Markets pare early losses with June WPI inflation numbers

Indian equity markets pared early losses but were still trading in negative territory in the late morning session on Monday, as June wholesale price index (WPI) inflation came at 4.86% as against market expectation of 5% month-on-month. Inflation rate in May stood at 4.7%. However, market sentiments remained cautious on the back of increasing crude prices, disappointing industrial production, fall in exports and a higher retail inflation data. In currency market, rupee depreciated against greenback on Monday amid increasing dollar demand from PSU banks and importers. Meanwhile, Finance Minister P Chidambaram is meeting Prime Minister Manmohan Singh today to check the slide of the Indian currency over the last few weeks. On sectoral front, oil marketing companies gained after a weak rupee forced the OMCs to hike petrol prices again by Rs 1.55 per liter. Stocks from healthcare, capital goods and FMCG sectors were trading in green, while metal, power and banking stocks were trading in red.

On the global front, most Asian stocks were trading in green after another robust performance on Wall Street, while commodities and major currencies were subdued as investors kept to the sidelines ahead of fresh economic data from China. Back home, the market breadth was favoring positive trend; there were 1094 shares on the gaining side against 861 shares on the losing side, while 122 shares remained unchanged.

The BSE Sensex is currently trading at 19,956.05, down by 2.42 points or 0.01% after trading in a range of 19,973.64 and 19,883.19. There were 16 stocks advancing against 14 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.64% and Small cap index was up by 0.37%.

The top gaining sectoral indices on the BSE were, Health Care up by 1.15%, Consumer Durables up by 0.74%, FMCG up by 0.64%, Capital Goods up by 0.58% and Realty up by 0.49%, while Metal down by 0.40%, Power down by 0.36%, Bankex down by 0.16% and PSU down by 0.06% were the top losers on the BSE sectoral space.

The top gainers on the Sensex were Wipro up by 2.06%, Bharti Airtel up by 1.82%, Dr Reddys Lab up by 1.79%, Hindustan Unilever up by 1.64% and TCS up by 1.61%.

On the flip side, Tata Steel was down by 2.80%, Infosys was down by 1.86%, Coal India was down by 1.43%, NTPC was down by 1.37% and HDFC Bank was down by 1.03% were the top losers on the Sensex.

Meanwhile, foreign direct investment (FDI) into India increased 25 percent year-on-year to $ 2.32 billion or Rs 12,623 crore in April, the highest level in the past six months, as against FDI worth $1.86 billion or Rs 9620 crore in April 2012. FDI flows year to April stood at $7.70 billion or Rs 38,974 crore.

According to the data from the Department of Industrial Policy and Promotion (DIPP), Hotel and tourism were the sector that received largest FDI equity inflows during the month ($2.32 billion), followed by pharmaceuticals ($987 million), services ($ 238 million), chemicals ($ 51 million) and construction ($ 32 million).

Geographically the most FDI in April came from Singapore ($ 1.29 billion), followed by Mauritius ($ 355 million), the Netherlands ($ 173 million), US ($ 149 million) and France ($41).

There have been voices raised regularly from different ministries for raising FDI limit in different sectors, as an increase in FDI will help support the rupee. Prime Minister Manmohan Singh too has backed the finance ministry and industry department’s plan to raise FDI ceiling in telecom to 100%, besides allowing overseas flows into several sectors without prior government approval. The finance ministry has proposed changes in FDI caps for sectors, including tea, media, petroleum and natural gas.

Recently a panel led by Department of Economic Affairs (DEA) secretary Arvind Mayaram submitted its report on reviewing FDI sectoral caps to the finance minister and recommended keeping the minimum FDI cap across sectors at 49 percent, so the FDI limit in sectors with a 26 percent cap can be hiked to 49 percent. Furthermore, the panel also recommended hiking the FDI limit in sectors with a 74 percent cap to 100 percent. However, there has some opposition from within the government for raising FDI caps, even Planning Commission was against the government’s proposal to further tweak FDI norms in retail sector. 

The CNX Nifty is currently trading at 6,008.80 down by 0.20 points after trading in a range of 6,010.90 and 5,980.95. There were 27 stocks advancing against 23 declines on the index.

The top gainers of the Nifty were Cairn up by 2.84%, Lupin up by 2.44%, HCL Tech up by 2.27%, Bank of Baroda up by 2.15% and JP Associates up by 1.91%.

On the flip side, Tata Steel down by 2.65%, Infosys down by 1.71%, Coal India down by 1.45%, NTPC down by 1.27% and HDFC Bank down by 1.26% were the major losers on the index.

Most of the Asian equity indices were trading in green; Jakarta Composite declined 0.91%, KLSE Composite decreased 0.16%. On the flip side, Shanghai Composite surged 0.87%, Hang Seng rose 0.04%, Taiwan Weighted was up by 0.42%, Seoul Composite up 0.28% and Straits Times was up by 0.18.

Japanese Nikkei remained shut for the trade today on account of public holiday.