Markets shed early gains; February inflation spikes

Indian equity benchmarks shed early gains on slightly higher than expected inflation data for February. Inflation for the month of February came in at 6.95% versus 6.55% month-on-month. Primary article inflation increased at 6.28% versus 2.25% month-on-month basis while WPI manufacturing products inflation declined at 5.75% versus 6.49% and fuel inflation too fell at 12.83% versus 14.21%. The Reserve Bank of India (RBI) expected to consider this number very crucially as it is the last major data point that comes out before the crucial credit policy on Thursday. The RBI has repeatedly said that while growth is important target inflation will continue to remain important. Meanwhile the Railway Minister Dinesh Trivedi presents his maiden Rail Budget 2012 in the Lok Sabha, the market is trading quiet though with a positive bias. The government expected to impose a safety cess, at least on higher-class tickets, in the rail budget. On the global front, most of the Asian shares were trading in green. Back home, the market breadth favoring the positive trend; there were 1,329 shares on the gaining side against 1,262 shares on the losing side while 140 shares remained unchanged.

The BSE Sensex is currently trading at 17,861.47, up by 47.85 points or 0.27%. The index has touched a high and a low of 18,040.69 and 17,847.41 respectively. There were 19 stocks advancing against only 11 declines on the index.

The broader indices too were trading mixed; the BSE Mid cap index up by 0.06% and Small cap index down by 0.07%.

The top gaining sectoral indices on the BSE were, CG up by 1.21%, Auto up by 1.01%, Bankex up by 0.92%, HC up by 0.91% and FMCG up by 0.70%. While, Realty down by 1.02%, Oil & Gas down by 0.52%, IT down by 0.48%, TECk down by 0.27% were the top losers on the index.

The top gainers on the Sensex were M&M up by 2.56%, ICICI Bank up by 2.26%, L&T up by 2.12%, Tata Motors up by 1.48% and Hindalco Industries up by 1.24%, while, TCS down by 3.14%, HDFC down by 1.42%, Wipro down by 1.10%, RIL down by 1.09% and Tata Steel down by 0.46% were the top losers on the Sensex.

Meanwhile, the government has set a disinvestment target of Rs 30,000 crore for FY‘13 and 25,000 crore for FY’14. As per Finance Minister, Pranab Mukherjee these projections are based on the medium-term fiscal policy statement of the Union Budget for 2011-12.

Comparing India’s government debt situation to the rest of the world, the finance minister has also stated that in India the general government debt is largely domestic and stood at 66.4% of GDP at the end of March 2011. This is much below the level of 99.7% of GDP for advanced economies and 85.3% for the euro area for 2010, as per the IMF's Fiscal Monitor Update, January 2012.

The government had planned a disinvestment target of Rs 40,000 crore for the current fiscal through sales of its assets in PSUs. However, it was able to garner only Rs 14,000 crore due to unfavorable market conditions. Uncertain global economic climate, mainly due to fallout of euro zone crisis, adversely affected the financial markets, which has been responsible for slowing down of PSU disinvestment for the current fiscal.

The S&P CNX Nifty is currently trading at 5,446.75, higher by 17.25 points or 0.32%. The index has touched a high and a low of 5,499.40 and 5,441.55 respectively. There were 32 stocks advancing against just 17 declines and one remained unchanged on the index.

The top gainers of the Nifty were M&M up by 2.69%, ICICI Bank up by 2.20%, L&T up by 2.14%, Axis Bank up by 1.81% and Tata Motors up by 1.57%.

On the flip side, TCS down by 3.07%, JP Associates down by 2.39%, HDFC down by 1.53%, RPower down by 1.38% and Reliance down by 1.21% remained the losers on the index.

All the Asian equity indices were trading in the green; Hang Seng surged 0.41%, Jakarta Composite added 1.09%, KLSE Composite added 0.59%, Nikkei 225 advanced 1.53%, Straits Times shot up by 0.97%, Seoul Composite rose by 0.99% and Taiwan Weighted was up 1.17%, while Shanghai Composite lost 1.45% was remained as sole loser.