Benchmarks trade at high point of the day on positive inflation numbers

Indian equity markets gave thumbs up to the inflation numbers and currently trading at the high point of day on the back of buying interest across some blue chip counters. Meanwhile, the annual rate of inflation, based on monthly WPI, slowed further in the month of January to 6.55% as compared to 7.47% for the previous month and 9.47% during the corresponding month of the previous year. Build-up inflation in the financial year so far was 5.48% compared to a build-up of 8.58% in the corresponding period of the previous year. However, positive inflation numbers will make it easier for the RBI to make monetary policy more accommodative by cutting interest rates. On sectoral front, all rate sensitive sectors like bank, realty and auto were trading higher with ease in inflation numbers, while select healthcare, power and TECk sectors were trading weak. On the global front, Asian shares were trading in red following Moody's downgrading the sovereign debt ratings of some euro-zone nations, including Spain, Italy and Portugal. Back home, the market breadth favoring the positive trend; there were 1,513 shares on the gaining side against 1,013 shares on the losing side while 111 shares remained unchanged.

The BSE Sensex is currently trading at 17,844.68, up by 71.84 points or 0.40%. The index has touched a high and a low of 17,850.82 and 17,742.58 respectively. There were 22 stocks advancing against 8 declines on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 0.82% and 0.84% respectively.

The top gaining sectoral indices on the BSE were Realty up by 1.29%, Bankex up by 1.18%, Auto up by 1.07%, PSU up by 0.94% and Capital Goods (CG) up by 0.91%. While, HC down by 0.47%, Power down by 0.10% and TECk down by 0.03% were the top losers on the index.

The top gainers on the Sensex were SBI up by 3.76%, Hindalco Industries up by 2.57%, M&M up by 2.08%, Sterlite Industries up by 1.74% and L&T up by 1.66%.

On the flip side, Cipla down by 5.62%, Tata Power down by 2.87%, Bharti Airtel down by 1.37%, Jindal Steel down by 1.30% and ONGC down by 1.00% were the top losers on the Sensex.

Meanwhile, Indians who felt that their circumstances have improved financially went up marginally by 1.1% in December 2011 as compared to September 2011. However, optimism about an increase in future income, although high, has been descending over the last four quarters, according to the sixth round of Reserve Bank of India's (RBI) Consumer Confidence Survey December 2011.

According to the consumer survey, 57.1% of the respondents felt that their financial conditions had improved in December 2011 as compared to 56% in September. One fourth of the respondents continued to report weakening in this regard. Over 17% respondents reported that their household circumstances became worse off due to increase in price level. This proportion has declined during the last four quarters, from 25.7% in March 2011 to 17.1% in December 2011.

The survey further found that 64% of respondents said they expected their incomes to rise during the next one year period, down from over 66% who had the same view in September 2011. As per 46% of the respondents a rise in current income was the main factor for increase in spending. The study also found that over 80% of the respondents were of the view that the current interest rates were high from borrower’s viewpoint. The degree of negative perceptions on price levels for now as well as in future was up in December 2011 as compared with September 2011.

The survey had 5,400 respondents from six metropolitan cities -- New Delhi, Mumbai, Kolkata, Chennai, Bangalore and Hyderabad -- and was conducted in December 2011. The RBI started conducting the quarterly survey on consumer confidence in 2010. According to it, the change in consumer confidence has the potential to affect real economic activities through the changes in business sentiments and the findings of the survey on confidence level of consumers can be of use for policy making purposes.

Another survey conducted by the apex bank on inflation called 'Inflation Expectations Survey of Households: December 2011 (Round 26), has found that surveyed households expect inflation to be at 13.3% in December 2012, as compared to 12.9% perceived for September, 2012. Housewives expected inflation to stand at 13.7% in December 2012, whereas daily wage workers said it would be 13.8%. 

Further, both the financial sector employees and self-employed projected inflation to be 12.8% by the year-end. The general price expectations were observed to be more aligned with food price expectations as compared with other product groups. Around 90% of the respondents appeared to have been driven by expected changes in food prices for arriving at general price expectations, the survey said. 

The S&P CNX Nifty is currently trading at 5,412.80, higher by 22.60 points or 0.42%. The index has touched a high and a low of 5,415.60 and 5,377.95 respectively. There were 33 stocks advancing against 16 declines and one remained unchanged on the index.

The top gainers of the Nifty were SBI up by 3.80%, IDFC up by 2.69%, Hindalco up by 2.66%, Cairn up by 2.19% and PNB up by 2.18%.

Cipla down by 5.58%, Tata Power down by 2.78%, Jindal Steel down by 1.49%, RCOM down by 1.44% and Bharti Airtel down by 1.35% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite declined 0.54%, Hang Seng was trading flat with negative bias, Jakarta Composite inched lower by 0.05%, Seoul Composite declined 0.20%, Taiwan Weighted shed 0.36% and Straits Times trimmed 0.01%

On the flip side, Nikkei 225 gained 0.70% was the lone gainer amongst the Asian pack.