Sensex eases from day’s high tracking weak European markets cues

Stock markets in India have cooled a lot from high point of the day in Wednesday afternoon trades with the frontline equity indices facing severe resistance around crucial levels. The benchmark gauges got off to a promising start a day after rallying over a percent on the back of RBI’s stunning bigger-than-expected repo rate cut. The better than expected earnings announcement from technology major HCL Tech too lifted overall market sentiments and also injected some life in IT and TECk counters which were on the southward trajectory since bellwether Infosys’ weak quarterly result and a gloomy guidance. However, the psychological 17,500 (Sensex) and 5,350 (Nifty) levels proved as stern resistances as the key indices could not claw beyond those levels, instead drifted to lower levels. The European markets were playing a bit of spoilsport as they opened on a weak note after their biggest gain in more than four months in the previous session. On the other hand, the Asian markets continued to trade with vigor after healthy US corporate earnings, successful Spanish debt sale and strong German economic sentiment survey and support the domestic markets. Back home, market participants grew a bit worried over the quantum of rate cut by RBI fearing that it would reignite inflationary pressure. In addition, a gauge of consumer price inflation indicated just that the rate of price rise has surged to 9.4% in March as compared to 8.33% in February 2012. But, the automobile index, welcomed the RBI decision to cut key lending rates by 50 basis points as it surged over a percent amid expectations that the move will boost buyers’ sentiments. The Metal and Power counters remained other leading gainers in the space while the defensive FMCG pocket remained the lone loser with a quarter percent cut.

Moreover, the broader markets traded on a strong note with around a percent gains, outperforming their larger peers by a fat margin. The bourses rose on large volumes of over Rs 0.8 lakh crore while the market breadth on BSE was in favor of advances in the ratio of 1680:918 while 147 scrips remained unchanged.

The BSE Sensex is currently trading at 17,457.28 up by 99.34 points or 0.57% after trading as high as 17,522.80 and as low as 17,446.62. There were 25 stocks advancing against 5 declines on the index.

The broader indices were trading on a strong note; the BSE Mid cap index surged 1% and Small cap soared 0.97%.

On the BSE sectoral space, Consumer Durables up 1.77%, Auto up 1.20%, Metal up 1.20%, Power up 1.12% and Healthcare up 1% were the major gainers, while FMCG down 0.25% was the only laggard in the space.

Bajaj Auto up 2.98%, Hindalco up 2.89%, Tata Power up 1.92%, Sterlite up 1.85% and Sun Pharma up 1.85% were the major gainers on the Sensex, while ITC down 1.04%, Coal India down 0.74%, Infosys down 0.58%, DLF down 0.37% and HUL down 0.14% were the major losers in the index.

Meanwhile, the consumer price index (CPI) has surged to 9.4% in March as compared to 8.33% in February 2012, as per data released by the central statistical organization (CSO). The March numbers are provisional whereas the February numbers are final.

The corresponding provisional inflation rates for rural and urban areas for March 2012 are 8.79% and 10.30% respectively. Inflation rates (final) for rural and urban areas for February 2012 are 8.36% and 9.45% respectively.

The CPI numbers which are a recent addition to the government’s data, show the impact of inflation on the final consumer. The WPI (wholesale price index) which is traditionally used by the RBI as an inflation gauge monitors the wholesale prices of the country and so far it was assumed that the consumer inflation would move in the same fashion. However the concept came under criticism as it was felt that these statistics do not correctly bring to light the impact of inflation on the aam aadmi. Hence the government has now started collecting the CPI numbers to get a better account of inflation levels in the economy.

However it will take some time before the series is firmly established and the RBI can start using it as a gauge for inflation. The apex bank has recently cut interest rates by 50 basis points to spur the economy. The cut was based on the WPI index after establishing the fact that inflation has taken a downward trajectory after being stubbornly high for many months.

The S&P CNX Nifty is currently trading at 5,326.40, higher by 36.70 points or 0.69% after trading as high as 5,342.00 and as low as 5,320.70. There were 42 stocks advancing against 8 declines on the index.

The top gainers on the Nifty were HCL Tech up 5.71%, Bajaj Auto up 3.17%, ACC up 2.93%, Ambuja Cement up 2.75% and Hindalco up 2.70%.

ITC down 0.97%, Coal India down 0.76%, Infosys down 0.62%, DLF down 0.46% and R Com down 0.39% were the major losers on the index.

In the Asian space, Shanghai Composite spurted 1.97%, Hang Seng surged 1.04%, Jakarta Composite added 0.04%, KLSE Composite up 0.22%, Nikkei 225 zoomed 2.14%, Straits Times advanced 0.46%, Seoul Composite soared 0.97% and Taiwan Weighted gained 0.25%.

The European markets were trading in red as France’s CAC 40 declined 0.45%, Germany’s DAX slipped 0.44% and Britain’s FTSE 100 fell 0.23%.