Positive trade continues in market despite weak inflation numbers

Indian equity benchmarks witnessed some profit booking at higher levels but continued trading in the positive territory despite of weak inflation numbers. The 30-share BSE Sensex gained more than 130 points, while the 50-share NSE Nifty holding 5,200 mark. Meanwhile, October inflation has come in at 9.73% versus 9.72%. Primary articles inflation is at 11.4% versus 11.84%, manufactured products inflation at 7.66% versus 7.69% while fuel group inflation has come in at 14.79% versus 14.09%. Investors were trading cautious as inflation numbers dampen their hopes. On sectoral front, IT, TECK and pharmaceuticals stocks were among the most impressive gainers. Shares from oil and realty sectors were mostly trading firm. Automobile, capital goods and consumer durables stocks have given up some of their gains. Metal, capital goods and PSU stocks were drifted lower after a good spell in positive territory.  Banking shares, which have suffered recently on asset quality concerns, recovered slightly. The country's No. 3 lender HDFC Bank rose 3%. On the global front, Asian stocks also rose on hopes that new leaders in Italy and Greece will take decisive action to save their indebted nations from bankruptcy and fend off a wider financial meltdown in the euro zone. Back home, the market breadth favoring the negative trend; there were 1,144 shares on the gaining side against 1,280 shares on the losing side while 106 shares remained unchanged.

The BSE Sensex is currently trading at 17,328.96, up by 136.14 points or 0.79%. The index has touched a high and low of 17,391.99 and 17,302.12 respectively. There were 20 stocks advancing against just 9 declining ones on the index and one remained unchanged.

The broader indices slipped in red; the BSE Mid cap and Small cap indices was down by 0.13% and 0.26% respectively.

The top gaining sectoral indices on the BSE were, IT up by 1.21%, TECk up by 1.21%, HC up by 1.14%, Oil & Gas up by 0.90% and Bankex up by 0.80%. On the flip side Metal down by 0.10%, PSU down by 0.03% and CG down by 0.02% were the top losing sectoral indices on the BSE.

The top gainers on the Sensex were HDFC Bank up by 3.00%, Sun Pharma up by 2.86%, Hindalco Industries up by 2.64%, Hero MotoCorp up by 1.93% and Bharti Airtel up by 1.90%. On the flip side, Tata Steel down by 1.23%, Coal India down by 1.10%, M&M down by 0.91%, BHEL down by 0.79% and Tata Power down by 0.69% were the top losers on the Sensex.

Meanwhile, Finance Minister Pranab Mukherjee expects India’s gross domestic product (GDP) growth for the June-September 2011 to be lower than the growth achieved in April-June quarter. He said, with the worldwide financial crisis, he did not expect the GDP growth rate to improve in this quarter, although some improvement might be possible in the third quarter.

On the back of unfavorable economic condition in the global economy, high inflation along with high interest rates regime in the first quarter of 2011-12, country’s economic growth fell to 7.7%, the slowest in the last 6 quarters.

Mukherjee further admitted that private sector investment has declined, because of the negative sentiments. However, he tried to lift the moral of Indian corporates and top bankers by saying, 'the global financial crisis may have some adverse impact on the economy, but my appeal to you is don't indulge in any sort of despondency or frustration.' By adding further he urged the corporate sector to make more fresh investment and boost growth. 'The government is with you. Sometimes we have to move carefully, but we are cautious about the pitfalls.'

On the financial health of the government, Mukherjee accepted that in the current economic environment, it would be difficult to meet the fiscal deficit target of 4.6% in the 2011-12. However, finance minister made it clear that the government would not hesitate to take difficult decisions to correct fiscal parameters, if needed.

On inflation, Mukherjee said that the government was taking every possible step to bring down inflation, from double digits. Headline inflation measured by Wholesale Price Index (WPI), for August stood at 9.72%, inflation has been hovering above 9% mark for almost a year. 

On the liquidity situation in the Indian banking system, State Bank of India chairman Pratip Chaudhuri said that there was ample liquidity in the banking system and no dearth of capital for lending. 'We are waiting for projects to come.'

On this issue finance minister said bank lending needs to grow at 20-21% to achieve a 9% GDP growth. By adding he said that the government has infused Rs 1,000 crore in banks this fiscal so far and will inject another Rs 5,000 crore over the next five months. Banks would need fresh funds to support their lending growth as Basel III regime is imminent from January 2013, and this would increase the requirement of capital.

The S&P CNX Nifty is currently trading at 5,207.35 higher by 38.50 points or 0.74%. The index has touched a high and low of 5,228.90 and 5,200.75 respectively.  There were 34 stocks advancing against 16 declining ones on the index.

The top gainers of the Nifty were HDFC Bank up by 3.06%, Sun Pharmaceuticals up by 2.84%, Ranbaxy up by 2.77%, Hindalco Industries up by 2.76% and Cairn up by 2.46%.

On the flip side, IDFC down by 1.35%, Tata Steel down by 1.19%, M&M down by 1.17%, Coal India down by 1.01% and BHEL down by 0.89% were the major losers on the index.

All the Asian equity indices were trading in the green, Shanghai Composite surged 1.77%, Hang Seng spurted 2.16%, Jakarta Composite soared 1.11%, KLSE Composite gained 0.67%, Nikkei 225 was up by 1.10%, Straits Times ascended 1.61%, Seoul Composite expanded by 2.13% and Taiwan Weighted gained 2.15%.