Benchmarks pare off some gains; Nifty holds above crucial 6000 mark

Failing to capitalize more on the easing inflation figures, benchmark equity indices have relinquished some gains, as investors remained more concerned about the widening divergence between the between WPI and CPI. Meanwhile, sharp uptick of February’s inflation numbers, also spooked investors’ sentiment. Although, benchmarks did spurt in a knee jerk reaction to the inflation readings that were lowest since November 2009, but the uptrend was reciprocated with bout of profit-booking. Paring portion of gains, Sensex, currently is trading up over 50 points, above its 19650 level, while 50 share index Nifty, up by 25 points is trading above its crucial 6000 level. Broader indices too witnessing some selling pressure have pared their gains. On the BSE sectoral front, Oil & Gas, PSU and Health Care counters have emerged as the pockets of strength, while Consumer Durables, Fast Moving Consumer Goods are eating into bourses’ gains. Additionally, mostly negative start of European counterparts is adding to the underlying cautious tone at D-street. European shares edged off five-year highs on Monday, with renewed concerns about ongoing problems facing banks sparking a wave of profit-taking in the second best-performing sector of the past month.

Closer home, the BSE Sensex is currently trading at 19767.68, up by 76.01 points or 0.39% after trading in a range of 19831.79 and 19652.69. There were 19 stocks advancing against 10 declines on the index and one remained unchanged. The overall market breadth on BSE is in the favour of advances, which have thumped declines in the ratio of 1076:992; while 135 shares remained unchanged.

The broader indices too pared off some gains; the BSE Mid cap and Small cap index were trading up by 0.37% and 0.23% respectively.

The gaining sectoral indices on the BSE were, Oil & Gas up by 0.94%, PSU up by 0.83%, Health Care up by 0.71%, Bankex up by 0.53% and TECk up by 0.48% while Consumer Durables down by 0.79%, Fast Moving Consumer Goods down by 0.17%, were the losers on the BSE sectoral space.

The top gainers on the Sensex were ONGC up by 1.90%, Bharti Airtel up by 1.83%, Hindalco Industries up by 1.67%, Gail India up by 1.66% and SBI up by 1.18%.

On the flip side, Wipro down by 0.72%, Bajaj Auto was down by 0.59%, Tata Steel was down by 0.84%, Dr Reddys Lab was down by 0.55% and BHEL was down by 0.37% were the top losers on the Sensex.

Meanwhile, in a big surprise, the annual rate of inflation, based on monthly WPI, slowed down to its lowest since 2009 at 4.89% (Provisional) for the month of April, 2013 (over April, 2012) as compared to 5.96% (Provisional) for the previous month and 7.50% during the corresponding month of the previous year. Build up inflation in the financial year so far, was 0.53% compared to a build up of 1.55% in the corresponding period of the previous year. However in a disappointment, February inflation figures were revised upward to 7.28% from 6.84%.

Manufactured products, which carry weight of 64.97% in the index, rose by 0.2% to 148.7 (Provisional) from 148.4 (Provisional) for the previous month. The index for 'Food Products' group rose by 0.5% to 165.8 (Provisional) from 164.9 (Provisional) for the previous month. The index of Fuel & Power, which has weight of 14.91%, declined by 0.7% to 194.6 (Provisional) from 195.9 (Provisional) for the previous month due to lower price of aviation turbine fuel (6%), petrol and furnace oil (2% each), lpg(1%).  However, the price of bitumen (1%) moved up.

The index of Primary Articles, having weight of 20.12% too rose by 2.0% to 228.00 (Provisional) from 223.6 (Provisional) for the previous month. The index for 'Non-Food Articles' group rose by 1.4% to 209.7 (Provisional) from 206.9 (Provisional) for the previous month, while the index for 'Minerals' group declined by 0.7% to 355.0 (Provisional) from 357.4 (Provisional) for the previous month.

However, it remains to be noted that besides the sharp uptick of February inflation figures, the widening divergence between WPI and CPI remains the matter of concern. Annual rate of inflation, based on the consumer prices index (CPI), declining for second straight month, finally came in single digit at 9.39% in April, as against 10.39% seen in the previous month.

Meanwhile, C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council termed the inflation data as reassuring, and said that April WPI has now moved into a “Comfort Zone.” “RBI will have room to cut interest rates further if inflation eases”.

The Reserve Bank of India, so far, has obliged the street with rate cuts for three times, with the latest being the one on May 3. Drawing comfort from 3-year low inflation, Reserve Bank of India (RBI), in its ‘Monetary Policy Statement 2013-14’, reduced repo rate by 25 basis points from 7.5% to 7.25% with immediate effect, its lowest since May 2011.The CNX Nifty is currently trading at 6,011.75, up by 31.30 points or 0.52% after trading in a range of 6,026.20 and 5,970.05. There were 38 stocks advancing against 11 declines on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were Power Grid up by 2.23%, ONGC and GAIL were up by 1.85%, Bharti Airtel up by 1.83% and Ranbaxy up by 1.80%.

On the flip side, HCL Technologies down by 2.35%, Ambuja Cements down by 0.83%, Reliance Infra down by 0.66%, Bajaj-Auto down by 0.63% and BHEL down by 0.53%, were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite plunged by 1.1%, Hang Seng was lower by 0.38%, KLSE Composite decline by 0.05%, Nikkei 225 was down by 0.16% and Jakarta Composite was down 0.17%.

On the other hand, Taiwan Weighted was up by 0.04%, Straits Times added 0.22% and KOSPI Composite gained 1.03%.