Indian equities trim gains; Sensex below 17,500 level

Indian equities pare gains but continued its firm trade above neutral line in green in the late afternoon session on back of buying in the frontline blue chip counters. 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. Traders were seen piling up position in Auto, Health Care and Metal sector while selling was witnessed in FMCG sector. However, 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. ITC and HUL from FMCG sector was seen trading in red exerting pressure on the markets. Auto shares M&M, Maruti Suzuki, Bajaj Auto, Tata Motors, Escorts, TVS Motor Company, Ashok Leyland and Hero MotoCorp were seen trading firm in green after yesterday the central bank cut key interest rates for the first time in three years by a sharp 50 basis points.

In the scrip specific development, Saint-Gobain Sekurit India was locked at upper circuit limit on reports that the company's foreign parent is expected to announce an offer soon to delist the firm from the BSE. PSU OMCs HPCL, BPCL and IOC were firm for the second straight day after the Reserve Bank of India in its monetary policy review yesterday said that hike in rates of petroleum products is necessary to arrest fiscal slippages, making a case for raising prices of diesel, kerosene and LPG.

On the global front, Asian markets were trading in green while the European markets were trading on a mix note. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,300 and 17,400 levels respectively. The market breadth on BSE was in favor of advances in the ratio of 1686:1038 while 144 scrips remained unchanged.

The BSE Sensex is currently trading at 17,447.40 up by 89.46 points or 0.52% after trading as high as 17,522.80 and as low as 17,431.52. 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 0.85% while Small cap soared 0.80%.

On the BSE sectoral space, Auto up 1.49%, Health Care up 1.38%, Metal up 1.25%, Consumer Durables up 1.08% and Power up 0.93% were the major gainers, while FMCG down 0.34% was the only laggard in the space.

Hindalco Industries up 2.78%, Bajaj Auto up 2.73%, Tata Motors up 2.34%, Sun Pharma up 2.15% and Tata Power up 1.73% were the major gainers on the Sensex, while ITC down 1.44%, DLF down 0.61%, Coal India down 0.54%, Infosys down 0.37% and HUL down 0.23% 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 5,319.90, higher by 30.20 points or 0.57% after trading as high as 5,342.00 and as low as 5,315.60. There were 39 stocks advancing against 11 declines on the index.

The top gainers on the Nifty were ACC up 4.09%, Ambuja Cement up 3.53%, HCL Tech up 3.45%, Hindalco Industries up 2.89% and Bajaj Auto up 2.79%.

ITC down 1.58%, Reliance Communications down 1.01%, DLF down 0.78%, Kotak Bank down 0.57% and Coal India down 0.56% were the major losers on the index.

In the Asian space, Shanghai Composite spurted 1.96%, Hang Seng surged 1.06%, Jakarta Composite added 0.19%, KLSE Composite up 0.18%, Nikkei 225 zoomed 2.14%, Straits Times advanced 0.47%, Seoul Composite soared 0.97% and Taiwan Weighted gained 0.25%.

The European markets were trading on a mix note as France’s CAC 40 declined 0.75%, Germany’s DAX slipped 0.18% and Britain’s FTSE 100 gain 0.06%.