Benchmarks slip into negative territory after briefly bouncing back in green

Local equity markets after bouncing back into positive territory post the release of November WPI data have yet again slipped into negative territory, albeit with slender losses of around 0.15%, which has kept Sensex and Nifty above psychologically crucial 27,300 and 8,200 levels respectively. Meanwhile, broader indices also succumbing to selling pressure, were trading with cut of around three tenths of a percent. Shockingly dismal IIP data along with somber regional counterparts mainly casted gloom in early deals of trade, though benchmarks recovered a bit after five and half year low November WPI data, but soon succumbed to selling pressure. Meanwhile, in an encouraging development, the annual rate of inflation, based on monthly WPI, eased for sixth straight month to five and half year low figure of 0.0% (provisionally) for the month of November, 2014 as compared to 1.77% for the previous month.

On the global front, Asia pacific shares prices came under pressure on Monday as oil prices briefly sank to fresh 5-1/2 year lows in choppy trade, doing little to allay concerns that some energy producers and exporters could find themselves in dire straits as revenues slump. Sentiment was also spooked after U.S. shares posted their biggest weekly fall in 2-1/2-years last week on losses led by energy sector, while they expect the US Federal Reserve to hint this week it is getting closer to raising interest rates.

Closer home, most of the sectoral indices on BSE were lost in the sea of red, stocks from banking and PSU counters were swimming against the tide. Banking stocks rallied on incremental rate cut hopes after November CPI data eased to record low and November WPI to five and half year low. On the flip side, massive selling was being witnessed in IT, Consumer Durables and Technology counters. IT shares continued to trade weak with TCS down over 3% after the company said that it expects a negative 220 basis point impact on dollar revenue during the third quarter because of cross currency headwinds. Besides, Oil and gas shares were under pressure as global crude prices are expected to fall further on weaker demand and increased supply. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1564:1016; while 103 shares remained unchanged.

The BSE Sensex is currently trading at 27307.64, down by 43.04 points or 0.16% after trading in a range of 27105.04 and 27375.23. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.29%, while Small cap index lost 0.30%.

The gaining sectoral indices on the BSE were Bankex up by 0.22%, PSU up by 0.16% while, IT down by 1.87%, Consumer Durables down by 1.57%, TECK down by 1.44%, Realty down by 1.20%, Oil & Gas down by 0.75% were the losing indices on BSE.

The top gainers on the Sensex were HDFC up by 4.05%, Coal India up by 2.68%, ONGC up by 1.02%, Hero MotoCorp up by 0.85% and NTPC up by 0.83%. On the flip side, TCS down by 3.19%, Sesa Sterlite down by 1.60%, Cipla down by 1.35%, GAIL India down by 1.10% and Infosys down by 1.09% were the top losers.

Meanwhile, bolstering the case for rate cuts by RBI in upcoming monetary policy in February, the annual rate of inflation, based on monthly WPI, easing for sixth straight month, ebbed to five and half year low figure 0.0% (provisionally) for the month of November, 2014 as compared to 1.77% for the previous month and 7.52% during the corresponding month of the previous year.

The figure was way below the expected numbers, for the month of September, 2014, the final Wholesale Price Index for ‘All Commodities’ and annual rate of inflation remained unchanged at its provisional level of 185.0 and 2.38% respectively. With this the official Wholesale Price Index for ‘All Commodities’ (Base: 2004-05 = 100) for the month of November, 2014 declined by 1.3% to 181.5 (provisional) from 183.9 (provisional) for the previous month.

The sharp decline in WPI was mainly on account of sharp decline in inflation for ‘Fuel & Power’ group, followed by Inflation in Primary Articles. The index for ‘Fuel & Power’, which occupies 14.91% weightage in the overall index, declined by 5.4% to  199.3 (provisional) from 210.7 (provisional) for the previous month due to lower price of furnace oil (13%), high speed diesel oil (10%), aviation turbine fuel (8%), petrol (5%) and kerosene (3%).  Meanwhile, the index for Primary Articles, which occupies 20.12% weightage in overall index slid by 1.0% to 252.4 (provisional) from 255.0 (provisional) for the previous month.

Besides, Manufactured Products index, which occupies majority of 64.97% weightage in the overall WPI index, too lost 0.3% to 155.4 (provisional) from 155.8 (provisional) for the previous month mainly on the back of index for ‘Food Products’ group, which declined by 0.9% to 172.6 (provisional) from 174.2 (provisional) for the previous month.

The latest data further bolsters the case for rate cut by RBI in its upcoming bi-monthly monetary policy statement, which is scheduled on Tuesday, February 3, 2015 after record low CPI data and shockingly low IIP data. However, RBI in its previous monetary policy on December 2 also highlighted that the inflation reading for November, which will become available by mid-December is expected to soften further mainly on account of favourable base effect, which is likely to dissipate thereafter and in turn lift inflation from the current levels.

The CNX Nifty is currently trading at 8212.45, down by 11.65 points or 0.14% after trading in a range of 8152.50 and 8237.00. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were HDFC up by 4.21%, Kotak Mahindra Bank up by 3.47%, Coal India up by 3.01%, Ultratech Cement up by 1.46% and Zee Entertainment up by 1.34%. On the flip side, BPCL down by 3.86%, Tech Mahindra down by 3.21%, TCS down by 3.08%, DLF down by 2.63% and HCL Tech. down by 1.98% were the top losers.

Asian markets were reeling under pressure; with Nikkei 225 trading lower by 272.18 points or 1.57% to 17,099.40; Hang Seng sliding by 224.3 points or 0.96% to 23,024.90; Jakarta Composite declining by 62.06 points or 1.2% to 5,098.37; Taiwan Weighted shedding 41.7 points or 0.46% to 8,985.63; Straits Times shedding 35.4 points or 1.06% to 3,288.73; FTSE Bursa Malaysia KLCI surrendering 31.95 points or 1.84% to 1,701.04 and KOSPI Index edging lower by 1.35 points or 0.07% to 1,920.36. On the flip side, Shanghai Composite up by 15.25 points or 0.52% to 2,953.42 was the sole gainer on the index.