Nifty hovers around 8450, Midcap outperforms; Dr Reddy's up

Moneycontrol Bureau

At 10:58 am Market Update: The Sensex declined 20.01 points to 27941.18 and the Nifty dropped 8.55 points to 8451.10. About 1437 shares have advanced, 799 shares declined, and 117 shares are unchanged on the BSE.

Sakhti Siva of Credit Suisse says the brokerage is now trimming from 1 percent overweight to a modest 1 percent underweight. "We emphasise that this is more of a tactical call based on valuations and we still believe India's return on equity is likely to rise in 2016," she reasoned.

Credit Suisse downgraded four mid-cap Indian stocks on valuations while their top picks from the CS regional portfolio are Axis Bank and HCL Technologies.

10:45 am June inflation forecast: The wholesale price index (WPI) inflation for June is expected to be a negative number for the seventh month in a row. The macro figure, that will be announced today, is expected to come in between - 2.3 and -2.5 percent.

Food inflation is expected to be an improved figure this month but food makes for only about 17 percent of the WPI basket. About 63 percent of the basket is formed by the manufacturing sector, which is expected to be a very dismal number. Hence, core WPI is likely to contract.

However, much depends on when the data is taken. If it was taken on the last day of June, ie June 30, then there was a significant crash in steel prices that fell from USD 360 to USD 340. The rupee, meanwhile, was fairly stable.

Hence, a worse WPI reading can be expected if the month-end numbers were taken. But the range is likely to be between - 2.3 and - 2.5.

10:25 am Buzzing: IT software company Ramco System rose nearly 13 percent intraday on signing multi-million dollar tech transformation deal with Cobham Aviation Services. 

The market continued to consolidate with the Nifty hovering around 8450 level. Capital goods, select auto and pharma stocks gained while oil, FMCG and select banking & financials stocks lost ground.

The 30-share BSE Sensex fell 12.93 points to 27948.26 and the 50-share NSE Nifty declined 5.10 points to 8454.55. However, the broader markets outperformed benchmarks. The BSE Midcap and Smallcap indices gained more than half a percent.

About two shares have advanced for every share declining on the Bombay Stock Exchange.

Dr Reddy's Labs rallied 1.5 percent as the company launched its Memantine hydrochloride tablets (a generic version of Namenda) in the US while Sun Pharma slipped half a percent as sources told CNBC-TV18 that USFDA has audited company's API facility in Ahmednagar, Maharashtra.