Lower than expected June WPI data prompts intra-day trend reversal

Lower than expected June WPI data has led to intra-day trend reversal at D-street, which led benchmark indexes, Sensex and Nifty, reclaiming their crucial 20,000 and 6000 marks respectively. On the macro-front, the annual rate of inflation, based on monthly WPI, shot up to 4.86% (Provisional) for the month of June, 2013 (over May, 2012) as compared to 4.70% (Provisional) for the previous month, but the uptick was lower than expected. Additionally, positive start of European markets too added to the upside of the bourses which have now climbed to day’s highest point. On the global front, European shares climbed in line with Asian stocks after China’s economy grew in line with estimates and the Chinese government opened markets wider to foreign investors. Back home, stocks from Health Care, Capital Goods and Consumer Durables counters were performing exceptionally well, while those belonging to Metal and Power were the weak links of the trade. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1088: 864; while 126 shares remained unchanged.

The BSE Sensex is currently trading at 20,002.64, up by 44.17 points or 0.22% after trading in a range of 20009.43 and 19883.19. The broader indices were trading in green; the BSE Mid cap and Small cap indices were trading up 0.72% and 0.51% respectively.

The top gaining sectoral indices on the BSE were, Health Care up by 1.19%, Capital Goods up by 1.02%, Consumer Durables up by 0.80%, Realty up by 0.77%, and FMCG up by 0.77%, while Metal down by 0.30% and Power down by 0.22% were the top losers on the index.

Out of the 30 share, 18 stocks were advancing while 12 were declining on Sensex. The top gainers on the Sensex were Dr Reddys Lab up by 2.16%, TCS up by 2.14%, Bharti Airtel up by 2.08%, Hindustan Unilever up by 2.00% and Wipro up by 1.80%. On the flip side, Tata Steel down by 2.49%,  Infosys down by 1.79%, Coal India down by 1.48%, NTPC down by 1.33% and HDFC Bank down by 0.99%, were the top losers on the Sensex.

Meanwhile, deviating from last three months of easing trend and adding to the woes of policy-makers, the annual rate of inflation, based on monthly WPI, shot up to 4.86% (Provisional) for the month of June, 2013 (over May, 2012) as compared to 4.70% (Provisional) for the previous month and 7.58% during the corresponding month of the previous year. However, the rate of uptick was lower than expected. Build up inflation in the financial year so far, was 1.53% compared to a build-up rate of 2.30% in the corresponding period of the previous year. Meanwhile in a pleasant surprise, April inflation figures were revised downward to 4.77% from 4.89%.

Manufactured products, which carry weight of 64.97% in the index, rose by 0.1% to 149.3 (Provisional) from 149.1 (Provisional) for the previous month. The index for 'Food Products' group rose by 0.4% to 167.7 (Provisional) from 167.1 (Provisional) for the previous month. The index of Fuel & Power, which has weight of 14.91%, rose by 1.0% to 194.0 (Provisional) from 192.0 (Provisional) for the previous month due to higher price of light diesel oil and naphtha (3% each), non-coking coal, furnace oil  and petrol (2% each) and high speed diesel and bitumen (1% each).

The index of Primary Articles, having weight of 20.12% too rose by 1.4% to 232.5 (Provisional) from 229.3 (Provisional) for the previous month. The index for 'Non-Food Articles' group rose by 0.1% to 208.8 (Provisional) from 208.5 (Provisional) for the previous month, however the index for 'Minerals' group declined by 6.2% to 324.9 (Provisional) from 346.5 (Provisional) for the previous month.

Adding to the set of gloomy data, headline inflation edged higher after a surprise drop in industrial output, a fall in exports and higher retail inflation. However, core wholesale price index, or inflation that excludes volatile food and fuel prices, is estimated to have eased to 2% from an annual 2.4% rise in May, which may provide the central bank with some room to cut policy rates by 25 basis points in its policy review at the end of this month.

The CNX Nifty is currently trading at 6,014.60, up by 5.60 points or 0.09% after trading in a range of 6,020.80 and 5,980.95. Out of the 50 share index, 28 stocks were gaining; top gainers of the Nifty were Cairn up by 2.86%, Bank of Baroda up by 2.28%, Dr Reddys Lab up by 2.13%, HCL Tech up by 2.13% and JP Associate up by 2.10%.

On the flip side, Tata Steel down by 2.63%, Infosys down by 1.85%, Coal India down by 1.58%, NTPC down by 1.44% and HDFC Bank down by 1.35% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite surged 0.91%, KOSPI Composite up by 0.28%, Taiwan Weighted was up by 0.42% and Straits Times was up by 0.11%.

On the other hand, Jakarta Composite declined 0.70%, KLSE Composite decreased 0.08% and Hang Seng down by 0.06%.

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

European markets have got off to a positive start; with CAC 40 edging higher by 0.49%, DAX rising 0.66% and FTSE 100 gaining 0.68%.