Benchmarks continue weak trade; Nifty below 5,000 mark

Indian equity indices were trading weak in a pessimistic note hovering around the lowest point of the day in absence of buying as investors were reluctant to pick stocks amid ongoing domestic and global crisis. Market participant were seen piling up the positions in Realty sector while selling was witness among IT, Bankex and TECk sector. Stocks like IFB Agro, Residency Projects, Esaar India and Hindoostan Mills hit new high while stocks like MTNL, Dishman Pharma, Allsec Technologies, GTL Infra, TV18 Broadcast, Great Offshore, Allied Digital, Onmobile Global, Raj Oil, DEN Networks, MBL Infra, JSW Energy, ARSS Infra, Career Point and Punjab & Sind Bank hit new low. Stock from Information Technology pack like Wipro, TCS, Infosys, Tech Mahindra, HCL Technologies, Mahindra Satyam and Mphasis were trading under pressure on concerns that a likely economic slowdown in the US and Europe will hit technology spending by overseas clients. Banking counters like BOB, IDBI Bank, Union Bank of India, PNB, Bank of India, SBI, Axis Bank, ICICI Bank, Kotak Mahindra Bank and HDFC Bank were seen trading in red on concerns that higher interest rates may crimp loan growth. Idea Cellular was trading firm after Malaysia's Axiata bought an additional 0.9% stake or 2.98 crore shares in the company on 5 August 2011, raising its holding to about 20%. Shares in Indian education solutions provider Educomp Solutions fell after reports of an income-tax department (IT) probe at its offices. There are reports that income-tax officials have searched the company's premises in New Delhi and Gurgaon. On the global front, Asian markets were trading in red barring Jakarta Composite and KLSE Composite while the European markets were trading in red on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,000 and 16,600 levels, respectively. The market breadth on the BSE was negative in the ratio of 672:2031 while, 109 scrips remained unchanged.

Moreover, heavy activity was seen in counters of Voltamp Transformers, PI Industries, Nirlon, Indiabulls Real Estate, Den Networks, Birla Pacific Medspa, Escorts and KS Oils with good volumes due to fund based activity as of yesterday. Trans Nalanda India Equity Fund bought 104,202 shares of Voltamp Transformers. However, Reliance Capital Trustee Co a/c Reli. Diver. Power Sect Fund sold 100,000 shares and Reliance Capital Trustee Company a/c Reliance Divirsifie sold 100,000 shares. Ironwood Investment Holdings bought 457,703 shares of PI Industries while Rowanhill Investments sold 403,000 shares. Danke Dealers bought 711,761 shares of Nirlon while Winstar India Inv Co PCC Winstar Value Cell sold 711,761 shares. Macquarie Bank bought 2,716,596 shares of Indiabulls Real Estate. Emerging Markets Mgt LLC a/c Emsaf Mauritius sold 700,802 shares of Den Networks. SPS Share Brokers sold 800,000 shares of Birla Pacific Medspa. Reliance Capital Trustee Co A/C Reliance Growth Fund bought 728,000 shares of Escorts. SICOM sold 4,986,000 shares of KS Oils.

The BSE Sensex is currently trading at 16,570.47 down by 270.33 points or 1.61% after trading as high as 16,916.81 and as low as 16,549.36. There were 6 stocks advancing against 24 declines on the index.

The broader indices were trading on a bleak note; the BSE Mid cap index slipped 1.61% while Small cap shed 1.87% respectively. 

On the BSE sectoral space, Realty up 1.19% was the only gainers while IT down 3.35%, Bankex down 2.91%, TECk down 2.43%, Metal down 1.90% and PSU down 1.47% were the major losers on the index.

DLF up 5.26%, M&M up 1.24%, Hero MotoCorp up 1.04%, JP Associates up 0.95% and HUL up 0.71% were major gainers on the Sensex, while ICICI Bank down 4.01%, SBI down by 3.52%, Infosys down 3.37%, TCS down 3.24% and Jindal Steel down 3.22% were the major losers on the index.

Meanwhile, India’s weekly food inflation measured by the wholesale price index moderated to 9.03% for the week ended August 6, from 9.90% in the previous week, which was at four and half month high level. This moderation in food inflation is due to decline in prices of food items such as wheat, pulses, milk, egg, meat and fish and vegetables.

According to the data released by Ministry of Commerce and Industry, the index for Food Articles group declined by 1.7% to 191.9 (Provisional) from 195.3 (Provisional) for the previous week due to lower prices of fruits and vegetables and fish-marine (5% each), fish-inland (4%), urad, bajra and arhar (2% each) and wheat and moong (1% each).  However, the prices of ragi (5%), gram and maize (2% each) and jowar (1%) moved up.

The index for Non-Food Articles group rose by 1.5% to 178.4 (Provisional) from 175.8 (Provisional) for the previous week due to higher prices of flowers, raw cotton and safflower (7% each), gingelly seed, cotton seed and linseed (2% each) and soyabean and castor seed (1% each).  However, the prices of sunflower (4%), niger seed (3%), groundnut seed (2%) and gaur seed (1%) declined.

As a result, the index for primary articles group which has the highest weightage of 20.12% in WPI declined by 0.9% to 197.5 (Provisional) from 199.3 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 11.64% (Provisional) for the week ended August 6 compared to 12.22% (Provisional) for the previous week.

Meanwhile, the index for Fuel & Power group which has the weightage of 14.91% in WPI rose by 0.9% to 167.2 (Provisional) from 165.7 (Provisional) for the previous week due to higher prices of furnace oil (7%), naphtha (5%), light diesel oil (4%), aviation turbine fuel (3%) and bitumen (2%). The annual rate of inflation, calculated on point to point basis, stood at 13.13% (Provisional) for the week ended August 6 as compared to 12.19% (Provisional) for the previous week.

India's central bank has raised interest rates 11 times since March 2010 to tame headline inflation, which stood at 9.22% in July from 9.44% in June. Although the headline inflation numbers for July have shown signs of moderation, the central bank is unlikely to take a breather on its monetary tightening policy as there is no respite in the rate of price rise. On the other hand, food inflation has declined for the week under observation. However, the numbers are still above RBI’s comfort zone, which paves way for RBI to continue its anti-inflationary stance. Last week RBI Governor Duvvuri Subbarao said it was important to bring down inflation to sustain growth and that it was too early to signal a change in monetary stance, suggesting the central bank may not be done with monetary tightening.

The S&P CNX Nifty is currently trading at 4,963.00, lower by 93.60 points or 1.85% after trading as high as 5,078.60 and as low as 4,961.85. There were 7 stocks advancing against 43 declines on the index.

The top gainers of the Nifty were DLF up 4.72%, M&M up by 1.23%, JP Associates up 1.04%, Hero MotoCorp up 1.02% and ACC up 0.77%.

HCL Tech down 5.79%, Axis Bank down 5.68%, Reliance Infra down 4.60%, ICICI Bank down 4.02% and PNB down 3.96% were the major losers on the index.

Asian markets traded on a somber note, Shanghai Composite plunged 1.61%, Hang Seng sank 1.34%, Nikkei 225 plummeted 1.25%, Straits Times dipped 0.10%, Seoul Composite got butchered by 1.70% and Taiwan Weighted sank 1.64%. On the other hand, Jakarta Composite surged 1.15% and KLSE Composite was up 0.02%.

The European markets were trading in red with, France’s CAC 40 plunged 2.07%, Germany's DAX shed 1.83% and London’s FTSE slipped 1.29%.