Post session - Quick review

Respite came to Indian equity markets, after five straight days of down-trend, leading to correction of half a percent in the passing week. However, unexpected ease in November WPI data, which re-ignited hopes of rate cut, came as a shot in arm to the rate sensitive’s, providing the required fillip to the Indian equity markets in the last trading session of the week.  The wholesale price index (WPI), India's main inflation gauge, unexpectedly cooled down to 7.24% (Provisional) for the month of November, 2012 as compared to 7.45% for October and 9.46% during the corresponding month of the previous year. Sentiment were mainly buttressed with reform push of the cabinet, which approved a new law for land acquisition and a new body to fast-track infrastructure projects, both aimed at kick-starting growth. However, benchmark equity indices shot to highest level of the session in the dying hours of the trade, after Chidambaram stated that current fiscal deficit target of 5.3% is achievable for the current fiscal, key criteria for averting a credit-rating downgrade to junk status.

Outperforming the globe, local equity markets witnessed substantial favor, which saw 30 share barometer index, Sensex, scooping close to half a percent gains, to end past 19300 psychological level. Similarly, widely followed 50 share index, Nifty, too concluded past the 5850 crucial bastion.  However, the session clearly belonged to Midcap index, which went home with gains of over half a percent, while Small cap index too gained 0.15%.

On the global front, Asia pacific shares ended mostly down on concerns that US lawmakers are still too far apart to avert a fiscal crisis, as an end-of-year deadline looms eclipsed the euphoria witnessed on account of pick-up in China’s manufacturing sector. The HSBC flash purchasing managers' index for December rose to 50.9, a 14-month high and the fifth straight monthly gain. Additionally, European shares after starting off on a positive note slipped into negative terrain.

Closer home, besides rate sensitive’s counters- Auto, Realty and Bankex, Metal and PSU stocks too provided fodder to the already berserk bulls.  However, stocks from Health Care, Consumer Durables and Power Shares emerged as the party poopers, which ended down in red.  In sector specific action, brighter economic outlook for world's second largest oil consumer, China, mainly pumped in strength into Metal Stocks. Realty stocks also gained traction. The trigger for the modest gains in realty stocks was the Cabinet clearance of Land Acquisition Bill, which strengthens landowners’ rights during acquisition for development and is likely to be introduced in Parliament during the final week of the winter session. Additionally, fertilizers stocks, viz, Rashtriya Chemicals Fertilizers, National Fertilizers, Gujarat State Fertilisers, too witnessed buying after the Cabinet Committee on Economic Affairs (CCEA) approved the long pending urea investment policy that will incentives setting up of new fertiliser plants and expansion of existing ones. Moreover, Capital goods stocks, namely, Larsen & Toubro, Jaiprakash Assocaties and Punj Lloyd gained steam after cabinet approved the creation of a special panel on Thursday to speed up the implementation of big-ticket infrastructure projects. On the other hand , telecom stocks ended mixed after federal cabinet on Thursday approved a renewed push to sell telecommunications bandwidth, post a muted response to an auction held in November left four key zones unsold, with the auction's starting prices being slashed by 30% for the Delhi, Mumbai, Karnataka and Rajasthan service areas in the 1,800 MHz category.

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1453: 1464 while 126 scrips remained unchanged. (Provisional)

The BSE Sensex gained 92.96 points or 0.48% and settled at 19322.22. The index touched a high and a low of 19348.85 and 19193.11 respectively. 17 stocks advanced, while 13 stocks were declined on the index (Provisional)

The BSE Mid-cap index was up by 0.59%, while Small-cap index was up by 0.15%. (Provisional)

On the BSE Sectoral front, Metal up by 2.44%, Bankex up by 1.41%, Realty up by 1.04%, PSU up by 0.74% and IT up by 0.62%, while Consumer Durables down by 1.05%, Healthcare down by 0.26 and Power down by 0.24% were the losers in the space.

The top gainers on the Sensex were Sterlite Inds up by 3.39%, Hindalco Inds up by 3.28%, Tata Steel up by 3.03%, SBI up by 2.81% and Jindal Steel up by 2.59%, while, Bharti Airtel down by 1.58%, BHEL down by 1.45%, Tata Power down by 0.90%, Dr Reddys Lab down by 0.85% and Cipla down by 0.74% were the top losers in the index. (Provisional)

Meanwhile, after rising to the highest level in the year for the month of September, the wholesale price index (WPI), India's main inflation gauge, in a big relief, unexpectedly cooled down to 7.24% (Provisional) for the month of November, 2012 as compared to 7.45% for October and 9.46% during the corresponding month of the previous year, thereby registering second consecutive decline. However, the annual reading for the month of September was revised sharply higher to 8.07% from earlier of 7.81%.

Re-igniting the hopes of rate-cut from Reserve Bank of India (RBI), in its upcoming monetary policy review on December 18, 2012, the figures were way below the consensus estimates of 7.6% figure for the month of November. Build up inflation in the financial year so far was 4.84% compared to a buildup of 5.28% in the corresponding period of the previous year.

The pleasant surprise came in from the index for Manufactured Products, which carries weight of almost 65% in the index, which rose tad by 0.1% to 148.0 from 147.9 for the previous month. The index for ‘Food Articles’ group rose by 0.6% to 166.7 from 166.7 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 0.3% to 220.8 from 220.2 for the previous month. The index for ‘Food Articles’ group rose by 0.3% to 213.2 from 212.5 in the previous month, while, the index for ‘Non Food Articles’ group rose by 1.8% at 201.3 (Provisional) from 197.7 (Provisional) for the previous month. However, the index for ‘Minerals’ group declined by 2.4% to 347.1 (Provisional) from 355.8 (Provisional) for the previous month.

Indian economy is headed for the weakest full-year growth in a decade, at about 6%, far below the near double-digit pace before the global economic downturn. But despite the slowdown, the Reserve Bank of India (RBI) has been hesitant to lower rates since April because of above the comfort level inflation of nearly seven percent, worsened by a weak rupee that has added to the cost of fuel imports.

However, this time around, an unexpected drop in inflation figure strengthens the case for RBI to go for rate cut in its upcoming monetary policy meet, with just ‘CRR’ cut case too not being ruled out by some economist. However, this could be followed by rate cut in RBI’s monetary policy in January, as with the given apex bank’s conservative approach, Reserve Bank of India Governor Duvvuri Subbarao may wait for more evidence that inflation is on an easing trend before heeding Finance Minister Palaniappan Chidambaram’s call for cheaper credit to back a government policy overhaul. Furthermore, adding to the positive’s, core inflation rate, which the RBI holds as key to its rate decisions, also declined to 4.5% for the month of November against the figure of 5.6% in September and 5.2% in October.

India VIX, a gauge for markets short term expectation of volatility lost 3.26% at 14.23 from its previous close of 14.71 on Friday. (Provisional)

The S&P CNX Nifty gained 28.10 points or 0.48% to settle at 5,879.60. The index touched high and low of 5,886.10 and 5,839.15 respectively. 32 stocks advanced against 18 declining on the index. (Provisional)

The top gainers on the Nifty were Bank of Baroda was up 3.75%, Hindalco up 3.71%, Sesa Goa up 3.40%, Tata Steel up 2.92% and SBI was up 2.77%. On the other hand, Bharti Airtl down 1.86%, Power Grid down by 1.48%, JP Associates down by 1.36%, BHEL down by 1.29% and Siemens down by 1.24% were the top losers. (Provisional)

Most of the European markets were trading mixed, France’s CAC 40 was down by 0.03%, and the United Kingdom’s FTSE 100 down 0.04% while Germany’s DAX up 0.27%