Markets pares early gains; nifty below 5100 mark

The Indian equity markets which got off to an exciting start this morning on the strong global cues have pared most of their early gains and are currently moving towards red zone in the late morning session. The market has come off the day's high though still remain in positive terrain but the Nifty has slipped below the 5100 mark.  Investors were treading cautiously following the release of inflation data. Meanwhile, inflation numbers came in line with the market expectation.  July WPI inflation slightly moderated to 9.22% versus 9.44% in June. July manufactured products inflation stood at 7.49% versus 7.43% (MoM), primary articles inflation came at 11.30% versus 12.22% (MoM), fuel group inflation at 12.04% versus 12.85% (MoM) and food articles inflation is at 8.19% versus 8.38% (MoM). Back on street, from sectoral front, realty and auto moved back after quite a steady start, dragging the markets down from initial high. Stocks from power, pharmaceuticals and oil sectors too have come off their highs due to lack of support. Select information technology, consumer durables, metal, bank and capital goods stocks hold on in positive territory with impressive gains. On global front Asian stock markets were trading mixed. Back home, the market breadth remained positive; there were 1302 shares on the gaining side against 1119 shares on the losing side while 99 shares remained unchanged.

The BSE Sensex is currently trading at 16,937.74, up by 98.11 points or 0.58%. The index has touched a high and low of 17,035.49 and 16,927.16 respectively. There were 19 stocks advancing against 11 declines on the index.

The broader indices were trading mixed; the BSE Mid cap index declined by 0.08% and Small cap index rose 0.27%.

The top gaining sectoral indices on the BSE were, TECk up by 1.19%, IT up by 0.89%, CG up by 0.66%, CD up by 0.65% and Bankex up by 0.53%. Meanwhile, Realty down by 1.77% and Auto down by 0.06% remained the losers on the index.

The top gainers on the Sensex were Bharti Airtel up by 2.49%, SBI up by 1.85%, Sterlite Industries up by 1.79%, BHEL up by 1.62% and TCS up by 1.35%.

On the flip side, DLF down by 2.19%, Maruti Suzuki down by 1.52%, HDFC down by 1.19%, Jaiprakash Associates down by 0.56% and HUL down by 0.27% were the top losers on the Sensex.

Meanwhile, the Standard and Poor’s does not see any immediate impact on the India’s sovereign rating of BBB-/stable from the downgrading of the United States rating to AA+ from AAA, however, Indian government is threatened of not meeting the fiscal target for the current financial year and is unable to carry forward economic policy reforms which may have implications in the medium term.

The Standard and Poor’s sovereign analyst Takahira Ogawa said 'We do not see an immediate impact on India's sovereign rating (BBB-/Stable) resulting from the lowering of the US sovereign rating to AA+.' Recently, the Standard and Poor’s downgraded the sovereign rating of the United States to AA+ from AAA. The credit rating is opinions that reflect the ability and willingness of the rated entity to meet its financial obligation. This decline of the US sovereign rating had hampered the sentiments of the stock market all over the world, including India.

India has been struggling from the stubbornly high inflation, which is hovering near the two digit mark from last few months. The head line inflation for the first quarter of 2011-12 has been more than 9% and for June it stood at 9.44%, whereas weekly food inflation stood at 9.9 % for the week ended 30 July.  on the fiscal front, government is finding difficult to meet its fiscal target due to, rising crude oil prices and high food and fertilizer subsidies, besides the failure of government to raise Rs 40,000 crore form the disinvestment of Public Sector Units (PSUs) in 2010-11, and government is also expected to miss its target of raising Rs 40,000 crore form disinvestment of PSUs in 2011-12. 

The S&P on India's sovereign rating said that it could be raised if the government continues to reduce the public sector's deficits materially. 'For example, future government initiatives to significantly reduce subsidies for fertilisers, foods and fuels would be a positive factor in improving the expenditure structure of the budget and reducing the negative influence of potential external shocks on India's fiscal position,' the S & P said.

The S&P CNX Nifty is currently trading at 5,099.95, higher by 27.00 points or 0.53%. The index has touched a high and low of 5,132.20 and 5,096.10 respectively. There were 34 stocks advancing against 16 declines on the index.

The top gainers of the Nifty were Bharti Airtel up by 2.62%, Ambuja Cement up by 2.36%, Sterlite Industries up by 1.91%, BHEL down by 1.89% and TCS down by 1.88%.

On the flip side, GAIL down by 1.93%, DLF down by 1.85%, Kotak Bank down by 1.48%, SAIL down by 1.45% and Maruti Suzuki down by 1.34%, were the major losers on the index.

Most of the Asian equity indices were trading in the green; Hang Seng was up by 0.17%, Jakarta Composite was up by 0.57%, KLSE Composite was up by 0.38%, Straits Times up by 0.24%, Nikkei 225 was up by 0.13% and Seoul Composite was up by 4.59%.

On the flip side, Shanghai Composite down by 0.43%, and Taiwan Weighted was down by 0.27% remained the losers among the Asian pack.