Weak trade prolongs ahead of F&O expiry

Indian equities continued its lackadaisical trade below neutral line in the late afternoon session in absence of buying due to lack of any positive upside trigger. Investors were reluctant to pick front line stocks despite India’s weekly food inflation plunging for seventh straight week and slipped to near six years low levels to 0.42% for the week ended Dec 17. High volatility is expected on the bourses ahead of settlement which is scheduled for today as traders are expected to roll over positions in the futures & options (F&O) segment from the near-month December, 2011, series to January, 2012, series. Market participants remained cautious reluctant to initiate large bets and evidently preferred to indulge only in stock specific activity amid end of the year position squaring. Traders were seen piling up position in Metal sector while selling was witnessed in Oil & Gas, Capital Goods and Realty sector.

Industry heavyweight RIL was seen trading with cut of around more than one and half percent putting pressures on the market. Also, BPCL, Gail India, Cairn and ONGC from Oil & Gas sector were trading in red exerting pressure on the market. L&T, BHEL, Siemens, Crompton Greaves, Suzlon Energy and BEL from Capital Goods space were trading weak pulling the markets lower. DLF, Unitech, HDIL, DB Realty and Anant Raj Industries from Realty sector were trading in red making markets edge lower. However, Sterlite, Sesa Goa, Hindalco and Jindal Steel from Metal packs were trading firm in green helping to prevent markets slide further.

On the global front, all Asian markets traded on a mix note while the European markets were trading in green on optimistic mood. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 4,700 and 15,700 levels, respectively. The market breadth on BSE was in favor of declines in the ratio of 1111:1379 while 136 scrips remained unchanged.

The BSE Sensex is currently trading at 15,642.10 down by 85.75 points or 0.55% after trading as high as 15,724.60 and as low as 15,608.67. There were 10 stocks advancing against 20 declines on the index.

The broader indices were trading on a weak note; the BSE Mid cap index dropped 0.05% while Small cap shed 0.49%.

On the BSE sectoral space, Metal up 0.31% was the sole gainers while Oil & Gas down 1.37%, Capital Goods down 1.01%, Realty down 0.95%, Consumer Durables down 0.89% and Power down 0.88% were the major losers in the space.

Sterlite Industries up 1.11%, SBI up 0.64%, Tata Motors up 0.64%, JP Associates up 0.28% and Hindalco up 0.26%, were the major gainers on the Sensex, while Maruti Suzuki down 2.52%, Tata Power down 2.07%, RIL down 1.65%, DLF down 1.56% and L&T down 1.34% were the major losers in the index.

Meanwhile, India’s weekly food inflation, measured by the Wholesale Price Index (WPI), extended the declining streak for the seventh straight week and slipped to near six years low levels to 0.42% for the week ended December 17. The decline was mainly on the back of declining prices of essential items like vegetables, onion, potato, wheat and other essential commodities.

The sharp slump in food inflation numbers in the last one and half months has come as a sigh of relief for not only economic policymakers but also for the government who had been battling to control the rampant inflationary pressure on the economy since last two years. In a bid to rein inflation, RBI hiked key policy rates by 13 times since March 2010 only to pause the liquidity tightening measures in its recent meeting. Meanwhile, Pranab Mukherjee, Union Finance Minister, does not see the recently plunge in food inflation as impressive since the overall inflation still hovers comfortably above the RBI’s comfort zone.

According to the data released by the Ministry of Commerce and Industry, the index for ‘Food Articles’ group declined by 0.4% to 190.3 from 191.9 for the previous week due to lower prices of fruits and vegetables (4%), jowar (3%), tea and arhar (2% each) and ragi, urad and condiments and spices (1% each). However, the prices of fish-marine   (7%), poultry chicken (2%) and moong, masur, maize, fish-inland and bajra (1% each) moved up.

The index for ‘Non-Food Articles’ group rose by 0.1% to 177.6 (Provisional) from 177.4 for the previous week due to higher prices of gaur seed (8%), safflower (4%), fodder and sunflower (2% each) and linseed, rape & mustard seed, groundnut seed, soyabean and copra (1% each). However, the prices of raw silk (5%), raw jute and castor seed (2% each) and flowers, gingelly seed, raw rubber and raw cotton (1% each) declined.

As a result, the index for ‘Primary Articles’, which accounts for 20.12% of the WPI, declined by 0.1% for the week ended December 17 to 197.5 from 197.7 for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 2.70% for the period under consideration as compared to 3.78% for the previous week.

Meanwhile, the index for Fuel & Power group which carries a weightage of 14.91% rose by 0.2% to 172.7 in the week from 172.4 for the previous week due to higher prices of furnace oil (4%), light diesel oil (3%) and bitumen (1%).  However, the prices of aviation turbine fuel (2%) and naphtha (1%) declined.

The S&P CNX Nifty is currently trading at 4,673.20, lower by 32.60 points or 0.69% after trading as high as 4,701.80 and as low as 4,666.30. There were 13 stocks advancing against 37 declines on the index.

The top gainers on the Nifty were Sterlite Industries up 1.17%, HCL Tech up 0.74%, Tata Motors up 0.64%, SBI up 0.59% and Sesa Goa up 0.50%.

BPCL down 3.10%, RCOM down 2.85%, Maruti down 2.59%, Tata Power down 2.50%, and Ambuja Cement down 2.28% were the major losers on the index.

Asian markets traded on a mixed; Shanghai Composite added 0.39%, Jakarta Composite rose 0.65%, Seoul Composite up by 0.03% and Taiwan Weighted advanced by 0.26%.

On the flipside Hang Seng declined 0.65%, Straits Times shed by 0.04% and Nikkei 225 slipped 0.29%.

The European markets were trading in green, France’s CAC 40 added 0.34%, Germany’s DAX rose 0.26% and Britain’s FTSE 100 inched higher 0.05%.