Benchmark indices pare gains; hold their fort in green

Benchmark equity indices continue to hold their fort in green, although some profit booking was emerged because of gloomy July inflation figures; however the sentiment continues to remain optimistic amidst positive global set-up. On the macro-front, in a rude shock, India's main inflation gauge, based on monthly WPI, shot higher to 5.79% (Provisional) for the month of July, way above the Reserve Bank of India’s (RBI) perceived comfort level of 5% and against 4.86% (Provisional) for the previous month of June. However, a positive European market is cushioning the uptrend of the bourses. Keeping their head above water, Sensex and Nifty, are holding above the crucial 19,200 and 5,700 psychological levels respectively.

On the global front, European shares rose on Tuesday, climbing for a fourth straight session, on expectations of robust European data, which could see equity markets flirt with their highs of the year. Street widely expects Euro zone industrial output data for June to have risen 0.8 percent from the previous month, while Germany's ZEW economic sentiment index for August is forecast at 40.0, from 36.3 previously.

Back home, sentiment also got a lift with the surge of Oil Marketing companies stocks, post Oil Minister Veerappa Moily said that one time price hike may be on cards to bridge the gap of under-recoveries. On BSE sectoral front, Auto, Consumer Durables and Metal counters were on the fire, while Capital Goods, Banking and Fast Moving Consumer Goods were languidly trading in red. The overall market breadth on BSE is in the favour of advances, which thumped declines in the ratio of 1131:918; while 143 shares remained unchanged.

The BSE Sensex is currently trading at 19274.74, up by 44.90 points or 0.23% after trading in a range of 19337.03 and 19203.63. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading in green; the BSE Mid cap and Small cap index were trading up by 0.52% and 0.24% respectively.

The top gaining sectoral indices on the BSE were, Auto up by 2.55%, Consumer Durables (CD) up by 2.44% Metal up by 2.17%, Oil & Gas up by 1.39% and PSU up by 1.38%. While, Capital Goods down by 0.45%, Bankex down by 0.25%, Fast Moving Consumer Goods (FMCG) down by 0.24%, Power down by 0.18% and Information Technology (IT) down by 0.07%, were the only loser indices on the BSE.

The top gainers on the Sensex were Tata Motors up by 6.65%, Tata Steel up by 4.71%, Hindalco Inds up by 3.61%, ONGC up by 3.47% and Gail India up by 2.44%.

On the flip side, BHEL down by 2.07%, Dr Reddy ‘s Lab down by 1.59%, HDFC down by 1.53%, Jindal Steel down by 1.26%, and Bharti Airtel down by 1.10% were the top losers on the Sensex.

Meanwhile, in a rude shock, India's main inflation gauge, based on monthly WPI, shot higher to 5.79% (Provisional) for the month of July, way above the Reserve Bank of India’s (RBI) perceived comfort level of 5% and against 4.86% (Provisional) for the previous month of June. Build up inflation rate in the financial year so far was at 3.12% compared to a build up rate of 2.98% in the corresponding period of the previous year. However, May inflation figures were revised downwards to 4.58% from 4.70% earlier.

Surge in ‘Food Articles’ group by 3.4% to 237.7 (Provisional) from 229.8 (Provisional) for the previous month, which lifted the index of Primary Articles, having weight of 20.12%, by 2.7% to 238.8 (Provisional) from 232.5 (Provisional) on (M-o-M) basis, mainly turned out to be the main culprit behind the acceleration of July inflation number. Food Articles index rose mainly due to higher price of fruits and vegetables (11%), rice (5%), fish-inland (5%) and fish-marine, barley, urad, condiments and spices, mutton, wheat and masur (1% each). Meanwhile, the index for ‘Non-Food Articles’ group rose by 0.9% to 210.7 (Provisional) from 208.8 (Provisional) for the previous month.

Additionally, Manufactured products, which carry weight of 64.97% in the index, rose by 0.6% to 150.2 (Provisional) from 149.3 (Provisional) for the previous month. The index for 'Food Products' group rose by 0.7% to 168.9 (Provisional) from 167.7 (Provisional) for the previous month.

Further, the index of Fuel & Power, which has weight of 14.91%, rose by 3% to 199.8 (Provisional) from 194.0 (Provisional) for the previous month due to higher price of furnace oil, aviation turbine fuel, petrol and bitumen (7% each) and high speed diesel (3%). 

July inflation also prolonged previous sessions’ gaining trend on account of falling currency, which pushed up the price of imports, making raw materials more costly. Thus, with this another set of gloomy data, the central bank's task of containing inflation will likely get more difficult, since raising interest rates will adversely affect an already slowing economy. Earlier, India's annual industrial output growth measured by index of industrial production (IIP), despite several measures taken by the government including imports curb and export sops, contracted for second straight month at 2.2% at 164.3 in June, way below the general expectation of a contraction of 1.3% and 1.6% figure of last month.

The CNX Nifty is currently trading at 5,709.40, up by 10.10 points or 0.18% after trading in a range of 5,735.85 and 5,690.20. There were 26 stocks advancing against 24 declines on the index.

The top gainers of the Nifty were Tata Motors up by 6.46%, Tata Steel up by 4.41%, NMDC up by 3.53%, Hindalco Inds up by 3.50% and ONGC up by 3.38%. On the flip side, BHEL down by 2.65%, HCL Technologies down by 2.08%, Reliance Infra down by 2.03%, IndusInd Bank down by 1.72% and Jindal Steel down by 1.68% were the major losers on the index.

The most of Asian equity indices were trading in green; Straits Times rose by 0.09%, Jakarta Composite advanced by 0.76%, Seoul Composite added 0.57%, Nikkei 225 surged 1.32%. While, Taiwan weighted down by 0.44% and KLSE Composite down by 0.13% and Shanghai Composite declined by 0.32%

European shares have got off to a positive start; with CAC 40 adding 0.21%, DAX rising 0.01% and FTSE 100 adding 0.25%.