeks and a decisive range breakout would give fresh leg of rally to the market," said Anand Rathi Technicals in a note.
   

Fed is widely expected to raise rates for the first time in 2016 at its two-day meeting that started on Tuesday, with markets pricing in a chance of 0.25 to 0.50% hike. Any aggressive rate hike could hit the market more which is already under pressure over the demonetisation move.

On Tuesday, foreign investors turned net sellers with net sale value of Rs 2,181 crore, while domestic investors bought equities worth Rs 179 crore, provisional data available with BSE showed. 
 
Meanwhile, Gold prices edged higher in Asian trade on Wednesday on a weaker dollar and as markets waited for the outcome of the US Fed's policy outcome later in the day.

Sectors and Stocks

Sensex was trading in red  during early trades dragged by losses in Auto, banking, and metal sectoral indices. 

Asian Paints, Axis Bank, RIL and TCS were the top gainers on BSE Sensex while Coal India, Bharti Airtel, HDFC and Tata Motors were the biggest laggards. 

Tata Motors fell almost 1% on BSE Sensex after Tata Sons bought 1.73% stake in the company. 
 
TCS was trading 0.59% up after Cyrus Mistry was removed as director of TCS with over 93% votes for his ouster, 100% of promoter group votes and 57% of public institutional shareholders voted to remove him.

Coal India fell 2.83% after the company reported a massive 77% fall in its consolidated net profit at Rs 600 crore for the quarter ended September, hit by drop in sales and higher expenses. The PSU major had posted a consolidated net profit after tax, minority interest and share of profit of associates of Rs 2,654 crore in the July-September period of the previous fiscal. 

Retail inflation on record low
 
The Consumer Price Index (CPI)-based inflation fell to 3.63% in November — a record low in the new series — from 4.2% in October. The main reason for contraction in demand was demonetisation, said analysts.
 
In November last year, the number was quite high — 5.41%, a record then.
 
According to the data, inflation in food items — which account for over 45% in CPI — was down to 2.11%, from 3.32% in October.
 
“Expect inflation to trend upwards in the fourth quarter but remain within the Reserve Bank of India’s projection of 5%,” said ICRA Principal Economist Aditi Nayar.
 
However, in its recent policy review, RBI had noted that due to base effect, inflation rate may reverse and turn unfavourable in December and February.
 
Current Account Deficit
 
With a sharp drop in imports, the country’s current account deficit (CAD) declined to $3.4 billion (0.6 %of the gross domestic product) for July-September, from $8.5 billion (1.7% of GDP) in the same quarter previous year.
However, on a quarterly basis, CAD was higher in Q2 than the $0.3-billion figure (0.1% of GDP) in April-June, according to RBI data. The contraction over a year was primarily due to a lower trade deficit ($25.6 billion), brought about by a larger decline in merchandise imports, relative to exports.
 
Global markets       
 
Asia shares rose cautiously as investors sure that the Federal Reserve would raise rates for the first time in a year.
 
Australia led the early going with gains of 0.7% and MSCI's broadest index of Asia-Pacific shares outside Japan nudged up 0.2%.
 
Japan's Nikkei went the other way, easing 0.1% with moves across the region modest at best.
 
Wall Street climbed new all-time highs on Tuesday and the Dow Jones ended fewer than 100 points away from the 20,000 mark. Dow Jones has climbed about 9% since US Presidential election this year. It was up 0.58% while S&P 500 gained 0.65% and Nasdaq Composite added 0.95%.