Benchmarks gyrate around neutral line in late afternoon session

Indian equities pared losses to gyrate around neutral line in the late afternoon session on account of buying in front line counters. Though markets were trading mostly in positive territory from early trades but the sentiments turned gloomy after 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. Traders were seen piling positions in IT, Consumer Durables and TECK stocks, while selling was witnessed in Oil & Gas, FMCG and Auto sector stocks.  In scrip specific development, SpiceJet was trading in green after the company announced a three-year, interline agreement with Singapore-based Tigerair, a move that is expected to increase the carrier’s load factor. GlaxoSmithKline Pharmaceuticals was trading firm after parent company GlaxoSmithKline plc announced a voluntary open offer.

On the global front, the Asian markets were trading in red, while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,150 and 20,700 levels respectively. The market breadth on BSE was negative in the ratio of 991:1250 while 155 scrips remained unchanged.

The BSE Sensex is currently trading at 20725.90, up by 10.32 points or 0.05% after trading in a range of 20764.52 and 20647.56. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; with the BSE Mid cap and Small cap indices trading up by 0.21% and 0.24% respectively.

The gaining sectoral indices on the BSE were Information Technology up by 1.61%, Consumer Durables up by 1.39%, TECK up by 1.20%, Capital Goods up by 0.94% and Health Care up by 0.76% While, Oil & Gas down by 1.29%, FMCG down by 0.56%, Auto down by 0.34%, PSU down by 0.13% and Power down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were SSLT up by 5.06%, Infosys up by 2.41%, ICICI Bank up by 1.43%, L&T up by 1.40% and Coal India up 1.39%. On the flip side, Jindal Steel down by 2.41%, Sun Pharma down by 1.85%, Reliance Industries down by 1.78%, Bharti Airtel down by 1.67% and M&M down by 1.56%.

Meanwhile, cementing the case for a 25 basis point rate hike in RBI’s upcoming mid-quarterly policy review, India's main inflation gauge, based on monthly WPI, accelerated to highest level since September 2012 at 7.52% for the month of November as against eight month high figure of 7.00% (Provisional) for the previous month of October and 7.24% during the corresponding month in the previous year, mainly driven by food price inflation which rose at the fastest clip since June 2010. Food prices rose 19.93% year-on-year in November, faster than an annual rise of 18.19% in October.

In another worrying trend, the inflation number for September was revised sharply upwards to 7.05% from earlier estimate of 6.46%. Meanwhile, build up inflation rate in the financial year so far was 6.70% 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 November, 2013 rose by 0.7% to 181.5 (provisional) from 180.3 (provisional) for the previous month. Out of this, Manufactured Products, the major group with weight of 64.97%, rose by 0.2% to 151.9 (provisional) from 151.6 (provisional) for the previous month.  Within the group, index for Food Products group rose by 0.6% to 170.8 (provisional) from 169.8 (provisional) for the previous month due to higher price of gingelly oil (10%), processed prawn (6%), rice bran oil and wheat flour (atta) (3% each),  sooji (rawa), maida, ghee, oil cakes and palm oil (2% each) and copra oil, tea dust (blended), cotton seed oil, soyabean oil, groundnut oil and mustard & rapeseed oil (1% each).  However, the price of gur (5%), khandsari and tea leaf (unblended) (2% each) and tea dust (unblended), tea leaf (blended), sugar and sunflower oil (1% each) declined.

Meanwhile, Primary Articles, the group having a weightage of 20.12% in overall index, rose by 1.9% to 256.3 (provisional) from 251.6 (provisional) for the previous month. The index for Food Articles group rose by 2.0% to 256.4 (provisional) from 251.4 (provisional) for the previous month due to higher price of egg (8%), condiments & spices (7%), fruits & vegetables (6%), beef & buffalo meat and fish-marine (5% each), pork (4%), urad and jowar (3% each), moong, maize, ragi and wheat (2% each) and arhar, mutton, masur, milk and barley (1% each).  However, the price of fish-inland (10%), tea (5%), gram (2%) and poultry chicken and rice (1% each) declined.

Further, Fuel & Power, having weight of 14.91%, too rose by 0.1% to 209.6 (provisional) from 209.4 (provisional) for the previous month due to higher price of lpg (5%), bitumen (2%) and high speed diesel (1%).  However, the price of aviation turbine fuel (5%), petrol and kerosene (2% each) and furnace oil (1%) declined.

Thus, while, costlier fruits and vegetables such as onions and tomatoes that had pushed retail inflation to a nine-month high of 11.24% in November, sharpened the dilemma for RBI Governor Raghuram Rajan ahead of next week's monetary policy announcement, the latest data confirms the case of RBI hiking key policy rates to rein in the spiraling inflation.

The CNX Nifty is currently trading at 6,167.05, down by 1.35 points or 0.02% after trading in a range of 6,183.25 and 6,146.05. There were 17 stocks advancing against 33 declining stocks on the index.

The top gainers of the Nifty were SSLT up by 5.50%, Infosys up by 2.35%, Axis Bank up by 1.89%, Coal India up by 1.64% and ICICI Bank up by 1.64%. On the flip side, Jindal Steel down by 2.60%, Ultratech Cement down by 2.12%, BPCL down by 1.99%, Sun Pharma down by 1.93% and RIL down by 1.93% were the major losers on the index.

The Asian equity indices were trading in red; Hang Seng down by 0.56%, Nikkei 225 down by 1.62%, Taiwan Weighted down by 0.75%, KLSE Composite down by 0.05%,  Seoul Composite down by 0.09%, Straits Times down by 0.26%, Jakarta Composite down by 1.10% and Shanghai Composite down by 1.60%.

The European markets were trading in green; France’s CAC 40 was up 0.07%, Germany’s DAX added 0.20% and UK’s FTSE 100 inched up by 0.01%.