Benchmarks hold early gains; India’s CPI-inflation shoots up to 10.56% in December

Indian equities continued to trade firm in late morning session as investors maintained their buying spree in software companies amid hopes of robust earnings from Tata Consultancy Services later today after Infosys’ upbeat third quarter performance last week. On the global front, most of the Asian equity indices were trading in the green but the gains remained capped as investors remained on sidelines awaiting Chinese growth data due later in the week. Back home, dashing hopes of any policy rate cut by the RBI in the upcoming monetary policy review, annual rate of inflation, based on the consumer prices index (CPI) in India, crept higher in the month of December at 10.56 percent.  Meanwhile, food inflation in the CPI surged to 13.04 percent in December from 11.81 percent in November 2012. According to the data released by Central Statistics Office, provisional annual inflation rate based on all India general CPI (Combined) for December 2012 on point to point basis stood at 10.56 percent as compared to 9.90 percent for the previous month of November 2012. The traders were seen piling up position in IT, TECk and Realty while selling was seen in Health Care and Auto. In scrip specific development, Geojit BNP Paribas Financial Services surged on reporting over two-fold increase in the net profit at Rs 13 crore for the third quarter ended December 2012 as against Rs 4.3 crore during the same quarter of the previous year. Hero MotoCorp was trading under pressure on reporting that the company’s workers protesting at Gurgaon plant against no wage hike. Jaiprakash Power Ventures was trading in red after the company reported net loss of Rs 97.58 crore in Q3 December 2012, compared with net profit of Rs 59.52 crore in Q3 December 2011.

The NSE Nifty and BSE Sensex were managing to hold their psychological 5950 and 19800 levels respectively. The market breadth on BSE was negative; advances: declines in the ratio of1188:929.

The BSE Sensex is currently trading at 19830.95 up by 167.31 points or 0.85% after trading in a range of 19853.91 and 19689.09. There were 20 stocks advancing against 10 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.34% and Small cap index was up by 0.27%.

The top gaining sectoral indices on the BSE were, IT up by 2.25%, TECk up by 1.88%, Realty up by 1.03%, Bankex up by 0.88% and Oil & Gas up by 0.83% while, Health Care down by 0.12% and Auto down by 0.07%, were the only losers on the index.

The top gainers on the Sensex were Infosys up by 3.79%, ONGC up by 1.88%, ICICI Bank up by 1.80%, TCS up by 1.59%, and ITC up by 1.15%.

On the flip side, Maruti Suzuki was down by 1.27%, Cipla was down by 0.78%, Sun Pharma was down by 0.65%, Tata Power was down by 0.61% and Bajaj Auto was down by 0.60% were the top losers on the Sensex.

Meanwhile, worried to contain the fiscal deficit at 5.3 per cent of GDP for current fiscal, the finance ministry has reportedly said that no new funds will be provided to departments in the last quarter unless they provide 'utilisation certificates' for previous allocations. On under utilization of provided funds, finance ministry has reported that several departments have been sitting on funds that have been allocated to them two years ago. The government pays around eight per cent interest on the credit that it raises from the banking system, and it does not make any sense for government departments or public sector undertakings under their control to sit on this cash when they are not going to utilise it.  

While, the reduction in quantum of funds, which are not properly utilized by the public sector departments, will lead to a significant saving in the government's expenditure in the current financial year it will lead to more allocations of funds to the departments like social sector programmes, defence and even the home ministry.

Further the government has planned to speed up the disinvestment in public sector companies and accelerate the tax collections from companies such as Nokia in order to collect more revenue in the remaining part of the financial year. Additionally, it is also expected the increasing revenue collections in telecom companies from one-time spectrum fee and reframing of spectrum auction scheduled to March, help to curtail the fiscal deficit.

The government is expected to raise Rs 30,000 crore through the disinvestment route. Earlier, in 2011-2012, the government fell way short of the target of raising Rs 40,000 crore through disinvestment. Now the target was turned down to Rs 30,000 crore for the current fiscal. 

However, it would be difficult for the government to contain the fiscal deficit because of the reasons like rising subsidy bill for petroleum products which is close to the Rs 163,000-crore mark with food and fertiliser subsidies and sluggish taxes collection in this fiscal. The Kelkar Committee on fiscal consolidation had observed that overall tax collections, including indirect taxes, could fall short of the target by as much as Rs 60,000 crore.

The S&P CNX Nifty is currently trading at 5,993.65 up by 42.35 points or 0.71% after trading in a range of 6,002.45 and 5,962.15. There were 31 stocks advancing against 19 declines on the index.

The top gainers of the Nifty were Infosys up by 3.69%, ICICI Bank up by 2.02%, DLF up by 1.74%, ONGC up by 1.59%, and AXIS Bank up by 1.46%.

On the flip side, Ultra Tech Cements down by 1.63%, Maruti Suzuki down by 1.61%, Lupin down by 1.22%, Power Grid down by 1.10%, and Reliance Infra down by 0.88%, were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite soared 46.24 points or 2.06% to 2,289.23, Hang Seng rose 158.76 points or 0.68% to 23,422.83, Jakarta Composite surged 49.34 points or 1.15% to 4,355.25, KLSE Composite increased 1.97 points or 0.12% to 1,684.67 and KOSPI Composite was up by 4.25 points or 0.21% to 2,000.66.

Straits Times dropped 14.94 points or 0.46% to 3,201.79 and Taiwan Weighted was down by 18.92points or 0.24% to 7,799.68.

Japanese Nikkei remained shut for trade today on account of Coming of Age (Adults') Day.