Benchmarks trade flat with positive bias in early deals

Indian equity benchmarks made slightly negative start and continued their volatile trade gyrating around neutral lines in early deals on Tuesday, amid diminished hopes of a policy rate cut after India’s retail inflation spiked to five year high. India's retail inflation spiked to a five-year high in December, breaching the upper end of the RBI's 2-6 percent target for the first time since July 2016. Inflation increased notably to 7.35 percent from 5.54 percent in November, driven by higher food prices. In the same period last year, inflation was 2.11 percent. Investors are also looking ahead to the Wholesale Price Index (WPI) data to be out later in the day. Though, some optimism came in with report that the government is expected to address the issue of inverted duty structure, especially in sectors such as chemicals and electronics, in the forthcoming Budget, to boost manufacturing as part of the 'Make In India' campaign. Inverted duty structure refers to taxation of inputs at higher rates than finished products that results in build-up of credits and cascading costs.

On the global front, most of the Asian markets were trading higher following the record highs overnight on Wall Street and as investors’ sentiment improved after the US removed China from a list of currency manipulators ahead of the signing of a phase one trade deal between the two countries on Wednesday. Chinese Vice Premier Liu He is scheduled to visit Washington to sign the deal. Besides, Japan posted a current account surplus of 1,436.8 billion yen in November, up 75 percent on year.

Back home, metal stocks were in focus as India imposed anti-subsidy duty for a period of five years on copper wire rods from Indonesia, Malaysia, Thailand and Vietnam after concluding a probe that these imports have impacted domestic players. In stock specific development, Wipro gained ahead of its Q3 result to be released later in the day.

The BSE Sensex is currently trading at 41882.65, up by 22.96 points or 0.05% after trading in a range of 41770.90 and 41903.36. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.54%, while Small cap index up by 0.51%.

The top gaining sectoral indices on the BSE were Metal up by 1.34%, Oil & Gas up by 0.71%, Basic Materials up by 0.68%, IT up by 0.64% and TECK was up by 0.58%, while Bankex down by 0.21% was the only losing index on BSE.

The top gainers on the Sensex were Tata Steel up by 1.55%, HCL Technologies up by 1.42%, Mahindra & Mahindra up by 0.97%, TCS up by 0.93% and Asian Paints up by 0.90%. On the flip side, Ultratech Cement down by 0.63%, HDFC Bank down by 0.57%, ONGC down by 0.52%, ICICI Bank down by 0.42% and Larsen & Toubro down by 0.36% were the top losers.

Meanwhile, with spiraling prices of vegetables, India’s retail inflation based on Consumer Price Index (CPI) jumped to an over five-year high of 7.35% in December 2019. The CPI was 2.11% in December 2018 and 5.54% in November 2019. The previous high in retail inflation was witnessed at 7.39% in July 2014. The inflation was above the Reserve Bank of India’s (RBI) upper tolerance limit of 6% at the time of economic growth slowdown. The overall food inflation rose to 14.12% in December as against (-) 2.65% in the same month of 2018. It was also significantly higher than the 10.01% recorded in November 2019.

As per the data of the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation, the CPI (Rural, Urban, Combined) on Base 2012=100 for December 2019, stood at 7.26%, 7.46% and 7.35%, respectively, compared to 1.50%, 2.91% and 2.11%, respectively in December 2018. The index value of CPI for combined stood at 150.4. The data also showed that consumer food price index (CFPI) for all India Rural and Urban for December 2019 stood at 12.97% and 16.12%, respectively, compared to -2.99% and -1.89%, respectively in December 2018. The index value of CFPI for combined stood at 155.2 for the month of December.

The spike in inflation in the vegetable segment was 60.5% during the month compared to December 2018. Onion prices were above the Rs 100 per kg mark in many major cities last month, due to a 26% fall in production. The inflation in 'pulses and products' was recorded at 15.44%, while in case of 'meat and fish' it was nearly 10%. Household goods and services grew by 1.75% from 2.2% in November. Health inflation grew by 3.80% as against 5.5% in the preceding month. Housing inflation stood at 4.3% compared to 4.5% last month. Fuel and light inflation stood at 0.7% compared to a contraction of 1.9% last month.

The CNX Nifty is currently trading at 12330.60, up by 1.05 points or 0.01% after trading in a range of 12308.70 and 12349.75. There were 31 stocks advancing against 18 stocks declining, while 1 stock remains unchanged on the index.

The top gainers on Nifty were Vedanta up by 2.59%, GAIL India up by 1.86%, Tata Steel up by 1.42%, HCL Technologies up by 1.41% and Hindalco up by 1.33%. On the flip side, Yes Bank down by 3.80%, UPL down by 0.86%, Ultratech Cement down by 0.63%, Larsen & Toubro down by 0.58% and HDFC Bank down by 0.57% were the top losers.

Asian markets are trading mostly in green, Nikkei 225 surged 144.89 points or 0.61% to 23,995.46, Taiwan Weighted strengthened 40.03 points or 0.33% to 12,153.45, Jakarta Composite soared 16.59 points or 0.26% to 6,313.16, Straits Times advanced 10.79 points or 0.33% to 3,261.86 and KOSPI rose 10.17 points or 0.46% to 2,239.43. On the flip side, Shanghai Composite declined 1.61 points or 0.05% to 3,113.96 and Hang Seng was down by 53.01 points or 0.18% to 28,901.93.