Benchmarks trade firm; lingers in a positive zone

Indian equity indices are trading firm in a narrow range lingering in a positive zone while witnessing a strong buying among investors hunting for undervalued stock and paying no heeds towards food inflation which is at four-and-a-half-month high of 9.90%. Market participant were seen piling up the positions in Oil & Gas, Metal and FMCG while selling was witnessed in Consumer Durables, Realty and TECk sector. Stocks like Bata India, Chambal Fertilizers, Warren Tea, Essar India, Page Industries, Inventure Growth & Securities and Nitin Fire Protection hit new high while stocks like IL&FS Transportation, Persistent Systems, Infinite Computers, VMS Industries, Blue Bird India, Cambridge Technologies, Alps Industries and Refex Refrigerants hit new low. Also, sugar stocks like Bajaj Hindusthan, Simbhaoli Sugars, Shree Renuka Sugars, Balrampur Chini Mills, Triveni Engineering & Industries and EID. Parry (India) were seen trading firm on reports that an Empowered Group of Ministers (EGOM) on food headed by Finance Minister Pranab Mukherjee is scheduled to meet on August 12, 2011, to decide on allowing more sugar exports. Piramal Healthcare was firm on reports that it will acquire 5.5% stake in Vodafone Essar. Stocks of fertilizers company like Chambal Fertilizers, National Fertilizers, RCF, Coromandel International and Gujarat State Fertilizers were seen trading firm. Last week there were reports that GoM approved draft policy on urea price decontrol. The Group of Ministers (GoM) on fertilizers headed by Finance Minister Pranab Mukherjee approved the draft policy which allows companies to increase the retail prices urea on the bases of market dynamics. The government on August 05 approved the decontrol of urea prices and allowed fertilizer companies to increase the rate of the important agriculture input prices by up to 10% in the first year of policy. Heavy activity was seen in counters of Sterling Biotech, Alstom Projects and Info Edge India with good volumes due to fund based activity as of yesterday. Albula Investment Fund bought 4,000,000 shares of Sterling Biotech. Alstom Finance BV sold 580,700 shares of Alstom Projects while Alstom Holdings (India) bought 580,700 shares. Merrill Lynch Capital Markets Espana S.A. SVB sold 300,000 shares of Info Edge India. On the global front, Asian markets are trading in red barring Shanghai Composite and Seoul Composite while the European markets were trading in green on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,100 and 17,100 levels, respectively. The market breadth on the BSE was neutral in the ratio of 1330:1349 while, 123 scrips remained unchanged.

The BSE Sensex is currently trading at 17,168.16 up by 37.65 points or 0.22% after trading as high as 17,207.82 and as low as 17,012.95. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading on a flat note; the BSE Mid cap index added 0.08% while Small cap rose 0.14% respectively. 

On the BSE sectoral space, Oil & Gas up 0.79%, Metal up 0.56%, FMCG up 0.50%, Health Care up 0.32% and PSU up 0.29% were the major gainers while Consumer Durables down 0.76%, Realty down 0.55%, TECk down 0.21%, Bankex down 0.19% and IT down 0.09% were the major loser on the index.

HDFC up 2.65%, NTPC up 2.00%, Coal India up 1.41%, RIL up 1.28% and Hindalco up 1.22% were major gainers on the Sensex, while Tata Power down by 4.17%, Bharti Airtel  down 1.63%, Maruti Suzuki down 1.54%, ICICI Bank down 1.39% and Bajaj Auto down 1.29% were the major losers on the index.

Meanwhile, prolonging the previous session uptrend, India’s food inflation measured by Wholesale Price Index (WPI) has spiked up at 4-1/2-month high of 9.90% for the week ended July 30 from 8.04% in the last week on the back of costlier onions, fruits, vegetables and protein-based items.

According to the data released by Ministry of Commerce and Industry, the index for Food Articles group rose by 1.6% to 195.3(Provisional)  from 192.2 for the previous week due to higher prices of fish-inland (17%), poultry chicken and fish-marine (4% each), ragi and fruits and vegetables (2% each) and rice, coffee and gram (1% each). However, the prices of egg, mutton, urad and arhar (1% each) declined.

Meanwhile, the index for 'Non-Food Articles' rose by 0.5% to 175.8 (Provisional) from 174.9 in the previous week due to higher prices of gaur seed and coir fibre (7% each), soyabean (5%), castor seed and gingelly seed (4% each), niger seed (3%), sunflower and rape and mustard seed (2% each) and copra, cotton seed and raw cotton (1% each). 

More importantly, the index for primary articles group which has the highest weightage of 20.12% in WPI rose by 1.2% for the week at 199.3 (Provisional) from 196.9 in the previous week. The annual rate of inflation, calculated on point to point basis, stood at 12.22% (Provisional) for the week ended June 30, 2011 as compared to 10.99% for the previous week ended July 23, 2011. 

Additionally, the index for Fuel & Power group which has the weightage of 14.91% in WPI rose by 0.1% to 165.7 (Provisional) from 165.6 for the previous week due to higher prices of lubricants (2%). Meanwhile, the annual rate of inflation, calculated on point to point basis, stood at 12.19% (Provisional) for the week as compared to 12.12% for the previous week.

The latest numbers are likely to put further pressure on the government and the Reserve Bank, who have been battling the high rate of price rise over a period of one-and-a-half years. Further to add on to the pressure, this is the highest rate of price rise in food items since the week ended March 12, when food inflation stood at 10.05%. India’s central bank so far has raised interest rates 11 times since March 2010 to tame headline inflation, which quickened to 9.44% in June.

Also, in its Economic Outlook for 2011-12 released earlier this month, the Prime Minister's Economic Advisory Council projected headline inflation to remain high at around 9% till October. He said that the rate of price rise will ease from November, declining to around 6.5% by March 2012. However, the report also stated that while pressure from food inflation has fallen in recent months, the rate of price rice still remains quite high, with the possibility of a further surge in coming months.

The S&P CNX Nifty is currently trading at 5,169.10, higher by 8.10 points or 0.16% after trading as high as 5,184.95 and as low as 5,121.00. There were 27 stocks advancing against 23 declines on the index.

The top gainers of the Nifty were Reliance Infra up 3.19%, Kotak Bank up by 3.02%, HDFC up 2.98%, Reliance Capital up 2.09% and NTPC up 1.94%.

Tata Power down 4.43%, HCL Tech down 2.82%, Bharti Airtel down 1.78%, Maruti Suzuki down 1.46% and ICICI Bank down 1.45% were the major losers on the index.

Asian markets traded on a weak note, Hang Seng slipped 0.95%, Jakarta Composite eased 0.38%, KLSE Composite shed 0.27%, Nikkei 225 declined 0.63%, Straits Times lost 0.91% and Taiwan Weighted dropped 0.22%. On the other hand, Shanghai Composite surged 1.27% and Seoul Composite climbed 0.62%.

The European markets were trading in green with, France’s CAC 40 surged 2.51%, Germany's DAX soared 3.13% and London’s FTSE jumped 2.16%.