Markets shift to negative territory; Nifty holds 5,600 mark

Indian equity markets retreated from early gains and currently shifted into negative territory on the back of profit booking after earlier sessions of rallies. Sensex continued trading in a narrow range around its previous closing values amid alternate bouts of buying and selling, while 50-share NSE Nifty was trying to hold the 5,600 level since early trade. In currency markets, Indian rupee depreciated against dollar tracking weakness in local equity markets. On sectoral front power, FMCG, realty, healthcare and information technology stocks were finding support, while metal and oil stocks were subdued. In global markets, Asian shares came down from four-month highs on Tuesday while gold and copper eased, as markets calculated the impact on growth from the Federal Reserve's aggressive stimulus and eyed whether Spain will request a bailout to ease its fiscal strains. Back home, the market breadth favoring positive trend; there were 1,507 shares on the gaining side against 991 shares on the losing side while 109 shares remain unchanged.

The BSE Sensex is currently trading at 18,520.38 down by 21.93 points or 0.12% after touching a high of 18,580.48 and low of 18,480.96. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.87% and Small cap index was up by 0.70%.

The top gainers on the BSE sectoral space were, Power up by 1.00%, PSU up by 0.98%, FMCG up by 0.91%, Realty up by 0.66% and TECk up by 0.61%. While Oil & Gas down by 0.72% and Metal down by 0.38% were only losers on the sectoral space.

The top gainers on the Sensex were BHEL up by 2.37%, GAIL up by 2.18%, Infosys up by 2.06%, SBI up by 1.87% and ITC up by 1.62%. On the flip side, HDFC down by 2.48%, Wipro down by 2.12%, Hindalco Industries down by 1.71%, TCS down by 1.53% and Reliance down by 1.45% were major losers on the Sensex. 

Meanwhile, driven by the rise in food inflation, annual rate of inflation, based on the consumer prices index (CPI) in India, creeping higher in the month of August, entered double digit figure of 10.03 percent. Food inflation in the CPI accelerated to 12.03 percent in August from 11.53 percent in August. According to the data released by Central Statistics Office, provisional annual inflation rate based on all India general CPI (Combined) for August 2012 on point to point basis stood at 10.03 percent as compared to 9.86 percent for the previous month of July 2012. However, July consumer price inflation was revised lower to 9.76 percent from 9.86 percent earlier.

According to the Ministry of Statistics and Programme Implementation, which released the monthly provisional CPI on Base 2010=100 along with annual inflation rates for August 2012, all India provisional General (all groups), CPI numbers of August 2012 for rural, urban and combined were at 124.3, 121.11 and 122.9 respectively. The corresponding inflation rates for rural and urban areas for August came in at 9.90 percent and 10.19 percent respectively as against July’s  9.76 percent and 10.10 percent, respectively, which indicated that the rate of price rise rose in both in rural and urban areas.

India has the highest retail inflation among the BRICS group of emerging economies - Brazil, Russia, China, and South Africa -- and is way above the Reserve Bank of India (RBI)’s comfort level. However, unlike most central banks, the RBI uses wholesale inflation in its policy formulation, as annual consumer price inflation data was only launched this year in January.

Driven by higher food prices due to deficient monsoon, the wholesale price index (WPI), India's main inflation gauge, shockingly rose at 7.55% for the month of August, as compared to 6.87% (Provisional) for the previous month and 9.78% during the corresponding month of the previous year. Meanwhile, furthering its anti-inflationary stance, the RBI, in its mid-quarter monetary policy review, leaving the key policy rates, viz. repo and reverse repo rate unchanged, only slashed cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.75 per cent to 4.50 per cent of their net demand and time liabilities (NDTL) effective the fortnight beginning September 22, 2012.

The S&P CNX Nifty is currently trading at 5,603.85, down by 6.15 points or 0.11% after trading in a range of 5,620.55 and 5,586.45. There were 25 stocks advancing against 25 declines on the index.

The top gainers of the Nifty were PNB up by 5.18%, BHEL up by 2.41%, IDFC up by 2.27%, Infosys up by 2.08% and GAIL by 2.06%. On the flip side, Cairn down by 2.92%, HDFC down by 2.59%, Wipro down by 2.27%, Kotak Bank down by 1.72% and Hindalco down by 1.66% were top losers on the index.

Most of the Asian indices were trading in red; Nikkei 225 down by 0.39%, Jakarta Composite down by 0.40%, Hang Seng index down by 0.05%, Taiwan Weighted down 0.36%, Shanghai Composite down by 0.54% and Straits Times down by 0.19% while KLSE Composite up by 0.13% and Kospi Composite Index up by 0.05% were the only gainers.