Indian equities trim losses; trade continues on lackadaisical note

Indian equities trimmed off its losses and are hovering near the neutral line though investors became cautious and are witnessing a selling spree at every rise in the market. Though sentiments got some support and market inched higher after India’s food inflation moderated sharply to single digit at 9.01% for the week ended November 12, its third straight week of decline, but benchmarks failed to hold on gains. Market participants were cautious and were seen squaring off risky positions all across the board, ahead of November series derivative contract expiry, which is scheduled for today. In the fight between bulls and bears to gain control it seems bulls are finding hard to take control over the market with bears pouncing back and making markets trade on a weak note. Traders were seen piling up the position in Capital Goods, Auto and Power sector while selling was witnessed in Consumer Durables, Metal and IT sector stocks. SAIL, Hindalco, Sesa Goa, Sterlite, Tata Steel and Jindal Steel from Metal pack were seen trading in red putting pressure on the markets. Index heavyweight RIL is seen trading with a cut of more than one and half percent. Also BPCL and HPCL from Oil & Gas pack were seen trading in red dragging the markets lower. PNB, SBI and HDFC Bank from Banking pack were seen trading with a cut off around half to more than one and half percent exerting pressure on the market.

However, Wipro and TCS from IT sector were trading firm in green helping to prevent markets fall further. In the scrip specific development, Shapoorji Pallonji group firm - Gokak textiles and Forbes & Company jumped after the group's managing director, Cyrus Mistry, was named as the successor to Tata Group chairman Ratan Tata. Shares of organized retailers Vishal Retail, Pantaloon Retail India, Store One Retail India, Koutons Retail India and Shoppers Stop were trading firm on reports that the Cabinet is slated to consider a proposal to allow 51% foreign direct investment in multi-brand retail today, November 24, 2011. Shares of fertiliser companies like Deepak Fertilizer & Petrochemicals, National Fertilizer, Zuari Industries and RCF were trading in green on reports that fertiliser firms are renegotiating import deals of potash, phosphate and other raw materials, as a sharp rupee fall has lifted production cost. On the global front, all Asian markets were seen trading in a mix note while the European markets were trading in green on optimistic note. However, cautiousness loomed across the region amid heightened nervousness over the spreading European debt crisis contagion and disappointing US economic reports. On one hand, the poor results of German bond auction, which met with only 60 percent demand, dissuaded investors from taking large bets. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 4,700 and 15,700 levels, respectively. The market breadth on the BSE was negative in the ratio of 1162:1479 while, 115 scrips remained unchanged.

The BSE Sensex is currently trading at 15,677.97 down by 22.00 points or 0.14% after trading as high as 15,729.01 and as low as 15,479.97. There were 16 stocks advancing against 14 declines on the index.

The broader indices were trading on a mix note; the BSE Mid cap index gained 0.07% while Small cap slipped 0.44%.

On the BSE sectoral space, Capital Goods up 1.07%, Auto up 0.89%, Power up 0.53%, PSU up 0.30% and HealthCare up 0.14% were the top gainers while Consumer Durables down 0.98%, Metal down 0.66%, IT down 0.59%, Oil & Gas down 0.34% and TECk down 0.21% were the major losers in the space.

Bajaj Auto up 1.91%, M&M up 1.89%, L&T up 1.81%, ONGC up 1.68% and JP Associates up 1.66% were the major gainers on the Sensex, while Hindalco down 1.59%, RIL down 1.53%, Hero MotoCorp down 1.50%, Infosys down 1.13% and HDFC down 0.94% were the major losers in the index.

Meanwhile, India’s weekly food inflation measured by the Wholesale Price Index (WPI) slipped below double digits for the first time in five weeks at 9.01% for the week ended November 12, compared to 10.63% in the last week. For the week under review, prices of vegetables, fruits and milk showed a decline of 1.6%, however, all other food items including prices of eggs and poultry became expensive on an annual basis.

According to the data released by the Ministry of Commerce and Industry, the index for ‘Food Articles’ group  declined by 0.7% to 198.5 (Provisional) from 199.8 (Provisional) for the previous week due to lower prices of poultry chicken (6%), bajra and fruits and vegetables (2% each) and condiments and spices, urad, fish-inland, maize and moong (1% each). However, the prices of masur and coffee (4% each), tea (2%) and barley, ragi, fish-marine, wheat and gram (1% each) moved up.

The index for 'Non-Food Articles' group declined by 0.7% to 174.7 (Provisional) from 175.9 (Provisional) for the previous week due to lower prices of raw rubber (9%), gaur seed (3%), sunflower, groundnut seed and raw cotton (2% each) and mesta, copra, coir fibre and castor seed (1% each). However, the prices of flowers (9%), fodder and gingelly seed (3% each), linseed and raw silk (2% each) and raw jute and rape and mustard seed (1% each) moved up.

However, the index for 'Minerals' group rose by 0.4% to 310.5 (Provisional) from 309.2 (Provisional) for the previous week due to higher prices of crude petroleum (1%). As a result the index for ‘Primary Articles’ which accounts for 20.12% of the WPI declined by 0.5% to 201.9 (Provisional) from 203.0 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 9.08% (Provisional) for the week ended November 12 as compared to 10.39% (Provisional) for the previous week.

Meanwhile, the index for ‘Fuel and Power’ group, which accounts for 14.91% of WPI, remained unchanged at their previous week’s level of 171.5 (Provisional) and 15.49% (Provisional) for the week ended November 12.

In spite of food inflation coming into single digit after hovering above 10% mark for five successive weeks, is still significantly above the Reserve Bank of India’s (RBI) comfort zone. However, this significant decline in the food inflation is expected to provide some relief to the government and RBI, which have been fighting to curb the high inflation. 

On November 23, Finance Minister Pranab Mukherjee said that ‘the government’s immediate priority is to contain price rise. High inflation and also some of the efforts to control liquidity has a detrimental effect on short-run growth. The immediate priority is to control inflation so that long-term growth prospects are not affected.’

Though after it had hiked rates in October the RBI said it would hold off another increase if inflation showed signs of decline, however, RBI's Governor D Subbarao said he would not hesitate to tighten rates further if inflation did not come down as expected. Overall inflation too has remained stubbornly high, near double digits, since January 2010. Headline inflation based on the wholesale price index was recorded at 9.73% in October, according to the latest data available.

The S&P CNX Nifty is currently trading at 4,693.95, lower by 12.50 points or 0.27% after trading as high as 4,714.25 and as low as 4,639.10. There were 25 stocks advancing against 25 declines on the index.

The top gainers on the Nifty were GAIL up 3.03%, Cairn up 2.51%, IDFC up 2.33%, Bajaj Auto up 1.87% and L&T up 1.77%.

SAIL down 4.61%, Reliance Power down 2.50%, Ambuja Cement down 2.02%, RIL down 1.95% and Hindalco down 1.76% were the major losers on the index.

Asian markets continued to trade on a mixed note, Hang Seng rose 0.40%, KLSE Composite gained 0.84%, Straits Times added 0.14%, Seoul Composite climbed 0.67%, Jakarta Composite inched up 0.09% and Taiwan Weighted surged 0.85%. On the flipside, Shanghai Composite dropped 0.73%, and Nikkei 225 plummeted 1.80%.

The European markets were trading in green with, France’s CAC 40 up 0.94%, Germany's DAX ascended 1.05% and Britain’s FTSE 100 inched higher 0.16%.