Benchmarks shift gears to trade in negative territory post the release of 14 months high WPI data

In a knee jerk reaction to 14 month high November WPI data which cemented hopes of 25 basis rate hike in RBI’s upcoming mid-quarterly policy review on December 18, Indian equity markers shifting gears are now trading in negative territory. On the macro-front, India's main inflation gauge, based on monthly WPI, shot higher at 7.52% for the month of November as against 7% (Provisional) for the previous month of October and 7.24% during the corresponding month in the previous year.

Trading with loss of close to two tens of a percent, while Sensex is languishing below the 20,700 level, Nifty is managing to hold above the 6,150 bastion. Meanwhile, broader indices too paring gains are trading with gains of over 0.10%. Sectorally, Oil & Gas, Auto and Metal counters are the weakest links of the trade, while Consumer Durable, Information Technology and HealthCare are witnessing some buying. Rupee’s depreciation for fourth straight session has mainly augured well for IT stocks.

Further, lack of support from regional counterparts has also weighed on the sentiment. In the global market, Asian peers were languishing in red, with investors just a few short days away from finding out the fate of U.S. monetary stimulus, in what looks set to be a very close call indeed. The Federal Reserve is scheduled to hold meeting on Tuesday and Wednesday to discuss tapering its $85 billion in monthly bond buying and opinion is divided on whether it will move this week or wait for January or March.

Closer home, the BSE Sensex is currently trading at 20686.54, down by 29.04 points or 0.14% after trading in a range of 20764.52 and 20667.02. There were 7 stocks advancing against 22 stocks declining on the index, while 1 stock remained unchanged. The overall market breadth on BSE is in the favour of declines which have outnumbered advances in the ratio of 1178:926; while 139 shares remain unchanged.

The broader indices too pared gains; with BSE Mid cap and Small cap indices trading up by 0.12% and 0.16% respectively

The gaining sectoral indices on the BSE were Consumer Durables up by 1.22%, Information Technology up by 1.19%, TECk up by 0.96%, HealthCare up by 0.81% and Capital Goods up by 0.62%. While, Oil and Gas down by 1.09%, Auto down by 0.70%, Metal down by 0.61%, FMCG down by 0.57% and Power down by 0.29% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.19%, SSLT up by 1.93%, TCS up by 1.30%, ICICI Bank up by 1.21% and L&T up by 1.19%. On the flip side, Jindal Steel down by 2.87%, Hindalco Inds down by 1.77%, Sun Pharma down by 1.72%, ONGC down by 1.71% and M&M down by 1.51%.

Meanwhile, concerned over acute liquidity crunch faced by the Indian fertiliser sector, the Fertiliser Ministry has sought an additional Rs 10,000 crore from the government as the Department of Fertiliser (DoF) did not get funds under the first supplementary grants and second supplementary grants would be made available only in December. So far this fiscal, the government has allocated Rs 70,586 crore funds to Department of Fertiliser (DoF) as against the total demand of Rs 1,05,497 crore for the 2013-14 fiscal. Commodity wise, a subsidy of Rs 41,158.85 crore was allocated for urea and Rs 29,426.88 crore for P&K fertilisers. The DoF has been able to pay subsidy dues till May to fertiliser firms manufacturing urea locally, while for non-urea fertilizers, it can pay subsidy only till this month.

Non-allocation of subsidy fund to fertilizer industry on time has left it with no money to pay subsidy bills for the third and fourth quarters of the financial year ending in March 2014. IFFCO, country's largest producer of urea, may witness decline in its profitability by 50 per cent in the current financial year due to a pending subsidy payment of about Rs 4,500 crore, while, state-run National Fertilisers Ltd (NFL) and Madras Fertilisers Ltd (MFL) could face closure by the end of this month due to liquidity crisis.

Earlier in September, the Finance ministry had agreed to pay only Rs 5,500 crore subsidy under a special banking arrangement (SBA) as against Rs 12,000 crore sought by the Department of Fertilisers (DoF). Meanwhile, in order to boost the fertilizer sector, the government has taken measures. The government agreed to bear interest of 8 per cent per annum with 2.7 per cent interest to be borne by the industry. Furthermore, it is also considering an additional Rs 10,000 crore more under the special banking arrangement against the subsidy due for the current year. Regarding the gas availability to fertilizer sector, the government has recently stated that the gas allocation policy will be revised to remove the cap imposed on the supply of domestic gas to fertiliser sector and accorded priority for gas utilisation policy 2008 in order to make new investments in the sector.

The CNX Nifty is currently trading at 6,156.55, down by 11.85 points or 0.19% after trading in a range of 6,183.25 and 6,151.00. There were 13 stocks advancing against 37 declining stocks on the index.

The top gainers of the Nifty were Infosys up by 2.25%, SSLT up by 1.72%,Power Grid Corporation of India up by 1.18%, ICICI Bank up by 1.13% and TCS up by 1.06%. On the flip side, Jindal Steel down by 3.08%, Ambuja Cement down by 2.55%, BPCL down by 2.16%, Hindalco Inds down by 2.06% and Sun Pharma down by 1.89% were the major losers on the index.

The Asian equity indices were trading in red; Hang Seng down by 0.48%, Nikkei 225 down by 1.62%, Taiwan Weighted down by 0.75%, KLSE Composite down by 0.20%,  Seoul Composite down by 0.09%, Straits Times down by 0.34%, Jakarta Composite down by 1.24% and Shanghai Composite down by 1.43%.