Markets hold early gains; Infosys leads the rally

Indian equity markets held early gains without reacting much to the better than expected India's annual industrial output growth measured by index of industrial production (IIP), which contracted by just 0.1% at 167.3 for the month of November 2012 against growth of 8.2% in the previous month. The figure was much higher against the street’s expectation of -0.6%. The 30 share Sensex was trading up by 97 points, while 50-share Nifty was trying to move above the 6,000 mark. In currency markets, rupee extended gains for the fourth consecutive session against dollar on the back of continued selling of the US currency by exporters and banks. On sectoral front, information technology stocks were leading the rally, as Infosys beat estimates in the third quarter result. FMCG, oil and power stocks were among the notable losers. In global markets, most Asia stocks declined on Friday after a sizeable increase in Chinese inflation, but Japanese shares advanced on the back of fresh losses for the yen. Back home, the market breadth favoring negative trend; there were 1,398 shares on the losing side against 1,029 shares on the gaining side while 136 shares remain unchanged.

The BSE Sensex is currently trading at 19,761.14 up by 97.59 points or 0.50% after trading in a range of 19,839.80 and 19,727.12. There were 7 stocks advancing against 23 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.23% and Small cap index was down by 0.21%.

The top gaining sectoral indices on the BSE were, IT up by 8.37%, TECk up by 6.15%, Consumer Durables up by 1.33% and Metal up by 0.58%, while, FMCG down by 1.63%, Oil & Gas down by 1.00%, PSU down by 0.70%, Power down by 0.59% and Bankex down by 0.57% were the top losers on the index.

The top gainers on the Sensex were Infosys up by 15.54%, Wipro up by 3.45%, TCS up by 3.22%, Sterlite Industries up by 2.16% and Tata Steel up by 0.87%.

On the flip side, ONGC was down by 2.25%, Hindustan Unilever was down by 2.01%, ITC was down by 2.01%, Sun Pharma was down by 1.61% and Tata Power was down by 1.52% were the top losers on the Sensex.

Meanwhile, as per Prime Minister's Economic Advisory Council chairman C Rangarajan, country's headline inflation may miss the expected 7 percent-mark by this fiscal-end if the government goes ahead with increasing administered prices of diesel.  While addressing an event organized by the Indian Institute of Foreign Trade, he said, ‘in the normal case, it is expected to come down to 7 percent (at the end of current fiscal). But, some adjustments are being made in the administered prices they may come in the way of headline inflation coming down.’

Inflation based on the wholesale price index (WPI) cooled down to 7.2 percent in November this year from 10.9 percent in April 2010. However, if the government accepts the Kelkar Committee’s recommendation of immediate hike in fuel prices and complete deregulation of diesel prices, a further moderation in the short-run may not be possible.

Further, the oil ministry had already moved a note to Cabinet based on recommendation of the Vijay Kelkar Committee, which was appointed by the finance ministry to suggest a roadmap for fiscal consolidation. The committee had recommended an immediate hike in price of diesel by Rs 4 per litre, kerosene by Rs 2 a litre and LPG by Rs 50 per cylinder.

Moreover, for attaining fiscal consolidation, the government must reduce the mounting subsidy bill, should act quickly to raise diesel rates to bring them in line with global. Justifying the government’s proposed move of raising fuel prices Rangarajan said, the decision to raise the diesel prices would be a right decision on a medium term and headline inflation may moderate to 6 percent in 2013-14.

The S&P CNX Nifty is currently trading at 5,985.75 up by 17.29 points or 0.29% after trading in a range of 6,018.85 and 5,975.55. There were 11 stocks advancing against 39 declines on the index.

The top gainers of the Nifty were Infosys up by 15.14%, Wipro up by 3.55%, TCS up by 3.17%, Sesa Goa up by 2.02% and HCL Tech up by 1.28%.

On the flip side, ONGC down by 2.35%, HUL down by 2.05%, ITC down by 2.03%, BPCL down by 2.01% and Sun Pharma down by 1.84% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite declined 1.41%, Hang Seng slipped 0.38%, KLSE Composite decreased 0.19%, Straits Times dipped 0.40%, KOSPI Composite tumbled 0.42% and Jakarta Composite down by 0.02%.

On the flip side Nikkei 225 was up by 1.50% and Taiwan Weighted was up by 0.10%.