Post session - Quick review

Indian equity markets succumbed to the profit booking of final hours after the European stocks retreated before a French bond sale. Though, the global environment was not supportive since beginning but the domestic markets bucking the trend kept their head high for most part of the trade. As the US markets made a flat closing and the Asian markets started mixed due to the worries of Europe after the commercial banks in the region held record overnight deposits with the ECB showing unwillingness to lend each other. Though, it was the domestic economic strength that kept the market sentiments on the higher side. Initially the rate sensitives’ were in high spirit supporting the markets against odds on expectation of some rate cooling by RBI, but later Reserve Bank of India’s (RBI) deputy governor Subir Gokarn said, stubbornly high inflation may prevent the RBI from reversing the hawkish monetary policy, he further said that a weaker rupee and elevated oil prices are further undermining policy maneuvering.

Earlier, the markets made a cautious but positive start as India's chief economic adviser, Kaushik Basu’s stated that the tide has turned in a long battle against inflation and the economy is set to rebound to its “full-steam” growth rate of around 9 percent within two years. The rate sensitives rejoiced with the news that weekly food inflation extending the declining streak for the eighth week in a row plunged to the negative terrain to -3.36% from 0.42% of the previous week. While, the sectors like, auto, banking and consumer durables moved higher the oil & gas and realty sectors suffered the most. International crude oil prices surged again as the Iranian supply disruption mounted after the European Union agreed to cut off oil imports from the No. 2 OPEC producer. Metals stocks too were down due to profit booking after the recent surge, on the same time IT and technology stocks lost momentum with the constant appreciation in rupee against dollar. The broader markets though made a positive ending and the small cap index turned to be the net gainer on the BSE.

The BSE Sensex lost 32.31 points or 0.20% and settled at 15,850.33. The index touched a high and a low of 15,980.17 and 15,809.31 respectively. 13 stocks advanced against 17 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.01% while Small-cap index was up by 0.18%. (Provisional)

On the BSE Sectoral front, Auto up 1.04%, Capital Goods up 0.82%, Bankex up 0.46% were the only gainers while Oil & Gas down 1.81%, Realty down 1.63%, Metal down 0.79%, PSU down 0.52%, and TECk down 0.43% were the top losers.

The top gainers on the Sensex were JP Associates up 2.77%, Bajaj Auto up 2.75%, Hero MotoCorp up 2.30%, Tata Power up 2.02% and M&M up 1.85%.

On the flip side, DLF down 4.01%, RIL down 2.65%, NTPC down 2.44%, Maruti down 1.77% and Coal India down 1.73% were the top losers in the index. (Provisional)

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.

India VIX, a gauge for market’s short term expectation of volatility lost 1.89% at 25.91 from its previous close of 26.41 on Wednesday. (Provisional)

The S&P CNX Nifty gained 0.55 points or 0.01% to settle at 4,750.20. The index touched high and low of 4,779.80 and 4,730.15 respectively. 24 stocks advanced against 26 declining ones on the index. (Provisional)

The top gainers on the Nifty were Cairn India up 4.27%, PNB up 3.74%, Bajaj Auto up 3.06%, IDFC up 3.02% and Axis Bank up 2.86%.

 On the other hand, DLF down 4.12%, Gail India down 3.28%, BPCL down 2.69%, RIL down 2.60% and NTPC down 2.09% were the top losers. (Provisional)

The European markets were trading in red, with France's CAC 40 down 0.95%, Germany's DAX down 0.19% and Britain’s FTSE 100 down 0.24%.

After a decent opening in morning session following a slew of encouraging US economic reports, most of the Asian peers ended the day’s trade in the red on Thursday as concerns over Europe’s debt crisis returned to the forefront. Chinese shares reversed early gains to close lower for a second-straight session on Thursday, the lowest level since March 2009 as worries about the property sector and tight liquidity conditions hit investor sentiment. Chinese developers broadly declined after property major China Vanke reported Wednesday a 30% on-year tumble in December sales. China Vanke shares dropped 1.1% and Oceanwide Real Estate Group lost 1.5% in Shenzhen.

Moreover, Japanese benchmark Nikkei declined by 0.83 percent as investors turned more cautious after Wednesday’s rally amid more fears over the European debt situation, though energy producers helped lifting Hong Kong stocks on rising crude-oil prices.