Indian markets off day’s lows; move above crucial levels

The downward pressure seems to have got arrested for Indian frontline equity indices in the afternoon trades of Thursday as the indices have pared some losses after hitting intraday lows. The psychological 4,800 and 16,000 levels proved as strong supports as the benchmarks have are currently trading above those levels with losses of less than a percent. Investors refrained from reacting positively to the industrial production data which showed IIP surpassed all estimates to stage a sharp rebound to 5.9% pace in November year on year basis, a month after contracting 5.1%, a 28 month low. Investors were worried that the RBI may not resort to monetary easing in its upcoming policy review meet on January 24 as PMEAC Chairman C Rangarajan has pointed out that RBI is likely to prefer open market operations (OMOs) over Cash reserve Ratio (CRR) cut. Meanwhile, the negative weekly food inflation data too failed to prop up sentiments in the markets. Food prices fell for the second consecutive week as food inflation remained in the negative zone at -2.90% for the week ended December 31, 2011. On the global front, Asian markets largely exhibited pessimistic trends on getting a disappointing Japanese trade data while Chinese inflation eased marginally but the moderation was far less than anticipated. The European futures on the other hand indicated a positive opening for the markets there as Italy and Spain prepared for debt auction while a US Federal Reserve survey showed the US economy improved last month. Back home, on the BSE sectoral front, information technology counter remained the top laggard in the space as bellwether Infosys reported its third quarter earnings but a muted guidance spooked sentiments. On the other hand, the power counter remained the top gainer with close to a percent gains on the back of encouraging IIP data.

Moreover, the broader markets showed some resilience and did not succumb to the selling pressure evident in their larger peers and traded on a flat note. The bourses slipped on good volumes of over Rs 0.50 lakh crore. The market breadth on BSE was in favor of declines in the ratio of 1256:1202 while 108 scrips remained unchanged.

The BSE Sensex is currently trading at 16,018.74 up by 157.12 points or 0.97% after trading as high as 16,178.58 and as low as 15,962.59. There were 17 stocks advancing against 13 declines on the index.

The broader indices were trading on a flat note; the BSE Mid cap index added 0.14% and Small cap shed 0.03%.

On the BSE sectoral space, Power up 0.82%, Bankex up 0.70%, Metal up 0.69%, PSU up 0.43% and Consumer Durables up 0.35% were the major gainers while IT down 5.61%, TECk down 4.11%, Oil & Gas down 0.56%, Capital Goods down 0.12% and Realty down 0.09% were the only losers in the space.

SBI up 1.69%, Sterlite up 1.24%, Tata Power up 1.08%, NTPC up 1.07% and Tata Steel up 0.99% were the major gainers on the Sensex, while Infosys down 7.32%, TCS down 4.83%, Wipro down 2.74%, RIL down 0.82% and L&T down 0.72% 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 tenth week in a row and remained in negative zone for second straight week to -2.90% for the week ended Dec 31 from -3.36% for the previous week thanks to sharp decline in the prices of vegetables, especially onions and potatoes. The food inflation turned negative in the week ended Dec 24 for the first time in almost six years.

The sharp slump in the rate of price rise of food items in last two 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.

According to the data released by the Ministry of Commerce and Industry, the index for ‘Food Articles’ group rose by 0.4% to 190.8 from 190.0 for the previous week due to higher prices of fish-marine (5%), mutton (4%), barley, poultry chicken, gram and jower (2% each) and bajra, maize, milk and egg (1% each).  However, the prices of tea (3%), condiments & spices and ragi (2% each) and fish-inland and fruits & vegetables (1% each) declined.

The index for ‘Non-Food Articles’ group rose by 1.3 percent to 181.0 from 178.7 for the previous week due to higher prices of flowers (19%), sunflower (7%), linseed and guar seed (4% each), raw silk (3%), soyabean, groundnut seed and fodder (2% each) and rape & mustard seed and gingelly seed (1% each).  However, the prices of raw rubber (2%) and copra, safflower, coir fibre and mesta (1% each) declined.

As a result, the index for ‘Primary Articles’, which accounts for 20.12% of the WPI, rose by 0.5% for the week ended Dec 31 to 198.6 from 197.6 for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 0.51% for the period under consideration as compared to 0.10% 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 4,821.60, lower by 39.35 points or 0.81% after trading as high as 4,869.20 and as low as 4,803.90. There were 30 stocks advancing against 20 declines on the index.

The top gainers on the Nifty were IDFC up 3.66%, Siemens up 2.78%, PNB up 2.12%, SBI up 1.63% and Sesa Goa up 1.61%.

Infosys down 7.42%, TCS down 4.84%, Wipro down 2.75%, Cairn down 2.22% and HCL Tech down 1.97% were the major losers on the index.

Asian markets were trading largely on a negative note; Shanghai Composite was down by 0.47%, Hang Seng down 0.09%, Jakarta Composite was down 0.24%, Nikkei 225 was down 0.74% and Taiwan Weighted was down by 0.02%.

On the flip side, Straits Times was up 0.29% and Seoul Composite was up 1.03%.