Indian equities trim losses; trade continues on a weak note

Indian equities pared off maximum losses but are still trading on a weak note in red in absence of buying among investors who turned out to be cautious as inflation for primary articles for week ended October 22 increased at 12.08% versus 11.75%, food articles inflation is at 12.21% versus 11.43%, while fuel group inflation is at 14.5% versus 14.7%. Traders were seen piling up the position in Power, Realty and Oil & Gas sector while selling was witnessed among IT, Consumer Durables and Metal sector. Also, 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 further lead a spread of weak sentiments among marketmen. IT stocks like Infosys, Wipro, TCS and HCL Technologies were down with a cut off around half to one and half percent excreting pressure on the markets helping pull the benchmark barometer down. Metal stocks like SAIL, Tata Steel, Sterlite and Hindalco were down further adding pressure on the market. However, Tata Power, PowerGrid and Reliance Power from Power pack were in green helping to lock the downside. While heavyweight like Reliance Industries was up by more than half percent helping to pull the market. In the scrip specific development, Jet Airways was trading in green after the company announced its tie-up with New York-based JetBlue Airways. ADA Group company stocks like Reliance Communications, Reliance Power and Reliance Infra were seen trading in green. Raymond was trading in red on reports that the Income Tax Department today conducted searches at the premises of Chairman and Managing Director of the Raymond Group, Gautam Singhania, in Mumbai and Delhi over alleged tax evasion. Allahabad Bank was trading in green extending Wednesday's rise triggered by strong Q2 September 2011 earnings. Berger Paints India traded firm in green after consolidated net profit rose 21.7% to Rs 49.27 crore on 22% growth in net sales to Rs 719.87 crore in Q2 September 2011 over Q2 September 2010. 

On the global front, Asian markets were trading in red while the European markets were too trading in red on pessimistic note. Investors are worried that Greece would reject the rescue package and default on its debt which will trigger a potential departure of Greece from the European Union, sparking a fresh economic downturn. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,250 and 17,400 levels, respectively. The market breadth on the BSE was negative in the ratio of 1174:1494 while, 121 scrips remained unchanged.

The BSE Sensex is currently trading at 17,432.23 down by 32.62 points or 0.19% after trading as high as 17,447.32 and as low as 17,278.03. There were 12 stocks advancing against 18 declines on the index.

The broader indices were trading in the red terrain; the BSE Mid cap index shed 0.12% while Small cap slipped 0.18%.

On the BSE sectoral space, Power up 1.51%, Realty up 0.53%, Oil & Gas up 0.47%, PSU up 0.42% and Capital Goods up 0.40% was the only gainer while IT down 1.11%, Consumer Durables down 0.69%, Metal down 0.67%, Auto down 0.45% and Bankex down 0.32% were the major losers in the space.

BHEL up 3.59%, Tata Power up 3.09%, Bharti Airtel up 2.15%, DLF up 1.82% and JP Associates up 1.17% were the major gainers on the Sensex, while HUL down 1.97%, Tata Motors down 1.77%, Sterlite Industries down 1.70%, Tata Steel down 1.48% and Infosys down 1.47% were the major losers on the index.

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 is currently trading at 5,250.80, lower by 7.65 points or 0.15% after trading as high as 5,253.25 and as low as 5,201.85. There were 28 stocks advancing against 22 declines on the index.

The top gainers on the Nifty were BHEL up 3.82%, Tata Power up 2.99%, RCOM up 2.32%, DLF up 2.25% and Bharti Airtel up 2.13%.

IDFC down 2.08%, SAIL down 2.00%, HUL down 1.91%, Sterlite down 1.83% and Tata Motors down 1.74% were the major losers on the index.

Asian markets traded on a negative note, Hang Seng plummeted 2.49%, Jakarta Composite plunged 1.75% KLSE Composite sank 0.58%, Straits Times down 1.33%, Seoul Composite sank 1.48% and Taiwan Weighted shed 1.82%. On the flipside, Shanghai Composite gained 0.16%.

Stock markets in Japan remained shut on observance of a national holiday.

The European markets were trading in red with, France’s CAC 40 down 0.63%, Germany's DAX declined 1.48% and Britain’s FTSE 100 dropped 0.64%.