Benchmarks end near day’s low as June inflation fails to cheer sentiments

Bears tightened their grip over the domestic markets which extended their south bound journey for fourth day in a row on Monday, with benchmarks losing their crucial 5,200 (Nifty) and 17,150 (Sensex) levels. Barometer gauges turned red after a positive opening. Thereafter, markets recovered slightly as June inflation came lower than feared; mounting hopes that RBI will put an end to anti-inflationary stance and would slash key policy rates, to bolster the growth of the faltering economy. The wholesale price index (WPI) for the month of June dropped to 7.25% versus 7.55% in May. The April WPI inflation was revised up to 7.5% as against the provisional 7.23% earlier. Fuel group inflation fell to 10.27% versus 11.53% in May. Inflation in manufactured products for June grew at 5% versus 5.02% in May, while WPI index for food articles in June rose to 10.81% versus 10.74% in May. Primary articles inflation stood at 10.46% versus 10.8% in May.

However, the recovery after the inflation number proved short lived as markets once again entered in the red as European counters opened on a sluggish note. Though, Asian stock markets ended mostly higher on Monday amid hopes of further stimulus measures from China after Premier Wen Jiabao warned Sunday that the recovery in the world’s second largest economy was not stable.

Back home, local bourses crashed like house of cards in the last leg of trade to end near intraday low on reports from Indian Meteorological Department (IMD) that Monsoon deficit stands still at 22% as on July 15. Moreover, the investors are waiting for action over diesel price as the government may hike diesel price after presidential election that will be on July 19.

Meanwhile, software sector remained the major loser on both BSE and NSE and stocks like, Infosys, TCS, Wipro, HCL Tech and MphasiS  tumbled after the rupee strengthened to one-week high in early session. While, metal shares declined for the second day in a row after the data released on July 13, 2012 showed Chinese economy cooled to its weakest rate of growth in more than three years in Q2 June 2012. Moreover, shares of three public sector oil marketing companies BPCL, HPCL and IOC fell as US crude futures settled at their highest closing level in more than one week on July 13, 2012. Bucking the trend, sugar stocks like Shree Renuka Sugar, Bajaj Hindusthan, Balrampur Chini, Triveni Engineering and Rana Sugar, edged higher in the trade on the report that Food Ministry has proposed imposing 10 percent import duty on sugar as the country has surplus domestic production.

The NSE’s 50-share broadly followed index Nifty, plunged by thirty points to settle below the psychological 5,200 support level while Bombay Stock Exchange’s Sensitive Index - Sensex nosedived by over a hundred points to finish below the psychological 17,150 mark. Moreover, the broader markets too settled on a bleak note and ended with over half a percent cuts.

The markets fell on lower volumes of over Rs 1.45 lakh crore while the turnover for NSE F&O segment too remained on the lower side as compared to that on Monday at over Rs 1.07 lakh crore. Moreover, the market breadth remained in favor of declines as there were 1,164 shares on the gaining side against 1,657 shares on the losing side while 112 shares remained unchanged.

The BSE Sensex lost 110.39 points or 0.64% to settle at 17,103.31, while the S&P CNX Nifty declined by 30.00 points or 0.57% to close at 5,197.25.

The BSE Sensex touched a high and a low of 17,282.30 and 17,079.63 respectively. The BSE Mid cap index was down by 0.62% and Small cap index down by 0.61%.

Bharti Airtel up 3.85%, Dr Reddys Lab up 1.81%, Maruti Suzuki up 1.62%, Cipla up 1.17% and ONGC up 0.77% were the major gainers on the Sensex, while Tata Steel down 3.95%, TCS down 3.16%, Jindal Steel down 2.69%, Tata Motors down 2.63% and Infosys down 2.48% were top losers on the index.

The top gainers on the BSE sectoral space were Health Care (HC) up 0.94%, Consumer Durables (CD) up 0.77% and Oil & Gas up 0.07%, while IT down 2.34%, Metal down 1.98%, Realty down 1.61%, TECk down 1.30% and Capital Goods (CG) down 1.02% were top losers on the BSE sectoral space. 

Meanwhile, offering little relief to Reserve Bank of India (RBI), the wholesale price index (WPI), India's main inflation gauge, rose at surprisingly lower-than-expected 7.25 percent for the month of June, as compared to 7.55% (Provisional) for the previous month and 9.51 percent during the corresponding month of the previous year.

The much awaited figure, was also way below than the consensus estimates of 7.60 percent. Meanwhile, build up inflation in the financial year so far was reported at 1.99 percent as compared to a build-up of 2.41 percent in the corresponding period of the previous year. However, April month’s inflation figure was revised sharply higher from 7.23 percent to 7.50 percent.

The index for primary articles group, which has a weightage of 20.12 percent in overall WPI, rose 0.1 percent to 216.4 from 216.1 for the previous month, largely because of 1.4 percent jump in index of ‘Food Articles’.

The index for ‘Food Articles’ group rising to 209.2 from 206.3 for the previous month continued to drive the headline numbers.  Meanwhile, the index for ‘Non-Food Articles’ group declined by 2.6 percent to 193.5 (Provisional) from 198.6 (Provisional) for the previous month.

The index for fuel and power group with a weightage of 14.91percent in WPI too declined by 0.4 percent to 178.2 from 178.9 due to lower prices of  light diesel oil (7percent), aviation turbine fuel and furnace oil (6 percent each) and naphtha (4 percent).  However, the prices of petrol (7 percent) moved up. Meanwhile, the index for Manufactured Products, which carries weight of almost 65 percent in the WPI, rose by 0.5 percent to 144.3 from 143.6 for the previous month.

Although the numbers have come lower than expectation but still remains above the comfort level of the RBI. The connoisseur are of the beliefs that lower than expected numbers would cast no impact on World’s most aggressive Central bank’s anti-inflationary stance during its next mid-quarterly policy review on July 31. RBI, like previous Mid-Quarterly policy review, this time around also is expected to maintain its status Quo on key policy rates.

The S&P CNX Nifty touched a high and low 5,246.85 and 5,190.45 respectively.

The top gainers on the Nifty were Bharti Airtel up 3.80%, Maruti up 1.73%, Dr Reddy up 1.72%, Axis Bank up 1.35% and Bank of Baroda up 1.29%. On the flipside, Tata Steel down 4.26%, TCS down 3.69%, Tata Motors down 3.03%, Jindal Steel down 2.91% and Reliance Infra down 2.84% were the top losers on the index. 

The European markets were trading mixed, as France's CAC 40 down 0.10%, Germany's DAX down 0.01% and United Kingdom’s FTSE 100 up 0.01%.

Asian stock markets ended mostly higher on Monday amid hopes of further stimulus measures from China after Premier Wen Jiabao warned Sunday that the recovery in the world’s second largest economy was not stable. Markets opened on a positive note on Monday, tracking positive cues from the rally of Wall Street on Friday. Meanwhile, euro and oil dropped ahead of inflation and confidence reports in Europe.

However, strong gains in Australia due to mining stocks rally supported the markets in good way, while China slid close to a six-month low on warnings over its economy. Investors are waiting for the trigger from Federal Reserve Chairman Ben Bernanke's testimony to Congress on Tuesday, which will be scrutinized to see whether the US central bank will introduce easing to stimulate the economy.

The Japanese market remained closed on Monday for a public holiday.