Benchmarks drift lower in early trade ahead of key events

Key benchmarks have turned negative after a flat start as investors remained cautious ahead of key events -- Economic Survey, Monetary Policy -- due today and the Union Budget presentation tomorrow. The global cues too remained gloomy as most of the Asian equities declined on Chinese Premier Wen Jiabao’s remarks that the nation would grow at a slower clip and as he dampened hopes for any near-term easing measures. Though, the US markets ended mixed overnight. Back home, after announcement of fare hikes in the Rail Budget, Railway Minister Dinesh Trived has been hard-pressed to quit or rollback the fares. Giving away to party demands, Trivedi resigned as rail minister and now Mukul Roy will replace him, this also made traders nervous. On the sectoral front software and technology remained the only gainers while, metal, realty and consumer durables witnessed the most selling pressure, dragging down the Sensex. Meanwhile, Anil Dhirubhai Ambani Group's stocks Reliance Communications and Reliance Power fell 2-3% after NSE said it would remove both stocks from Nifty 50 with effect from April 27. Moreover, the broader indices too were struggling to get some traction and the market breadth on the BSE was negative; there were 648 shares on the gaining side against 956 shares on the losing side while 72 shares remained unchanged. 

The BSE Sensex opened at 17,916.85; about 3 points lower compared to its previous closing of 17,919.30, and has touched a high and a low of 17,918.25 and 17,814.67 respectively.

The index is currently trading at 17,858.14 down by 61.16 points or 0.34%. There were 7 stocks advancing against 13 declines on the index.

The overall market breadth has made a negative start with 38.66% stocks advancing against 57.04% declines. The broader indices too were trading in the red; the BSE Mid cap and small cap indices were down by 0.49% and 0.29% respectively.

The only gaining sectoral indices on the BSE were, IT up by 0.44% and TECk up by 0.20%. While, Metal down by 1.63%, Realty down by 1.17%, CD down by 1.14%, CG down by 1.02% and Power down by 0.97% were the top losers on the index.

The top gainers on the Sensex were TCS up by 1.31%, GAIL up by 1.04%, HUL up by 0.72%, RIL up by 0.57% and Infosys up by 0.38%.

On the flip side, Coal India was down by 2.61%, BHEL was down by 1.87%, Sterlite Industries was down by 1.86%, DLF was down by 1.82% and Hindalco was down by 1.56% were the top losers on the Sensex.

Meanwhile, the pace of inflation unexpectedly quickened to 6.95% in February, driven largely by an increase in food prices like vegetables and protein-based items. According to the data released by the Ministry of Commerce and Industry, the wholesale price index (WPI) went up to 6.95% in February 2012 as compared to 6.55% in January. The rise has come in as a surprise as most analysts had forecasted the inflation number to be around 6.75%. Core inflation (which excludes certain items that face volatile price movements), however has seen a declining trend which has fuelled hope of a rate cut by the Reserve Bank.

Provisional data released by the government showed that food inflation was 6.07% in February against (-) 0.52% in January 2012 and was largely responsible for the increased number. Prices of pulses rose by 7.91% and that of vegetables by 1.52%. Egg, meat and fish became dearer by 20% as compared to 18.63% in January. Milk became expensive by 11.7%, while prices of rice and cereals increased by 1.53% and 1.71% respectively. However, the prices of potato and onion declined by 2.22% and 48.50% year-on-year in February. Food articles have 14.3% share in the WPI basket.

Manufactured items became costlier 5.75% year-on-year in February against 6.49% in the previous month. Among manufactured items, iron grew dearer by 15.82% and edible oil prices rose 7.57% year-on-year. Tobacco products moved up by 10.1% and basic metals became 10.44% expensive. Prices of manufactured items have a weight of around 65% in the WPI basket.

Prices of fuel and power rose by 12.8% in January as compared to 14.21% last month. Inflation in overall primary articles stood at 6.28% in February as compared to 2.25% in January. Non-food primary articles, which include fibres and oilseeds, showed moderation to (-) 2.56% in February. In January, inflation was 0.55%.

The headline inflation numbers for December 2011 was revised upwards to 7.74% from the provisional estimate of 7.47%.

The S&P CNX Nifty opened at 5,462.50; about 1 points lower compared to its previous closing of 5,463.90, and has touched a low of 5,427.80 while high remained its opening.

The index is currently trading at 5,437.35, lower by 26.55 points or 0.49%. There were 10 stocks advancing against 40 declines on the index.

The top gainers of the Nifty were TCS up by 1.12%, GAIL up by 0.76%, HUL up by 0.75%, Dr Reddy up by 0.59% and Grasim up by 0.57%.

On the flip side, RCom down by 3.18%, RPower down by 2.79%, Coal India down by 2.59%, Jaiprakash Associates down by 2.41% and RInfra down by 2.19%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite was down 2.97 points or 0.12% to 2,388.26, Hang Seng was down 23.53 points or 0.11% to 21,284.36, Straits Times was down 5.88 points or 0.19% to 3,020.52, Seoul Composite was down 4.67 points or 0.23% to 2,040.41 and Taiwan Weighted was down by 15.89 points or 0.20% to 8,109.37.

On the flip side, Jakarta Composite was up 7.53 points or 0.19% to 4,061.85, KLSE Composite was up 0.24 points or 0.02% to 1,575.95 and Nikkei 225 was up by 64.77 points or 0.64% to 10,115.29.