Benchmarks off day’s high on eight months high inflation data; Nifty trades below 6100 level

Although off day’s high, the trade at Dalal Street continues to remain jubilant despite the release of eight month inflation data of 7% in October.  Not much of gains were tempered as headline inflation, although was way higher than RBI’s commonly perceived comfort level of 5%, was in-line with street estimates. Mainly pep Talk of RBI’s governor, Raghuram Rajan, who underscored no fundamental reason behind Rupee depreciation and pegged the current account deficit (CAD) for 2013-14 at $56 billion, less than 3% of GDP, mainly got the markets excited.

Local equity markets also got sentimental boost, tailing sanguine regional counterparts, which crept higher after dovish comments from Fed chairman nominee Janet Yellen suggested the Fed may not be close to scaling back its stimulus. However, in light of weak macro-economic data, both Sensex and Nifty, were trading below the psychological 20,550 and 6,100 levels respectively with gains of over one and half percent. Meanwhile, broader indices also witnessing buying were up with gains of over a percent. Nevertheless, secular up-move of the bourses was broad-based in nature as no sectoral indices on BSE were down in red. Among all, rate sensitive banking, auto and realty counters were outperformers. The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1340:813; while 140 shares remained unchanged.

The BSE Sensex is currently trading at 20515.83, up by 321.43 points or 1.59% after trading in a range of 20568.99 and 20348.27. There were 25 stocks advancing against 5 declining on the index.

The broader indices continued to trade sanguine; the BSE Mid cap index was up by 1.18%, while Small cap index gained 1.21%.

The gaining sectoral indices on the index were Bankex up by 2.99%, Capital Goods up by 2.87%, Auto up by 2.75%, Realty up by 2.18%, and Power up by 1.97%. While, there were no losers on the BSE,

The top gainers on the Sensex were Tata Motors up by 4.99%, ICICI Bank up by 4.64%, L&T up by 3.78%, M&M up by 2.95% ,and Bharti Airtel up by 2.81%. On the flip side, Coal India down by 3.00%, Cipla down by 1.38%, Sun Pharma down by 0.55%. and TCS down by 0.43% were the only losers on the Sensex.

Meanwhile, in yet another blow to the economy after the double digit retail inflation numbers, India's main inflation gauge, based on monthly WPI, accelerated to highest level since February at 7% for the month of October as against 6.46% (Provisional) for the previous month of September and 7.32% during the corresponding month in the previous year, mainly driven by higher fuel and manufactured goods prices. These numbers although way higher than RBI’s commonly perceived comfort level of 5% were in-line with street expectation. Worryingly, August inflation figures too were revised upwards to 6.99% from 6.10% earlier. Thus, with this the build-up inflation rate in the financial year so far stood at 5.64% compared to a build up rate of 4.84% in the corresponding period of the previous year.

The Wholesale Price Index for ‘All Commodities’ (Base: 2004-05 = 100) for the month of October, 2013 rose by 0.3% to 180.3 (provisional) from 179.7 (provisional) for the previous month. Out of this, Manufactured Products, the major group with weight of 64.97%, rose by 0.4% to 151.6 (provisional) from 151.0 (provisional) for the previous month. Within the group, index for Food Products group declined by just by 0.1% to 169.8 (provisional) from 170.0 (provisional) for the previous month due to lower price of tea leaf (blended) (3%), tea dust (unblended) (2%) and tea dust (blended), sugar, gur, sunflower oil and khandsari (1% each). However, the price of processed prawn (4%), ghee, mixed spices, cotton seed oil, oil cakes and copra oil (1% each) moved up.

Meanwhile, Primary Articles, the group having a weightage of 20.12% in overall index, remained unchanged at its previous month level of 251.6 (provisional). Within the group the index of ‘Food Article’ declined by 0.4% to 251.4 (provisional) from 252.3 (provisional) for the previous month due to lower price of ragi and maize (5% each), tea (4%) and poultry chicken, fruits & vegetables and fish-marine (3% each).  While, the prices of fish-inland (8%), moong (5%), coffee (3%), condiments & spices, egg, wheat, urad and pork (2% each) and rice, mutton, beef & buffalo meat, barley and arhar (1% each) moved up.

Further, Fuel & Power, having weight of 14.91% rose by 0.9% to 209.4 (provisional) from 207.5 (provisional) for the previous month due to higher price of electricity (agricultural) (13%), electricity (industry) (10%), electricity (domestic) (5%), electricity (commercial) and electricity (railway traction) (4% each), aviation turbine fuel (3%) and bitumen, lubricants and kerosene (1% each). 

Worryingly, October’s core Inflation too spiked up to 2.6% against 2.1% in the previous month. Thus, this set of data combined with double digit retail inflation number and lower than expected factory output figures exert pressure on RBI to continue its fight against inflation in its upcoming monetary policy review in Mid-December.

The CNX Nifty is currently trading at 6,085.75, up by 96.15 points or 1.61% after trading in a range of 6,101.65 and 6,036.65. There were 41 stocks advancing against 9 declining on the index.

The top gainers of the Nifty were Axis Bank up by 5.70%, Tata Motors up by 4.92%, ICICI Bank up by 4.52%, JP Associate up by 3.82%, and L&T up by 3.76%. On the flip side, Coal India down by 3.07%, Cipla down by 1.48%, HCL Tech down by 1.14%, ACC down by 0.74%, and Sun Pharma down by 0.67% were the major loser on the index.

The Asian equity indices were trading in green; Nikkei 225 up by 2.12%, Shanghai Composite up by 0.63%, Taiwan Weighted up by 0.38%, Seoul Composite up by 0.20%, KLSE Composite up by 0.34%, Straits Times up by 0.82%, Hang Seng up by 0.73%, and Jakarta Composite up by 1.34%.