Markets witness sharp cut on weak inflation numbers

The Indian equity markets showed good recovery post improvement in the November industrial output but the sell-off in technology stocks and the weak inflation numbers limited the recovery. Industrial output rose 5.9% in November from a year earlier, rebounding from an annual contraction of 5.1% a month earlier. Meanwhile, weekly primary articles inflation for week ended December 31 has come in at 0.51% versus 0.10%, food articles inflation at -2.90% versus -3.36% while fuel group inflation is at 14.45% versus 14.60%. On sectoral front, heavy selling continued in IT sector on weak numbers from Infosys, while key stocks from metal, banking, realty, power and capital goods sectors trading firm with fairly strong gains. However, Bank Nifty which was holding Nifty very confidently, slipped into flat on weak inflation numbers. Infosys’ net profit rose to Rs 2372 crore for the quarter ended December 31, 2011 as compared to Rs 1780 crore for the quarter ended December 31, 2010. On the global front, all Asian markets continued trading in red. Back home, the market breadth favoring the positive trend; there were 1,393 shares on the gaining side against 903 shares on the losing side while 96 shares remained unchanged.

The BSE Sensex is currently trading at 16,139.68, down by 36.18 points or 0.22%. The index has touched a high and a low of 16,178.58 and 16040.35 respectively. There were 23 stocks advancing against 6 declines and one remained unchanged on the index.

The broader indices continue to remain in fine shape outperforming the benchmarks; the BSE Mid cap index was up by 0.95% while the small cap index was trading up by 0.65%.

Most of the sectoral indices on the BSE were in green, the top performers were Realty up by 1.76%, Metal up by 1.73%, Power up by 1.68%, Bankex up by 1.60% and Capital Goods up by 1.27%.

On the flip side IT has plunged by 4.88% and TECk was down by 3.40%.

The top gainers of the Sensex were Hindalco up by 2.54%, Tata Steel up by 2.35%, SBI up by 2.22%, DLF up by 1.94% and Bajaj Auto up by 1.86%.

On the other hand, the top losers were Infosys down by 6.44%, TCS down by 4.37%, Wipro down by 1.88%, M&M down by 0.56% and Hero MotoCorp down by 0.29%.

Meanwhile, foreign investments by Indian firms stood at one-year monthly low of $1.46 billion in December 2011, with hospitality major-Indian Hotels and diversified player-Binani Group emerging as major investors. As many as 415 foreign investment transactions were carried out by various companies in December. According to the Reserve Bank of India (RBI) data, outbound foreign direct investment (FDI) last month was almost 47% less than the $2.74 billion in November.

Indian Hotels invested $93.47 million into its Hong Kong-based wholly-owned subsidiary-Taj International Hotels (HK), which is engaged in retail, wholesale, restaurants and hospitality services. The company also committed $3.6 million to its US-based subsidiary International Hotel Management Services, engaged in operations of similar nature.

Binani Industries committed $47.01 million to its Luxembourg-based wholly-owned subsidiary, BIL Holding I Sarl, which is into financial, insurance, real estate and business services. Further the company along with Group firms Binani Cement and Binani Zinc also made three other investments worth $510,000 during the month in its arms based in the British Virgin Islands, the US and Mauritius.

Karuturi Global engaged in flower business is the third largest investor during the month having invested $50 million in the US through its wholly-owned subsidiary-Ethopian Meadows. Videocon Industries invested $42.5 million in British Virgin Islands through its wholly-owned subsidiary Videocon Global.

Tata Steel invested $35.33 million in Tata Steel Asia Holdings Pte, its wholly-owned subsidiary based in Singapore, engaged in financial, insurance, real estate and business services. The company also invested $1.5 million in its Singapore-based joint venture Tata NYK Shipping Pte.

According to the data released by the RBI, foreign direct investments by Indian firms in the first nine months ended December 2011-12 fell by 28.32% to $25.25 billion as against $35.23 billion in the same period of last year. On the other hand, overseas FDI by Indian firms amounted to $33.89 billion in calendar 2011 as against $40.45 billion in 2010, indicating a decline of 16.2%.

Uncertain global economic conditions, slowing domestic economic growth, surging interest rates in India etc. have affected the overseas investment pattern and placing hurdles in getting overseas loans from foreign banks, which are already facing trouble in the euro zone crisis.

The S&P CNX Nifty is currently trading at 4,855.85, down by 5.10 points or 0.10%. The index has touched a high and a low of 4,869.20 and 4,820.10 respectively. There were 42 stocks advancing against 8 declines on the index.

The top gainers of the Nifty were IDFC up by 3.94%, Siemens up by 3.56%, RPower up by 2.83%, PNB up by 2.66% and Hindalco up by 2.53%.

On the other hand, Infosys down by 6.67%, TCS down by 4.49%, Cairn India down by 2.06%, Wipro down by 1.84% and HCL Technology down by 1.59% were the top losers on the index.

Most of the Asian markets were trading down; Shanghai Composite was down by 0.47%, Jakarta Composite was down by 0.17%, Nikkei 225 was down by 0.76%, and Taiwan Weighted was marginally down by 0.02%.

On the other hand, Hang Seng was up by 0.02%, Straits Times was up 0.39% and Seoul Composite was up by 0.77%.