Markets pare early losses; July inflation drops to 6.87%

After a slightly weak start following a modest downward move, Indian equity markets currently erased some early losses in the late morning session. India’s trade deficit, which widened to $15.5 billion in July 2012 against $10.3 billion reported in June 2012 also pressurized local benchmarks. Meanwhile, India's main inflation gauge, the wholesale price index (WPI), came surprisingly way below the expectation at 6.87% for the month of July, 2012 (over July, 2011) as compared to 7.25% for the previous month and 9.36% during the corresponding month of the previous year. In currency markets, rupee opened lower on Tuesday and currently extended early losses amid sustained dollar demand from oil importers. On sectoral front, stocks from realty, power, capital goods and healthcare sectors were facing selling pressure. FMCG stocks were also under some pressure. Automobile, bank and consumer durables stocks were trading mixed. Oil stocks are off their earlier high levels. In global markets, Asian shares rose on Tuesday as investors were looking for positive triggers while waiting for more economic figures from Europe and the United States later in the day. Back home, the market breadth favoring negative trend; there were 1,147 shares on the gaining side against 1,159 shares on the losing side while 137 shares remained unchanged.

The BSE Sensex is currently trading at 17,603.55 down by 29.90 points or 0.17% after touching a high of 17659.66 and low of 17,572.34. There were 9 stocks advancing against 21 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index was up by 0.07%, while Small cap index was up by 0.23%.

The top gainers on the BSE sectoral space were, Metal up by 0.48%, Oil & Gas up by 0.38%, PSU up by 0.28%, Bankex up by 0.06% and TECk up by 0.02%, while Realty down by 1.06%, Power down by 0.86%, CG down by 0.51%, HC down by 0.48% and FMCG down by 0.31% were top losers on the index.

Coal India up by 1.67%, Tata Steel up by 1.55%, Jindal Steel up by 0.86%, Mahindra & Mahindra up by 0.70% and Bharti Airtel up by 0.60% were major gainers on the Sensex, while Sun Pharma down by 2.38%, Sterlite Industries down by 1.58%, HDFC down by 1.57%, Maruti Suzuki down by 1.37% and Tata Power down by 1.29% were major losers on the index.

Meanwhile, the Economic Advisory Council to the Prime Minister, Chairman, C Rangarajan, while delivering the second Ayyadevara HMA Foundation day lecture at Fapcci, affirmed that economic growth of India for this fiscal is likely to achieve atleast 8% growth by tackling inflation, reducing fiscal deficit and by focusing more on agriculture production and infrastructure.

He opined that sectors like agriculture and infrastructure, where power is a major aspect, play a major role in bringing down the inflation. He added that the increased farm production automatically brings down inflation to a large extent, while power sector also have a positive influence on the economy.

He also stated that aggressive policy action is needed to reduce petroleum subsidies for containing fiscal deficit at a budgeted level of 5.1 per of GDP in this financial year. The Centre's fiscal deficit had ballooned to 5.76 percent of GDP in the last fiscal due to high fuel subsidy outgo.

The S&P CNX Nifty is currently trading at 5,339.65, down by 8.25 points or 0.15% after trading in a range of 5,356.45 and 5,328.80. There were 20 stocks advancing against 29 declines while 1 remains unchanged on the index.

The top gainers on the Nifty were Ranbaxy up by 2.10%, Coal India up by 1.93%, Tata Steel up by 1.82%, Jindal Steel up by 1.42% and M&M up by 0.93%. While, Sun Pharma down by 2.34%, HDFC down by 1.57%, Sesa Goa down by 1.56%, Sterlite Industries down by 1.54% and DLF down by 1.45% were top losers on the index.

Most of the Asian indices were trading in green; Kospi Composite Index up 0.27%, Nikkei 225 up 0.50%, Taiwan Weighted up by 0.58%, Hang Seng index up by 0.53%, KLSE Composite up by 0.02 points and Straits Times up by 0.23% while Jakarta Composite down by 0.26% and Shanghai Composite down by 0.16% were the only losers.