Benchmarks trade lower on disappointing IIP and CPI data

Extending southward journey to fourth straight session, Indian equity benchmarks have made a negative start as investors reacted negatively to the double whammy of contraction in IIP and surge in Consumer Price Index. India's annual industrial output growth, measured by index of industrial production (IIP), contracted by 1.8% at 168.5 in the month of October over the corresponding month of previous year. Moreover, sentiments also remained dampened after the CPI (Combined) for November 2013 on point to point basis surged to nine months high level at 11.24%. Some pessimism also came in after Reserve Bank of India (RBI) Governor Raghuram Rajan said inflation was higher than the central bank's comfort zone, while growth was weaker than estimated and vowed to calibrate policy carefully.

On the global front, the US markets remained under pressure on concern of Fed scaling back its stimulus program in the near future after a report showed slightly stronger than expected retail sales growth in the month of November, also shrugging the report of a sharp jump in weekly jobless claims. However, Asian equity benchmarks, after a sluggish opening, pared their gains to enter into green terrain.

Back home, sentiments also remained down-beat after Indian rupee fell and bonds yields surged on Friday after retail inflation spiked, raising bets of a rate hike at the RBI's policy meeting next week. The rupee fell was last trading at 62.14/15 per dollar as against previous close of 61.81/82 per dollar. On the sectoral front, auto witnessed the maximum traction in trade followed by technology and software, while banking, capital goods and power remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction, while the market breadth on the BSE was positive; there were 534 shares on the gaining side against 643 shares on the losing side while 53 shares remain unchanged.

The BSE Sensex opened at 20867.17; about 58 point lower compared to its previous closing of 20925.61, and has touched a high and a low of 20867.17 and 20762.36 respectively. The index is currently trading at 20819.48, down by 106.13 points or 0.51%. There were 9 stocks advancing against 20 declines and one stock remains unchanged on the index.

The overall market breadth has made a weak start with 43.31% stocks advancing against 52.20% declines. The broader indices were trading mixed; the BSE Mid cap down by 0.16% and Small cap indices trading up by 0.06%.

The top gaining sectoral indices on the BSE were, Auto up by 0.38%, Teck up by 0.36% and IT up by 0.29%, while Bankex down by 1.43%, Capital Goods down by 1.31%, Power down by 0.90%, FMCG down by 0.57% and PSU down by 0.55% were the top losers on the sectoral index.

The top gainers on the Sensex were Tata Motors up by 2.40%, Wipro up by 1.42%, Bharti Airtel up by 1.38%, Tata Steel up by 0.67% and Coal India up by 0.64%. On the flip side, BHEL was down by 2.60%, ICICI Bank was down by 2.58%, L&T was down by 1.38%, HDFC was down by 1.22% and NTPC was down by 1.21% were the top losers on the Sensex.

Meanwhile, for the first time in four months, India's annual industrial output growth, measured by index of industrial production (IIP), contracted by 1.8% at 168.5 in the month of October as against growth figure of 2% in the previous month and worse than the street’s expectation of contraction of around 1%. The same was 8.4% during October 2012. Meanwhile, the cumulative growth for the period April-October 2013-14 over the corresponding period of the previous year stood at 0%.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of October 2013 stood at 118.1, 178.8 and 162.6 respectively, with the corresponding growth rates of  (-) 3.5%, (-) 2.0% and 1.3% as compared to October 2012. Meanwhile, the cumulative growth in the three sectors during April-October 2013-14 over the corresponding period of 2012-13 has been (-) 2.7%, (-) 0.3% and 5.3% respectively.

Industrial activity was hit as the infrastructure output, which includes coal, electricity, cement, crude oil and steel factories contracted. Output in those industries, which account for more than one-third of overall factory production, fell 0.6% annually compared with a reading of 8% in September.

On use based classification, capital goods production, a barometer for investments in the economy, grew by of 2.3% at 246.7 for October as against 231.7 in September. Further, Consumer durables and Consumer non-durables have recorded growth of (-) 12.0% and 1.8% respectively, with the overall growth in Consumer goods being (-) 5.1%.

Thus, this data, which increases the challenges before policy makers looking to revive growth in the economy comes on the heels of a marginal pickup in economic growth in the last quarter from a four-year low. Asia's third largest economy, India, expanded an annual 4.8% in the quarter through September, raising hopes for stronger growth in coming quarters.

The CNX Nifty opened at 6,201.30; about 35 points lower as compared to its previous closing of 6,237.05, and has touched a high and a low of 6,208.60 and 6,185.25 respectively. The index is currently trading at 6,201.20, down by 35.85 points or 0.57%. There were 13 stocks advancing against 37 declines on the index.

The top gainers of the Nifty were Tata Motors up by 2.39%, Wipro up by 1.38%, Bharti Airtel up by 1.25%, Coal India up by 0.85% and Tata Steel up by 0.62%. On the flip side, ICICI Bank down by 2.63%, BHEL down by 2.57%, IndusInd Bank down by 2.51%, BPCL down by 2.27% and Bank of Baroda down by 2.08% were the major losers on the index.

most of the Asian equity indices were trading in green; Shanghai Composite rose 0.63 points or 0.03% to 2,203.42, Hang Seng strengthened 100.01 points or 0.43% to 23,318.13, KLSE Composite increased 8.87 points or 0.48% to 1,842.74, Nikkei 225 surged 156.32 points or 1.02% to 15,498.14, Straits Times added 0.30 points or 0.01% to 3,059.34 and Taiwan Weighted was up by 26.68 points or 0.32% to 8,388.01.

On the flip side, Jakarta Composite declined 13.59 points or 0.32% to 4,198.63 and Seoul Composite was down by 7.60 points or 0.39% to 1,960.33.