Markets react negatively to the higher than expected inflation number

The Indian equity markets erased some of their early gains but still trading in the positive territory as investors indulging in some selective buying across the blue chip counters. Meanwhile, November WPI inflation has come in at 9.11% versus 9.73%. Primary articles inflation is at 8.53% versus 11.40%, manufactured products inflation at 7.7% versus 7.66%, food articles inflation at 8.54% versus 11.06% while fuel group inflation has come in at 15.48% versus 14.79%. With higher than expected inflation numbers, market is expecting Reserve Bank of India to come out with some strong monetary measures. The central bank is expected to increase CRR in its mid-quarter review of monetary policy for 2011-12 on December 16. Markets have reacted negatively post the announcement of November inflation number. On the global front, markets in the Asia-Pacific region were witnessing selling pressures on lasting concerns about the European economy, while stocks on Wall Street declined overnight amid none too impressive US retail sales report. Back home, the market breadth favoring the positive trend; there were 1,312 shares on the gaining side against 927 shares on the losing side while 123 shares remained unchanged.

The BSE Sensex is currently trading at 16,113.09, up by 110.58 points or 0.69%. The index has touched a high and low of 16,133.41 and 15,924.21 respectively.  There were 20 stocks advancing against 10 declining ones on the index.

The broader indices too gained some traction in line with frontline benchmark indices; the BSE Mid cap and small cap indices gained 0.43% and 0.56% respectively.

Top gaining sectoral indices on the BSE were, Bankex up by 1.49%, FMCG up by 0.92%, Oil & Gas up by 0.71%, CG up by 0.70% and TECk up by 0.49%. While, CD down by 0.66%, Power down by 0.43% and Metal down by 0.25% were the losers on the index.

The top gainers on the Sensex were Sun Pharma up by 2.94%, SBI up by 2.41%, Jaiprakash Associates up by 2.40%, Bharti Airtel up by 1.85% and HDFC Bank up by 1.36%. On the flip side, NTPC down by 1.38%, Coal India down by 1.10%, Tata Steel down by 0.59%, Hero MotoCorp down by 0.57% and Tata Power down by 0.44% were the top losers on the Sensex.

Meanwhile, a bill aimed at digitizing the cable sector by December 31, 2014, was passed in Lok Sabha, by passing the Cable Networks (Regulation) Amendment Bill, 2011, the government has put Rs 20,000 crore cable TV industry one step closer to going digital and promoting better picture and sound quality to consumers. 

The cable bill, which was introduced in Lok Sabha last month, now need to be passed by the Rajya Sabha and then approved by the President to become a law. Once the law is introduced, the cable television industry will convert to digital from analog cable. The move will pave the way not only for mandatory digitization, but usher in a host of other changes.

The amendments include systemization of registration of cable operators, compulsory transmission of certain channels like Doordarshan, inspection of cable network services, use of standard equipment in the cable television network, prescription of interference standards by the Central Government and empowering the TRAI to specify basic service tier and its tariff.

Television industry experts are of the view that the digital set-top boxes will deliver better video and audio quality to television households and it will also give choice to consumers to pick and pay for channels which they wish to see.

Information and Broadcasting Minister Ambika Soni said the measure was a major step towards reform, going digital means bringing TV networks in India on a par with their counterparts in the US, the UK and South Korea.

The minister also expects set-top box prices to decline. The set-top box will be available on payment via installments and on rent. However, the Telecom Regulatory Authority of India (TRAI) will impose a limit on tariffs for subscribing to channels. By next week, the TRAI will bring out a consultation paper to set up regulatory framework for digitization. Presently around Rs 30,000 crore is required to digitize cable, the networks are pushing for a higher foreign investment limit.

The industry has welcomed the move, as digitization will allow firms to offer value added services to consumers, and it also expects that after introduction of the bill, TV industry will experience surge in investment. 

The cable bill may be tabled in the Rajya Sabha today i.e. December 14, 2011. Though, some of the Lok Sabha members expressed their anger at the content on some channels including those broadcasting news, however, the entire house supported the Cable Bill. Since the cabinet committee on economic affairs in October 2011 had cleared an ordinance for digitizing cable television networks, its introduction in the Lok Sabha and the Rajya Sabha are just ‘procedural formalities’, official from the ministry of information and broadcasting said.

The cable firms are expected to convert their analog systems to digital in the four metro cities by end of current fiscal year. And at the end of next fiscal year cities with more than one million population will adopt digital cable, whereas the deadline for the whole country to go digital is December 2014.

The S&P CNX Nifty is currently trading at 4,834.85, up by 34.25 points or 0.71%. The index has touched a high and low of 4,839.55 and 4,777.25 respectively. There were 34 stocks advancing against 15 declining ones on the index, while one stock remained unchanged.

The top gainers of the Nifty were Sun Pharma up by 3.13%, Jaiprakash Associates up by 2.57%, SBI up by 2.53%, Cairn up by 2.32% and Axis Bank up by 1.96%. On the flip side, BPCL down by 1.66%, NTPC down by 1.53%, Powergrid down by 1.06%, Coal India down by 0.97% and Siemens down by 0.94%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite declined 0.33%, Jakarta Composite slid 0.27%, Nikkei 225 lost 0.39%, Straits Times surrendered 0.19%, Seoul Composite descended 0.34%.

On the flip side, Hang Seng up by 0.05%, Taiwan Weighted up by 0.38% was the top gainers amongst the Asian pack.