Sensex consolidates; ITC & SBI fall, Ashok Leyland up 2%

Moneycontrol BureauLive Market Commentary

12:00 pm Stock in news: Shares of Suven Life Sciences rallied as much as 7.8 percent intraday on Wednesday on getting approval from US Food and Drug Administration (USFDA) for Pashamylaram unit.

"After the inspection and the review, USFDA has classified Suven facility at Pashamylaram as acceptable for manufacture and supply of active pharmaceutical ingredients (bulk drugs), intermediates and formulations under current good manufacturing practice (cGMP)," the company said in its filing.

11:50 am Outlook: Rating agency CRISIL sees India’s economy growing 6 percent in 2014-15 on implementation of stalled projects, debottlenecking of the mining sector and a recovery in industry on higher external demand. CRISIL has estimated GDP growth for this fiscal at 4.8 percent, and said the low base would also be one of the key factors making net year’s number look better.

“We also expect some rebound in services growth in 2014-15 led by higher exports as well as a positive rub-ff from higher industrial growth.

Finally, we assume a normal monsoon year, which will cushion growth and help in taming inflation,” the CRISIL report said.

11:40 am Buzzing: Shares of Bharti Airtel jumped over 2 percent intraday on Wednesday on reports that it is going to split its Africa tower business sale. According to CNBC-TV18 sources, the country’s largest telecom company is likely to split its Africa tower business sale on a country-by-country basis.

It is looking at a valuation of roughly USD 1.8 billion for the Africa tower business, and first on the list, will be the Nigeria towers. The valuation of the Nigeria towers is pegged at around USD 500-550 million. The proceeds from the sale will be used to pare off Bharti's huge Rs 60,000 crore debt. The market had been anticipating this sale for quite some time. Bharti was not getting the right valuation for its towers.

11:30 am Macro economy outlook: The Urjit Patel report will form the backbone of how the Reserve Bank will be thinking about the monetary policy, believes Samiran Chakraborty, Head of Research, Standard Chartered Bank.

"Of-late the RBI has been saying that the steps taken in the past monetary policy works with two-three quarters lag, so it is quite possible that there is a disinflation process going on with negative output gap, which will possibly lead to consumer price index (CPI) headline heading towards 8 percent mark, which they want to achieve over 12 month period," he says in an interview to CNBC-TV18.

The report recommends that RBI adopt a new CPI as the anchor for policy. It says that inflation target must be set at 4 percent plus or minus 2 percent and the inflation aim must be set in a frame of a two year horizon. It sees the need to reduce CPI inflation to 6 percent in 24 months. The panel also suggests that the government must bring down the fiscal gap down to 3 percent by FY17.

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The market is consolidating with Nifty at 6323.05, up 9.25 points. The Sensex is up 34.30 points at 21285.42. About 1094 shares have advanced, 908 shares declined, and 218 shares are unchanged.

Bharti Airtel, Tata Steel, NTPC, Cipla and Hindalco are top gainers in the Sensex. Among the major losers are ITC, HUL, L&T, SBI and ONGC.

The rupee is slightly down on dollar purchases by some state-owned banks. However, technical support for rupee at around 62/per dollar levels is restricting further fall.

Government bond prices fall sharply in reaction to the Reserve Bank of India Deputy Governor Urjit Patel-led committee's recommendation that the central bank should adopt the headline consumer price index (combined) as a nominal anchor for policy communication.

Gold is trading near its lowest level in a week today after posting a nearly 1 percent drop on tuesday. Brent is marginally higher.

 Asian markets trade mixed with China leading the way. Japan is in focus as the Bank of Japan meet concluded where the policy was unchanged with the GDP growth forecast for FY15 lowered to 1.4 percent from 1.5 percent.