Benchmarks shoot-up to intra-day high; sluggishness prevails

After falling in a knee jerk reaction to the 10 months September’s inflation numbers, Indian equity markets have now shot up to intra-day high with the positive opening of European markets. However, the downtrend continues to prevail at Dalal Street mainly on concerns of poor Q2 earnings. 30 share barometer index, Sensex, declining by 50 points is oscillating 18600 level, while 50 share index, Nifty, is trading above 5650 crucial mark. Major pressure seems to be coming in from stocks belonging to Information Technology counters, which continue to decline post poor revenue guidance of software bellwether, Infosys. Following the suite are the stocks belonging to Consumer Durable, Technology and Bankex counters. Banking stocks have enticed additional weakness post limiting the room for an interest-rate cut to revive the economy, the wholesale price index (WPI), India's main inflation gauge, unexpectedly spurted to its 10 months high level at 7.81% for the month of September, as compared to 7.55% (Provisional) for the previous month.

On the global front, although Asian pacific shares continued to showcase mixed trend, European markets have got off to a stable start after weekend data from China showed strong exports, though there was also news of a sharp drop in producer prices.

Closer home, strong showing was witnessed in Health Care and Oil & Gas counters. Gains in Oil & Gas space is mainly led by the uptick of market bellwether Reliance Industries, which is trading firm ahead of reporting its Q2 earnings. In a quarter led by refining, the company is expected to post an over 20 percent growth in profits sequentially. Meanwhile, even shares of cement manufacturer have rallied on the bourses in otherwise weak market on reports that the Competition Appellate Tribunal (COMPAT) has asked the fair trade regulator Competition Commission of India (CCI) to give fresh copies of its order levying over Rs 6,300 crore in penalties on 11 cement companies in June this year for cartelisation, providing them with complete details on production, pricing and sales. Ambuja Cements, ACC, Madras Cements, UltraTech Cement, Mangalam Cement, J K Cement, Shree Cement and Heidelberg Cement India all have rallied in the range of 0.50-2.50%. The overall market breadth on BSE is in the favour of advances which have thrashed declines in the ratio of 1306:1235, while 129 shares remained unchanged.

The BSE Sensex is currently trading at 18622.12, down by 53.06 points or 0.28% after trading in a range of 18,690.99 and 18,596.65. There were 12 stocks advancing against 18 declines on the index.

The broader indices continued to showcase mix trend; the BSE Mid cap index was down by 0.11% and Small cap index added 0.50%.

The top gainers on the BSE sectoral space were, HC up by 0.56%, Oil & Gas up by 0.24%. While, CD down by 0.83%, IT down by 0.80%, TECK up by 0.76%, Bankex down by 0.43% and PSU down by 0.42% were the top losers on the sectoral space.

The major gainers on the Sensex were Hindalco Industries up by 1.36%, Cipla up by 1.00%, Dr Reddy’s Lab up by 0.74%, Mahindra & Mahindra up by 0.71% and Tata Power up by 0.68%. On the other hand, Maruti Suzuki down by 2.26%, Coal India down by 1.41%, Sterlite Industries down by 1.26%, Infosys down by 1.20% and Bharti Airtel down by 0.90% were major losers on the Sensex.  

Meanwhile, limiting the room for an interest-rate cut to revive the economy, the wholesale price index (WPI), India's main inflation gauge, unexpectedly spurted to its 10 months high level at 7.81% for the month of September, as compared to 7.55% (Provisional) for the previous month, but lower than the rate of 10% during the corresponding month of the previous year.

The much awaited figure was worse than the consensus estimates of 7.70%. Build up inflation in the financial year so far was 4.60% compared to a buildup of 4.48% in the corresponding period of the previous year. Moreover, the annual reading for the month of July was revised sharply higher to 7.52% from earlier of 6.87%.

The murky figure comes in the wake of government increasing the prices of heavily subsidized diesel on September 13 to rein in spending, with the index for fuel and power group with a weightage of 14.91% in index blowing by 4.00% to 188.3 from 181.00 in the previous month, due to higher prices of aviation turbine fuel (13%), light diesel oil (11%), naphtha and high speed diesel (9% each), furnace oil (7%) and kerosene (1%).  However, the prices of bitumen (1%) declined.

Further, the index for Manufactured Products, which carries weight of almost 65% in the index, rose by 0.5% to 147.7 from 146.9 for the previous month. The index for ‘Food Articles’ group rose by 1.2% to 166.5 from 164.5 in the previous month.

Meanwhile, the index for primary articles group, which has a weightage of 20.12% in overall WPI and includes food, non-food and minerals group too rose by 0.5% to 220.7 from 219.5 for the previous month. The index for ‘Food Articles’ group rose by 0.6% to 212.7 from 211.4 in the previous month. However, the index for ‘Non Food Articles’ group declined by 2.1% at 202.4 (Provisional) from 206.8 (Provisional) for the previous month. Furthermore, the index for ‘Minerals’ group rose by 4.9% to 347.6 (Provisional) from 331.3 (Provisional) for the previous month.

Faced with a big hole in the budget and the prospect of losing its investment grade credit rating, the government hiked prices of heavily subsidized diesel on September 13, the impact of which is reflected on India’s main inflation guage, which has spurted to 10 months high level, which in turn seems to limiting RBI’s abilities of easing monetary policy. However, still there are minute chances that RBI temporarily dropping its fight against inflation, would reciprocate to the government gestures, by slashing rates in its upcoming second quarterly monetary policy review on October 30, 2012.

The S&P CNX Nifty is currently trading at 5,659.30, down by 16.75 points or 0.30% after trading in a range of 5,676.85 and 5,651.05. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were Ranbaxy up by 1.19%, Hindalco up by 1.10%, Dr Reddy’s Lab up by 1.07%, Ambuja Cement up by 1.00% and Grasim Indsutries was up by 0.99%. While, Maruti down by 2.14%, Coal India down by 1.48%, DLF down by 1.46%, Sesa Goa down by 1.24% and Infosys down by 1.21% were the losers on the index

Asian equity indices were trading mixed; Kospi Composite declined 0.40%, Shanghai Composite lost 0.41%, Taiwan Weighted slid 0.24%, Jakarta Composite descended 0.18%, KLSE Composite surrendered 0.21% while Nikkei 225 advanced 0.51%, Straits Times added 0.20% and Hang Seng added 0.10% were the gainers.

European markets got off to a firm start; with CAC 40 adding 0.92%, DAX gaining 0.33% and FTSE 100 edging higher by 0.06%.