Indian equities drift lower; trades near lowest point of the day

Indian equities pared off gains and drifted lower hovering near the lowest point of the day in the late afternoon session as investors worried over the Euro-zone sovereign debt crisis on the global economy. The markets paid no heed towards the encouraging inflation numbers where India’s weekly food inflation plunged in to the negative terrain to -3.36% for the week ended Dec 24 after hovering in the double digits for nearly two long years. Traders were seen piling up position in Auto, Capital Goods and Consumer Durables sector while selling was witnessed in Realty, Oil & Gas and PSU sector. Investors were also cautious ahead of quarterly corporate quarterly results that will begin next week amid slowing economic growth and high interest rates.

Industry heavyweights RIL was trading with a cut of around more than one percent putting pressures on the markets. Also, Gail India, ONGC and BPCL from Oil & Gas space were trading in red exerting pressures on the market. L&T and BHEL from Capital Goods space were trading with gain of around more than one percent helping the markets edge higher. Hero MotoCorp, Bajaj Auto and Tata Motors from Auto pack were firm in green driving the markets up. On the global front, all Asian markets traded on a mix note while the European markets were trading in red on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 4,750 and 15,800 levels, respectively. The market breadth on BSE was dominantly in favor of advances in the ratio of 1500:1024 while 115 scrips remained unchanged.

The BSE Sensex is currently trading at 15,870.65 down by 11.99 points or 0.08% after trading as high as 15,980.17 and as low as 15,867.53. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading on an optimistic note; the BSE Mid cap index gained 0.28% while Small cap rose 0.49%.

On the BSE sectoral space, Auto up 0.98%, Capital Goods up 0.90%, Consumer Durables up 0.43%, Bankex up 0.38% and Power up 0.18% were the major gainers while Realty down 1.81%, Oil & Gas down 1.03%, PSU down 0.98%, Metal down 0.58% and FMCG down 0.50% were the top losers in the space.

JP Associates up 2.40%, Hero MotoCorp up 2.29%, Bajaj Auto up 1.90%, L&T up 1.53% and Tata Motors up 1.35% were the major gainers on the Sensex, while DLF down 4.33%, Maruti Suzuki down 1.86%, ONGC down 1.24%, HUL down 1.11% and Wipro down 1.11% 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 eighth week in a row and even plunged in to the negative terrain to -3.36% for the week ended December 24 from 0.42% for the previous week thanks to sharp decline in the prices of onions, potatoes and vegetables. The food inflation has turned negative after hovering in the double digits for nearly two long years.

The sharp slump in the rate of price rise of food items in the last one and half months has come as a sigh of relief for economic policymakers and also the government who had been battling to control the rampant inflationary pressure on the economy since 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. The Union Finance Minister Pranab Mukherjee opined that this is the first time in almost six years, for which data with base year 2004-05 is available, that food inflation has shown a decline on an annual basis. The decline in food inflation is seen as a major incentive for the RBI to look at the option of easing interest rates sooner than later.

According to the data released by the Ministry of Commerce and Industry, the index for ‘Food Articles’ group declined by 0.2% to 190.0 from 190.3 for the previous week due to lower prices of jowar, fruits & vegetables, gram and moong (1% each).  However, the prices of poultry chicken (3%), egg, ragi and maize (2% each) moved up.

The index for ‘Non-Food Articles’ group rose by 0.6% to 178.7 (Provisional) from 177.6 for the previous week due to higher prices of soyabean (6%), raw jute (4%),  gaur seed and gingelly seed (3% each), cotton seed and raw cotton (2% each) and coir fibre, groundnut seed and mesta (1% each).  However, the prices of flowers (7%) and castor seed, fodder and copra (2% each) declined.

As a result, the index for ‘Primary Articles’, which accounts for 20.12% of the WPI, rose by 0.1% for the week ended December 24 to 197.6 from 197.5 for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 0.10% for the period under consideration as compared to 2.70% for the previous week. Meanwhile, the index for Fuel & Power group which carries a weightage remained unchanged at its previous closing levels of 172.7 in the week.

The S&P CNX Nifty is currently trading at 4,757.00, higher by 7.35 points or 0.15% after trading as high as 4,779.80 and as low as 4,745.50. There were 28 stocks advancing against 20 declining ones while 2 stocks remained unchanged on the index.

The top gainers on the Nifty were Cairn up 3.55%, IDFC up 3.28%, PNB up 3.03%, JP Associates up 2.95% and Axis Bank up 2.93%.

DLF down 3.98%, GAIL down 3.77%, Maruti Suzuki down 1.85%, ONGC down 1.84% and Coal India down 1.67% were the major losers on the index.

Asian markets traded on a mixed note; Shanghai Composite ascended 0.19%, Hang Seng added 0.46%, Straits Times climbed 0.21% and Taiwan Weighted advanced 0.68%. On the flipside, Jakarta Composite inched lower 0.10%, Nikkei 225 sank 0.83% and Seoul Composite declined 0.13%.

The European markets were trading in red with, France’s CAC 40 dropped 0.91%, Germany’s DAX shed 0.30% and Britain’s FTSE 100 dropped 0.15%.