Indian equities pare losses; trade continues on a weak note

Indian equities continued their weak trade as hefty bouts of profit booking was evident across the counters since sentiments got spooked not only by global developments but also by discouraging domestic earnings and economic reports. On the domestic front, the surprisingly worse than expected IIP numbers dampened investors’ mood who were further reluctant to accumulate stocks at lower levels. However marketmen took some respite on reports that India’s weekly food inflation measured by the Wholesale Price Index (WPI), eased to 11.81% for week ended on October 29 compared to 12.21% in the last week. Traders were seen piling up the position in Auto, FMCG and Oil & Gas sector while selling was witnessed among Bankex, Metal and Capital Goods sector. M&M, Hero MotoCorp, Bajaj Auto and Tata Motors were trading in green giving the much needed support to the markets. ITC and HUL from FMCG sector were trading with gains of around half to one percent and prevented the markets from falling down further. Industry heavyweight RIL and CAIRN India was up by more than one percent each giving the much needed support for the benchmarks. ICICI Bank, Axis Bank, SBI, HDFC Bank and PNB from banking sector were down by around one to four and half a percent, exerting pressure on the markets. Hindalco, Tata Steel, Jindal Steel, Sterlite and SAIL were trading in red dragging the market lower. L&T and BHEL from Capital Goods sector were too seen putting pressure on the markets.

In the scrip specific development, Mahindra Satyam was firm after consolidated net profit rose 5.7% to Rs 238 crore in Q2 September 2011 over Q1 June 2011. DLF and Tata Steel tumbled on posting disappointing numbers. Hindustan Construction Company (HCC) was trading firm after the environment and forest ministry gave conditional clearance to the company's long-pending Lavasa project. Kingfisher Airlines tumbled to new low on reports that aviation minister will talk to finance minister to get the airline company some assistance from banks. On the global front, all Asian markets were seen trading in the green barring Jakarta Composite and KLSE Composite while the European markets too were trading in green on an optimistic note. In Europe, former European Commissioner Mario Monti appeared to be in line to replace Silvio Berlusconi as Italy’s prime minister and form a new government, while Greece’s main political parties agreed to participate in a coalition government headed by former European Central Bank Vice President Lucas Papademos. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,200 and 17,400 levels, respectively. The market breadth on the BSE was negative in the ratio of 802:1941 while, 98 scrips remained unchanged.

The BSE Sensex is currently trading at 17,362.10 down by 166.91 points or 0.96% after trading as high as 17,279.23 and as low as 17,096.84. There were 11 stocks advancing against 29 declines on the index.

The broader indices were trading in the negative zone; the BSE Mid cap index lost 1.09% while Small cap plunged 1.54%.

On the BSE sectoral space Auto up 0.75%, FMCG up 0.61%, Oil & Gas up 0.11% and Health Care up 0.04% were the only gainers while Bankex down 2.95%, Metal down 2.34%, Capital Goods down 2.10%, Realty down 2.07% and Consumer Durables down 1.69% were the major losers in the space.

M&M up 2.60%, Hero MotoCorp up 1.98%, Wipro up 1.65%, Sun Pharma up 1.60% and TCS up 1.32% were the major gainers on the Sensex, while Hindalco down 4.65%, ICICI Bank down 4.55%, Tata Steel down 4.23%, SBI down 3.66% and L&T down 2.82% were the major losers on the index.

India’s weekly food inflation measured by the Wholesale Price Index (WPI), eased to 11.81% for week ended on October 29 compared to 12.21% in the last week. This decline in food inflation after four successive increases is mainly because of decline in prices of decline in vegetables, wheat, onion and poultry products.

According to the data released by the Ministry of Commerce and Industry, the index for ‘Food Articles’ group declined by 0.2% to 201.7 (Provisional) from 202.2  (Provisional) for the previous week due to lower prices of fish-inland (3%), bajra (2%) and fruits & vegetables, moong and condiments & spices (1% each).  However, the prices of gram, egg, fish-marine, ragi and poultry chicken (2% each) and maize, urad and tea (1% each) moved up.

However, the index for ‘Non-Food Articles’ group rose by 0.2% to 177.5 (Provisional) from 177.2  (Provisional) for the previous week due to higher prices of flowers (7%), gaur seed (4%), rape & mustard seed (2%) and sunflower, raw rubber and raw jute (1% each).  However, the prices of groundnut seed (3%), coir fibre, linseed, raw silk and niger seed (2% each) and copra, gingelly seed and castor seed (1% each) declined.

As a result the index for ‘Primary Articles’ which accounts for 20.12% of the WPI declined by 0.1 % to 204.7 (Provisional) from 205.0 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 11.43% (Provisional) for the week ended October 29 as compared to 12.08% (Provisional) for the previous week.

Meanwhile, the index for ‘Fuel and Power’ group, which accounts for 14.91% of WPI, remained unchanged at their previous week`s level of 169.8 (Provisional) and 14.50% (Provisional) for the week ended October 29.

Earlier in this week, Finance Minister Pranab Mukherjee said that food inflation in India is a matter of great concern and the principle reason for the recent spike in inflation is that the demand for eggs, meat, vegetables and milk has increased.

Despite the marginal decline in food inflation, it still is hovering close to 12% mark, which is almost double the Reserve Bank of India’s comfort zone. However, RBI expects inflation to start moderating from December.

The S&P CNX Nifty is currently trading at 5,169.55, lower by 51.50 points or 0.99% after trading as high as 5,198.60 and as low as 5,142.25. There were 21 stocks advancing against 29 declines on the index.

The top gainers on the Nifty were M&M up 2.84%, Sun Pharma up 1.89%, Hero MotoCorp up 1.77%, Wipro up 1.73% and Power Grid up 1.55%.

Hindalco down 4.80%, ICICI Bank down 4.77%, Axis Bank down 4.19%, Tata Steel down 4.03% and SBI down 3.68% were the major losers on the index.

Asian markets traded largely on a positive note, Shanghai Composite added 0.06%, Hang Seng climbed 0.91%, Nikkei 225 gained 0.16%, Seoul Composite spurted 2.77%, Straits Times edged higher 0.03% and Taiwan Weighted advanced 0.80%. On the flipside, Jakarta Composite lost 0.42% and KLSE Composite declined 0.08%.

The European markets were trading in green with, France’s CAC 40 up 0.87%, Germany's DAX advanced 0.81% and Britain’s FTSE 100 climbed 0.48%.