Markets ascend to day’s high on five month low Dec WPI data; Sensex trades past 21,250 level

In a sharp reaction to five month low inflation data, local equity markets have ascended to day’s high point in afternoon deals and are trading with gains of over a percent, above the crucial 21,250 (Sensex) and 6,300 (Nifty) levels respectively. On the macro-front, further bolstering case for RBI’s status-quo stance in its upcoming monetary policy review on January 28, India's main inflation gauge, based on monthly WPI, eased to five month low at 6.16% as compared to 7.52% in November and 7.31% during the corresponding month of the previous year.  Reacting to this good news, banking stocks have turned top gainers, followed suite were stocks from Metal and Capital goods counters which too have featured in the list of top performers. Nevertheless, secular up-move of the bourses could also be attributed to across the board buying activities, with only stocks from Consumer Durables and Fast moving consumer goods counters underperforming.

Besides positive domestic triggers, optimistic global set-up also bolstered sentiment. On the global front, Asian pacific shares rebounded on Wednesday after a surprisingly strong batch of retail data out of the United States eased concerns about the world's number one economy. The Commerce Department said retail sales -- a key gauge of the consumer spending that drives the economy -- rose 0.2 percent in December, upending estimates of no change.

The BSE Sensex is currently trading at 21271.78 up by 238.90 points or 1.14% after trading in a range of 21,285.79 and 21,091.46. All the 30 stocks were advancing on the index. The market breadth on BSE was positive in the ratio of 1309:953 while 140 scrips remained unchanged.

The broader indices were too trading in green; the BSE Mid cap index was up by 0.34%, while Small cap index up by 0.57%.

The gaining sectoral indices on the BSE were Bankex up by 1.78%, Metal up by 1.44%, Capital Goods up by 1.31%, PSU up by 1.15% and Auto up by 0.98%. While, Consumer Durables down by 0.19% and FMCG down by 0.01% were the only losing indices on BSE.  

The top gainers on the Sensex were ICICI Bank up by 2.91%, Hero MotoCorp up by 2.68%, Hindalco Industries up by 2.37%, Cipla up by 2.33% and HDFC up by 1.96%. On the flip side, there were no losers.

Meanwhile,further cementing the case for RBI’s status-quo stance in its upcoming monetary policy review on January 28, India's main inflation gauge, based on monthly WPI, eased to five month low at 6.16% as compared to 7.52% in November and 7.31% during the corresponding month of the previous year. The figures were also way lower than street’s expectation. Markets after getting three-month low retail inflation figures were expecting WPI to cool down to 7% for the month of November. Surprisingly, October inflation was revised upwards to 7.24% against 7% earlier. Meanwhile, build up inflation rate in the financial year so far was 5.35% compared to a build up rate of 4.84% in the corresponding period of the previous year. Further, higher core inflation continued to remain a cause of worry as its stood at 2.8% for December as against 2.7% in the previous month.

The Wholesale Price Index for ‘All Commodities’ (Base: 2004-05 = 100) for the month of December, 2013 declined by 1.3 percent to 179.2 (provisional) from 181.5 (provisional) for the previous month. Out of this, Manufactured Products, the major group with weight of 64.97%, remained unchanged at its previous month's level of 151.9 (provisional). Within the group, index for Food Products group declined by 0.6% to 169.7 (provisional) from 170.8 (provisional) for the previous month due to lower price of gur (7%), tea leaf (unblended), gram powder (besan), tea leaf (blended) and copra oil (5% each), sunflower oil (4%), oil cakes and groundnut oil (3% each), soyabean oil (2%) and khandsari (1%). 

Meanwhile, Primary Articles, the group having a weightage of 20.12% in overall index, declined by 5.0% to 243.6 (provisional) from 256.3 (provisional) in November. The index for Food Articles group declined by 6.4% to 240.1 (provisional) from 256.4 (provisional) for the previous month due to lower price of fruits & vegetables (21%), fish-inland (8%), coffee (7%), tea and ragi (3% each) and gram, rice and mutton (1% each). 

Further, Fuel & Power, having weight of 14.91%, too rose by 0.8% to 211.3 (provisional) from 209.6  (provisional) for the previous month due to higher price of electricity (industry) (3%),  LPG (2%), high speed diesel, electricity (commercial), electricity (railway traction), aviation turbine fuel, bitumen and electricity (domestic) (1% each). However, the price of furnace oil (1%) declined.

The latest data print further bolsters the case for RBI keeping its key interest rates on hold for a second successive month at its policy review on January 28, after the dismal factory output data and three-month low Retail inflation figure. Bringing some relief to the policymakers who have an arduous task of pulling the economy out of a stagflation-like situation, the provisional annual inflation rate based on all India general Consumer Price Index (CPI) (Combined) eased more than the street's expectation, at a three-month low level of 9.87% for December 2013. Nevertheless, the latest data print also has partially built in the hopes of RBI slashing key policy rates by 25 basis points atleast by March 31, 2014.

The CNX Nifty is currently trading at 6,313.30, up by 71.45 points or 1.14% after trading in a range of 6,316.70 and 6,265.30. There were 45 stocks advancing against 4 declining ones while 1 stock remained unchanged on the index.

The top gainers of the Nifty were NMDC up by 3.40%, ICICI Bank up by 2.97%, Hero MotoCorp up by 2.64%, Bank of Baroda up by 2.38% and Hindalco Industries up by 2.38%. On the flip side, Ranbaxy Laboratories down by 1.42%, Cairn India down by 0.97%, Lupin down by 0.49% and ITC down by 0.06% were the only losers on the index.

The Asian equity indices were trading mostly in green; Hang Seng was up by 0.39%, Jakarta Composite up 1.39%, Nikkei 225 up by 2.50%, Straits Times up by 0.49%, Seoul Composite up by 0.37% and Taiwan Weighted up by 0.64%. On the flip side, Shanghai Composite was down by 0.31% and KLSE Composite down by 0.29%.