Post session - Quick review

Indian equity market commenced the new week with exuberance as the barometer gauges after getting a soft start amassed gains of over 0.75%, to conclude the session near the high point of the day. Previous week’s exhilaration protracted to the fresh week as latest development in Greece glorified the spirit at Dalal Street. 

Investors cheered conclusion of long-awaited agreement for a crucial second bailout package for debt-stricken Greece, which could resolve the country’s immediate financing needs with a 130-billion-euro rescue package and measures to cut its debt to 121 percent of GDP by 2020. The news led to enhanced appetite for riskier assets, which in turn  resulted in  sustained buying by funds and retail investors in benchmark indices, thereby taking them above their crucial psychological level of 18400 mark (Sensex) and 5600 mark for Nifty, a level which was last seen on July 25,2011.

Benchmark indices staged a muted start to the 4 trading day’s week as investors were on periphery ahead of the first release of the new annual CPI inflation data, a move to monitor retail prices that is expected to make monetary policy more effective in addressing demand-driven pressures.

However, the release of the CPI Inflation data provided the required impetus to Indian equity markets for their gung-ho performance as Interest rate sensitive banking and realty stocks amplified gains as a further decline in inflation based on wholesale price index in January 2012 reinforced expectations that the central bank will start cutting interest rates in the coming months to revive slowing economic growth. The new CPI data, released for the first time on Tuesday, showed a reading of 7.65% for the month of January as compared to 6.55% over the year to January. Lower interest rates generally aids in revival of demand for properties. Purchases of both residential and commercial property are largely driven by finance.

Even the comments of Finance Minister Paranb Mukherjee sparked optimism at Dalal Street, as he said that India's economic slowdown is likely to be temporary. Gains were also glorified in the F&O expiry week as local investor’s showing their optimism in the fundamentals of Indian equity markets rolled over their position ahead of the February’s month F&O expiry on Thursday.

On the global front, US markets remained closed on Monday on account of President’s Day holiday. Meanwhile, Asian pacific stocks failed to provide any cues as most of the stocks in that region ended lower after talks to prevent Greece from going belly up dragged on amid divisions over how to cut the country’s debt further and impose even tighter control over its spending.  However, even the European stocks ebbed amid speculation a Greek bailout deal won’t solve the nation’s debt crisis. The odds that Greece will remain encumbered by debt were illustrated by an analysis by European and International Monetary Fund analysts that highlighted what could go wrong with a country unable to grow out of its fiscal woes by devaluing its currency. In a worst-case scenario Greece’s debt might balloon to 160 per cent of gross domestic product in 2020, it concluded.

Back home, stocks from Realty, Consumer Durable and Oil & Gas counters, emerged as top gainer on the BSE sectoral chart, while stocks from Information Technology and Health care counters shortened the gains of the bourses. IT stocks edged lower as the rupee climbed to a two-week high on Tuesday. The broader markets too participated in the rally - the BSE Midcap Index was up by over 0.75% and Smallcap was up by over a percent. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1603:1354 while 130 scrips remained unchanged. (Provisional)

The BSE Sensex gained 115.53 points or 0.63% and settled at 18,404.88. The index touched a high and a low of 18,470.86 and 18,293.80 respectively. 20 stocks advanced against 10 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.91% while Small-cap index was up by 1.15%. (Provisional)

On the BSE Sectoral front, Realty up 4.21%, Consumer Durables up 3.06%, Oil & Gas up 2.18%, Power up 0.91% and Capital Goods up 0.85% were the top gainer while IT down 0.41% and Auto down 0.06% were the only losers.

The top gainers on the Sensex were BHEL up 4.50%, ONGC up 4.14%, Hindalco Industries up 2.91%, Bharti Airtel up 2.89% and RIL up 2.51%.

On the flip side, Sterlite Industries down 3.61%, Tata Power down 2.91%, Wipro down 1.46%, NTPC down 1.28% and Tata Motors down 1.06% were the top losers in the index. (Provisional)

Meanwhile, Provisional annual inflation for January 2012 stood at 7.65% as compared to January 2011. Inflation in rural areas was up to 7.38% and for the urban areas it was at 8.25%, as per data released by the Ministry of Statistics & Programme Implementation.

The highest price increase over the corresponding period last fiscal was for clothing, bedding and footwear, an indicator that buyers were spending more on accessories. Among food products, the sharpest increase in prices was for milk and products at 16.5%, followed by oils and fats at 13.47%. Retail prices also rose by 10.45% for eggs, fish and meat. Vegetables were cheaper by over 24% on a nationwide basis in January over the same month last year. Prices for fuel and light also jumped sharply at 13.13%.   

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation releases Consumer Price Indices (CPI) on base 2010=100 for all-India and States/UTs separately for rural, urban and combined every month with effect from January, 2011. However there has been a long pending demand of ministries and various users for a comprehensive consumer inflation rate. Hence for the first time the annual consumer price index (CPI) data has been released which measures retail prices in major food groups, fuel, clothing, housing and education across rural and urban India.

Unlike most central banks, which mainly use the CPI to monitor inflation and set monetary policy, the Reserve Bank of India (RBI) has long used the wholesale price index (WPI) as India's main inflation gauge. The Consumer Price Index, which was introduced a year ago, will now exist alongside the prevailing Wholesale Price Index (WPI), followed in India. The CPI rate has been introduced keeping in mind that demand-side pricing would be a better indicator of inflation than the WPI since it defines the extent to which retailers may pass on any sustained increase in wholesale prices to the consumers. The WPI focuses on prices from the producers' side. 

Yesterday the Ministry of Labour & Employment also released January numbers for All-India CPI for Agricultural Labourers (CPI-AL) and Rural Labourers (CPI-RL)(Base: 1986-87=100). As per the data, the overall index remained stationary at 618 points for Agricultural Labourers and 619 points for Rural Labourers in January 2012 as compared to December 2011. Though all the items in the index showed an upward price movement, food items witnessed a fall keeping the index stationary.

Point to point inflation, saw a sharp drop and the Consumer Price Index for Rural Labourers (CPI-RL) fell to 4.92% in January 2012 (year-on-year) as compared 6.37% in December 2011.The rate of price rise based on the Consumer Price Index for Agricultural Labourers (CPI-AL) also fell to 5.27% in January from 6.72% in December 2011.

The rise/fall in index varied from State to State.  In case of Agricultural Labourers, it recorded an increase between 1 to 5 points in 14 States and a decrease between 2 and 12 points in 5 States. It, however, remained stationary in 1 State. Maharashtra with 690 points topped the index table whereas Himachal Pradesh with the index level of 514 points stood at the bottom.

In case of rural labourers, 14 States recorded an increase between 1 to 5 points, while six States saw a fall of between 1 and 11 points. Once again, Maharashtra was at the top with 683 points, while Tripura was at the bottom with 534 points.  India VIX, a gauge for market’s short term expectation of volatility gained 8.56% at 26.25 from its previous close of 24.18 on Friday. (Provisional)

The S&P CNX Nifty gained 34.90 points or 0.63% to settle at 5,599.20. The index touched high and low of 5,621.50 and 5,561.75 respectively. 32 stocks advanced against 18 declining ones on the index. (Provisional)

The top gainers on the Nifty were BHEL up 4.56%, ONGC up 4.43%, Reliance Infrastructure up 3.76%, Bharti Airtel up 2.89% and Hindalco Industries up 2.85%.

On the other hand, Sterlite Industries down 3.61%, Tata Power down 2.99%, BPCL down 1.66%, Wipro down 1.41% and NTPC down 1.28% were the top losers. (Provisional)

The European markets were trading in red, with France's CAC 40 down 0.37%, Germany's DAX down 0.05% and Britain’s FTSE 100 down 0.23%.

Most of the Asian equity indices pared their losses in the late trade on Tuesday after euro zone policy makers agreed to a second bailout package for Greece in marathon talks that went deep into the Brussels night. Hong Kong and China indices turned positive in the late trade as turnover picked up after euro zone finance ministers sealed a second bailout for Greece that will resolve its immediate financing needs. Earlier, Hong Kong and China shares drifted lower, dragged by weakness in Chinese oil majors and as investors locked in profit after their recent outperformance on fears that escalating oil prices could hurt earnings performance. However, Japanese Nikkei slipped by 0.23 percent in a choppy session after failing to top the key resistance level of 9,500 on Tuesday.