Indian equities trade at the lowest point of day; Nifty breaches 5,200 mark

Indian equities pared off some gains to trade at the lowest point of the day hovering near neutral line as profit booking was evident across the counters since sentiments got spooked by discouraging monthly inflation numbers. Traders were seen piling up the position in TECk, IT and Health Care sector while selling was witnessed among Consumer Durables, Realty and Metal sector. Wipro, Infosys, HCL Technologies and TCS from IT pack were seen trading with gains of around one third to more than one percent helping to pull the markets. Ranbaxy, Sun Pharma, Dr Reddy’s Lab and Cipla were trading in green giving the much needed support for the benchmarks. HDFC Bank, Kotak Bank, Axis Bank and ICICI Bank was firm in green preventing the markets from falling down further. Tata Steel, SAIL, Sesa Goa, Sterlite and Jindal Steel from Metals pack was down by more than half percent to around two and half percent exerting pressure on the markets. M&M, Maruti and Tata Motors were down 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, LIC Housing Finance is trading in red on disappointing Q2 numbers. NALCO was trading in red after net profit dropped 37.8% to Rs 139.34 crore on 8.9% growth in net sales to Rs 1583.73 crore in Q2 September 2011 over Q2 September 2010.  Shree Renuka Sugars tumbled on posting dismal Q4 results. The company reported consolidated net loss of Rs 615.80 crore in Q4 September 2011 compared with net profit of Rs 128.10 in Q4 September 2010. The company reported a huge forex loss Rs 569.80 crore in Q4 September 2011 largely due to the higher translation foreign exchange loss in Brazilian subsidiaries on the back of depreciation of Brazil currency against the Indian Rupee. KingFisher Airlines was trading firm in green on reports that the company would consider proposals, including selling property, to cut its Rs 6,500 crore debt to Rs 3,000 crore. Shares of three state-run oil marketing companies HPCL, BPCL and IOC was trading in red on rising crude prices. Tulip Telecom is trading in green on reports that the company is in advanced talks with private equity firms to raise up to $75 million in the current fiscal year. On the global front, all Asian markets were seen trading in the green while the European markets too were trading in green on an optimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,200 and 17,300 levels, respectively. The market breadth on the BSE was negative in the ratio of 929:1804 while, 87 scrips remained unchanged.

The BSE Sensex is currently trading at 17,212.07 up by 19.25 points or 0.11% after trading as high as 17,391.99 and as low as 17,180.77. There were 14 stocks advancing against 16 declines on the index.

The broader indices were trading in the negative zone; the BSE Mid cap index lost 1.03% while Small cap shed 1.13%.

On the BSE sectoral space TECk up 0.98%, IT up 0.86%, Health Care up 0.77% and Bankex up 0.34% were the only gainers while Consumer Durables down 1.45%, Realty down 1.31%, Metal down 1.18%, Auto down 0.83%, and Power down 0.73% were the major losers in the space.

Bharti Airtel up 2.23%, HDFC Bank up 2.23%, Sun Pharma up 2.14%, Hero MotoCorp up 2.05% and Infosys up 1.17% were the major gainers on the Sensex, while M&M down 3.76%, Tata Steel down 2.50%, Maruti Suzuki down 1.53%, ONGC down 1.32% and Sterlite Industries down 1.19% were the major losers on the index.

Meanwhile, India’s headline inflation measured by Wholesale Price Index (WPI) for the month of October saw marginally increase to 9.73% as compared to 9.72% in September; the headline inflation has been outriding above 9.7% mark since last three weeks. The marginal increase in prices of fuel and power (0.7%) and food articles (1.83%) on sequential basis are the main reasons for surge in inflation. However, primary articles and manufactured products saw marginal decline, they fell to 11.40% and 7.66% in October, compared to 11.84% and 7.69% in September.

According to the data released by the ministry of commerce and industry, the WPI for 'All Commodities' for the month October 2011 rose by 0.6% to 156.8 (Provisional) from 155.8 (Provisional) for the previous month. Build up inflation in the financial year so far was 4.88% compared to a buildup of 4.84% in the corresponding period of the previous year.

On the month on month basis the primary articles rose by 1.0 % to 204.3 (Provisional) from 202.2 (Provisional) for the previous month. The index for ‘Food Articles’ group rose by 2.2 % to 200.9 (Provisional) from 196.5 (Provisional) for the previous month due to higher prices of fish-inland (12%), gram (10%), condiments & spices (6%), fruits & vegetables (5 %), egg (3%), urad, masur, rice and arhar (2% each) and ragi, pork, moong, tea and milk (1% each). However, the prices of fish-marine (7%), poultry chicken and bajra (5% each), maize and jowar (4% each), barley and coffee (2% each) and wheat (1%) declined.

The index for ‘Non-Food Articles’ group declined by 3.0 % to 178.9 (Provisional) from 184.4 (Provisional) for the previous month due to lower prices of safflower (19%), castor seed (12%), soyabean (9%), flowers (8%), sunflower, raw jute, raw cotton and coir fibre (6% each), groundnut seed (4%), raw silk and copra (3% each) and rape & mustard seed and niger seed (1% each). However, the prices of gingelly seed (10%), gaur seed and linseed (3%) and fodder (1%) moved up.

The index for ‘Minerals’ group rose by 0.3 % to 307.0 (Provisional) from 306.1 (Provisional) for the previous month due to higher prices of steatite (15%), magnesite (7%), barytes (5%) and crude petroleum (3%).  However, the prices of copper ore (12%), chromite (5%), bauxite and zinc concentrate (3% each), manganese ore (2%) and sillimanite and iron ore (1% each) declined.

The index for the Fuel and Power, which has weight of almost 15% in the WPI, rose by 1.0 % to 170.0 (Provisional) from 168.4 (Provisional) for the previous month due to higher prices of bitumen (5%), furnace oil (4%), naphtha and aviation turbine fuel (3% each), petrol and light diesel oil (2% each) and electricity (agricultural), electricity (domestic), electricity (commercial) and electricity (railway traction) (1% each).  However, the prices of electricity (industry) (1%) declined.

The index for Manufactured Products, which has weight of almost 65% in the WPI, rose by 0.4 % to 139.1 (Provisional) from 138.6 (Provisional) for the previous month. Under this segment of WPI, the index for ‘Food Products’, the index for ‘Paper & Paper Products’, the index for ‘Leather & Leather Products’, the index for ‘Rubber & Plastic Products’, saw increase in prices during October compared to last month. However, the index for ‘Beverages, Tobacco & Tobacco Products’, the index for ‘Textiles’ registered decline in prices in October compared to month of September.

The current rate of inflation is serious matter of concern across all segments of economy. The latest inflation data is making a strong case for Reserve Bank of India (RBI) to maintain its anti-inflationary stance and there is good possibility that RBI may go for 14th hike in its short term lending and borrowing rates. The RBI has increased its key policy rates by 375 basis points in last 18 months to tame inflation, however has failed to do so.

On the other hand, the increased interest rate has affected the Indian Banking System, which saw an almost 33.46% increase in its bad loans during second quarter of 2011-12. The gross non-performing assets of 37 listed Indian Banks increased to 1.06 lakh crore in June to September 2011 compared to Rs 79,078 in June to September 2010. This huge surge in gross NPA of Indian banks is mainly because of the non-stop hike in RBI’s key policy rates.

However on many occasions, RBI has hinted that, it may take pause in interest rate hike cycle only if inflation moderates from December. However, latest data indicates that the inflation is less likely to show any sign of moderation from its current rate. 

The S&P CNX Nifty is currently trading at 5,176.95, higher by 8.10 points or 0.16% after trading as high as 5,228.90 and as low as 5,167.30. There were 23 stocks advancing against 27 declines on the index.

The top gainers on the Nifty were Ranbaxy up 3.34%, HDFC Bank up 2.42%, Bharti Airtel up 2.38%, Sun Pharma up 2.06% and Hero MotoCorp up 1.99%.

Reliance Power down 4.14%, M&M down 4.12%, Reliance Infra down 3.12%, Tata Steel down 2.50% and SAIL down 2.38% were the major losers on the index.

Asian markets traded on an optimistic note, Shanghai Composite surged 1.92%, Hang Seng spurted 1.94%, Jakarta Composite soared 1.04%, KLSE Composite gained 0.71%, Nikkei 225 was up by 1.05%, Straits Times ascended 1.63%, Seoul Composite expanded by 2.11% and Taiwan Weighted gained 2.15%.

The European markets were trading in green with, France’s CAC 40 up 0.39%, Germany's DAX advanced 0.04% and Britain’s FTSE 100 climbed 0.11%.