Indian benchmarks rebound in tandem with European peers; settle with slender gains

Indian frontline equity indices staged a smart bounce back after hitting intraday lows in the second half of trade and recovered over a percentage point from thereon to finish in the positive territory with marginal gains. The benchmarks extended their consolidation phase for the second straight session as investors lacked conviction to open fresh positions amid a lot of uncertainties surrounding the European region. However, the late rebound in sentiments came on reports that the Greek government is on the brink of collapse as Papandreou's majority sank after Greek finance minister broke ranks over the referendum. Investors’ concerns eased on hopes that a potential collapse of Papandreou’s government would avoid the confidence vote on Greece’s bailout package, thus preventing a Greek default. Marketmen also lacked fervor ahead of the G-20 meeting in Cannes amid a European financial crisis and fears of a global recession. On the domestic front, the upside for the markets also was capped since government released weekly inflation numbers which showed that India's food inflation spurted to 12.21% during the week ended October 22, the highest level in nine months. Furthermore, India’s service sector PMI moderated for the second successive month in October since new business grew at its slowest pace since May 2009 on the back of slowdown in the global economy and monetary policy tightening. Meanwhile, PSU oil marketing companies continued to gain traction for a second straight session on the back of reports that government owned oil companies are planning to hike the petrol prices for the 13th time since June 2010, due to depreciation in rupee which increased the cost of imports of crude oil.

Earlier on Dalal Street, the benchmark got off to a sluggish opening as investors largely remained influenced by the pessimistic sentiments prevailing in Asian markets amid reports that a bailout loan from the Europe and the IMF to Greece will be withheld until after a referendum in December. The indices failed to show any resilience and continued to drift to lower levels through the morning session. But some recovery in sentiments appeared after the key indices hit intraday lows in early afternoon trades. Hefty buying interests in the Power and high beta Real estate stocks led the recovery and helped the bourses to settle in the positive zone. Eventually the NSE’s 50-share broadly followed index Nifty, settled with single digit gains above the crucial 5,250 support level while Bombay Stock Exchange’s Sensitive Index Sensex rose around twenty points and closed above the psychological 17,450 mark. Moreover, the broader markets finished on a mixed note but stayed in close proximity with the previous closing levels. On the BSE sectoral space, the Power index remained the top gainer in the space and settled with over one and half a percent gains followed by the rate sensitive Realty pocket which too went home with similar gains. On the flipside, the IT and Consumer Durables counters settled as the top laggards in the space after suffering losses of over half a percent. The markets consolidated on larger volumes of over Rs 1.16 lakh crore while the turnover for NSE F&O segment too remained on the higher side as compared to Wednesday at over 1 lakh core. The market breadth remained pessimistic as there were 1,329 shares on the gaining side against 1,460 shares on the losing side while 141 shares remained unchanged.

Finally, the BSE Sensex gained 17.08 points or 0.10% to settle at 17,481.93, while the S&P CNX Nifty advanced by 7.30 points or 0.14% to close 5,265.75.

The BSE Sensex touched a high and a low of 17,527.10 and 17,278.03 respectively. The BSE Mid cap index was down by 0.04%, while Small cap index was at neutral line.

The major gainers on the Sensex were BHEL up 4.18%, DLF up 3.92%, Tata Power up 3.23%, Bharti Airtel up 2.15% and Jaiprakash Associate up 2.09%. While, Hindustan Unilever down 2.08%, Tata Motors down 1.74%, Sterlite Industries down 1.70%, Tata Steel down 1.23% and ICICI Bank down 0.98% were the major losers on the index.

The top gainers on the BSE sectoral space were Power up 1.64%, Realty up 1.55%, Oil & Gas up 1.08%, Capital goods (CG) up 0.68% and PSU up 0.58%. While IT down 0.73%, Consumer Durables (CD) down 0.58%, Auto down 0.39%, Metal down 0.35% and FMCG down 0.19% were top losers on the BSE sectoral space.

Meanwhile, India’s weekly food inflation measured by Wholesale Price Index (WPI), jumped to nine month high level at 12.21% for the week ended on October 22, compared to 11.43% in the last week. The jump in weekly food inflation was mainly because of increase in prices of vegetables, fruits, milk and protein-rich items.

According to the data released by the Ministry of Commerce and Industry, the index for ‘Food Articles’ group rose by 0.7 % to 202.2 (Provisional) from 200.8  (Provisional) for the previous week due to higher prices of fish-inland (9%), poultry chicken and fish-marine (4% each), egg, condiments & spices and ragi (2% each) and gram, tea and bajra (1% each).  However, the prices of moong (3%), masur (2%) and barley, arhar, urad and fruits & vegetables (1% each) declined.

However, the index for 'Non-Food Articles' group declined by 1.4 % to 177.2 (Provisional) from 179.7  (Provisional) for the previous week due to lower prices of flowers (20%), raw silk (9%), raw jute (4%), castor seed (3%), sunflower, raw cotton and raw rubber (2% each) and rape & mustard seed (1%). However, the prices of soyabean (4%), gaur seed (3%) and copra and groundnut seed (1% each) moved up.

As a result the index for ‘Primary Articles’ which account for 20.12% of the WPI rose by 0.2 % to 205.0 (Provisional) from 204.5 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 12.08 % (Provisional) for the week ended October 22 over as compared to 11.75 % (Provisional) for the previous week. 

Meanwhile, the index for ‘Fuel and Power’ group, which account for 14.91% of WPI, declined by 0.2 % to 169.8 (Provisional) from 170.1 (Provisional) for the previous week due to lower prices of light diesel oil (5%), furnace oil, naphtha and aviation turbine fuel (1% each).  However, the prices of bitumen (1%) moved up. The annual rate of inflation, calculated on point to point basis, stood at 14.50 % (Provisional) for the week ended October 22 as compared to 14.70 % (Provisional) for the previous week.

The food inflation which is almost twice the Reserve Bank of India’s (RBI’s) comfort zone is matter of concern for policy making authorities. In order to control inflation, the RBI has increased its key policy rates for 13 times since March 2010, however, this attempt of RBI has failed as inflation continues its upward trajectory. However, the apex bank expects inflation to start moderating from December.

 The S&P CNX Nifty touched high and low of 5,281.60 and 5,201.85, respectively.

The top gainers on the Nifty were DLF up 5.16%, BHEL up 4.83%, ACC up 2.81%, Reliance Infra up 2.73% and Tata Power up 2.69%. On the flip side, SAIL down 2.66%, IDFC down 2.34%, HUL down 1.87%, Tata Motors down 1.69% and Sterlite Industries down 1.38% were the top losers on the index.

The European markets were trading in green. France's CAC 40 rose 1.28%, Britain's FTSE 100 up by 0.48%, and Germany's DAX increased by 1.65%.

Euro-zone fears continue to spank Asian pacific stocks after France and Germany told Athens it would not receive its next aid tranche until the referendum is passed. In addition investors are waiting for the European Central Bank’s policy decision and post-meeting press conference, the first under new president Mario Draghi, later Thursday and for catalysts from the Group of 20 nations’ summit.

Moreover, all the Asian markets barring Chinese Shanghai Composite ended the session in the negative terrain. Hong Kong shares fell by two and a half percent, dragged by HSBC Holdings Plc and local property names even as mainland markets strengthened in healthy volume as more investors positioned for a fourth-quarter rally in Shanghai. However, China stocks ended up 0.2 percent on Thursday, the highest level since late September, as sentiment was underpinned by ample liquidity in the financial system and assurances the government would be flexible with macro-economic policy.

Japanese markets remained closed for the trade on Thursday in observance of a national holiday.