Indian equities continue firm trade; Nifty above 5,350 mark

Indian equities added gains to continue its firm trade hovering near the highest point of the day in the late afternoon session on account of buying in front line counters coupled with positive clues from European counterparts taking the barometer index BSE Sensex hitting two and half week high. The market have been behaving on subdued note from the morning but the Wholesale Price Index (WPI) which came in much lower at 6.87% than street’s projection added confidence in the market. Besides investors have started building hopes that WPI which slowed would give the central bank some space to ease monetary policy next month. Traders were seen piling up position in Oil & Gas, Bankex and PSU sector while selling was witnessed in Health Care sector. The banking stocks were seen trading firm after India’s headline inflation in July 2012 fell to 6.87% much lower than projected. The stock market will remain closed on August 15, 2012, on account of Independence Day. It will also remain closed on August 20, 2012 on account of Ramzan Id.

On the global front, the Asian markets were trading in green while the European markets were trading on optimistic note. The investors are hoping that the European Central Bank (ECB) would soon announce stimulus measures as the GDP data from Germany and France indicate that the euro zone economy continues to falter. Besides, the Greek economy contracted for the ninth straight time in the second quarter. Gross domestic product declined by 6.2% from the prior year, but slower than the 6.5% decrease a quarter ago. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,350 and 17,700 levels respectively. The market breadth on BSE was positive in the ratio of 1352:1253 while 138 scrips remained unchanged.

The BSE Sensex is currently trading at 17,745.36, up by 111.91 points or 0.63% after touching a high of 17,753.43 and low of 17,572.34. There were 21 stocks advancing against 8 declines on the index while 1 stock remained unchanged. The broader indices were too trading in green; the BSE Mid cap index was up by 0.41%, while Small cap index was up by 0.34%.

The top gainers on the BSE sectoral space were, Oil & Gas up by 1.41%, Bankex up by 1.25%, PSU up by 1.00%, Metal up by 0.99% and Auto up by 0.67%, while Health Care down by 0.47% was the sole losers on the index.

Tata Motors up by 2.63%, Tata Steel up by 2.62%, ICICI Bank up by 2.15%, Coal India up by 1.86% and Jindal Steel up by 1.80% were major gainers on the Sensex, while Sun Pharma down by 2.30%, HDFC down by 1.41%, Sterlite Industries down by 1.23%, Bajaj Auto down by 1.11% and Cipla down by 0.07% were major losers on the index.

Meanwhile, offering a little relief to the Reserve Bank of India (RBI), the wholesale price index (WPI), India's main inflation gauge, unexpectedly slipped at 6.87% for the month of July, its lowest since January 2010, as compared to 7.25% (Provisional) for the previous month and 9.36% during the corresponding month of the previous year.

The much awaited figure, was also way below than the consensus estimates of 7.40%. Meanwhile, build up inflation in the financial year so far was reported at 2.36% as compared to a build-up of 3.14% in the corresponding period of the previous year. Meanwhile, the annual reading for May remained unchanged at 7.55%.

The index for primary articles group, which has a weightage of 20.12 percent in overall WPI and includes food, non-food and minerals groups rose 1.1% to 218.8 from 216.4 for the previous month. The index for ‘Food Articles’ group rising by 1.4% to 212.2 from 209.2 for the previous month continued to drive the headline numbers.  Meanwhile, the index for ‘Non-Food Articles’ group rose by 2.9% at 199.2 (Provisional) from 193.5 (Provisional) for the previous month. However, the index for ‘Minerals’ group declined by 3.4% to 335.8 (Provisional) from 347.6 (Provisional) for the previous month.

The index for fuel and power group with a weightage of 14.91percent in index too declined by 1.5% to 175.5 from 178, due to lower prices of light diesel oil (10%), furance oil (8%), naphtha (7%), aviation turbine fuel (ATF) and petrol (4% each). Meanwhile, the index for Manufactured Products, which carries weight of almost 65% in the index, rose by 0.6% to 145.7 from 144.8 for the previous month.

Although the numbers have come lower than expectation, but still fail to emerge as game changing number. Inflation staying above 7% mark for almost two-and-half-years by now, has limited RBI’s abilities of easing monetary policy too aggressively despite the steepest slide in economic growth in almost a decade in the January-March quarter.

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 September 17, 2012, as risk for inflation continues to remain on the upside . The RBI, like previous mid-quarterly policy review, this time around also is expected to maintain its status quo stance on key policy rates.

The S&P CNX Nifty is currently trading at 5382.25, up by 34.35 points or 0.64% after trading in a range of 5387.00 and 5,328.80. There were 37 stocks advancing against 13 declines on the index.

The top gainers on the Nifty were Tata Steel up by 2.53%, Tata Motors up by 2.50%, Bank of Baroda up by 2.41%, JP Associates up by 2.39% and IDFC up by 2.25%. While, Sun Pharma down by 2.29%, Bajaj Auto down by 1.66%, HDFC down by 1.61%, Siemens down by 1.26% and Sterlite Industries down by 1.23% were top losers on the index.

The Asian indices continued to trade in green; Kospi Composite Index surged 1.27%, Nikkei 225 inched up by 0.50%, Taiwan Weighted added 0.58%, Hang Seng index edged higher by 1.05%, KLSE Composite was holding up by 0.25%, Straits Times rose 0.63%, Shanghai Composite bounced back in green by 0.30% while Jakarta Composite inched up by 0.13%.

The European markets were trading in green with, France’s CAC 40 ascending 0.41%, Germany’s DAX added 0.99% and the United Kingdom’s FTSE 100 jumped 0.60%.