Indian equities continue their lackadaisical trade in late afternoon session

Indian equities continued lackadaisical trade hovering around the neutral line in the late afternoon session as investors remained cautious on getting worse than expected monthly WPI inflation data for November. The upside for the local bourses was also capped amid worries over economic growth after reports emerged that rating agency Fitch has revised downward its real GDP growth forecast for India to 7% in current financial year from 7.5%. In the fight between bulls and bears to gain control over the market, both bulls and bears are having head on collision with markets rallying under the sentiments of both. Traders were seen piling up positions in FMCG, Capital Goods and TECk sector while selling was witnessed in Consumer Durables, Metal and Realty sector.

ITC and HUL from FMCG pack were trading in green pulling the markets up. Industry heavyweight RIL too was trading in green with gain of more than one percent. Kotak Bank, SBI and Axis Bank from Banking space were trading in green giving the much needed support for the market to trade higher. Tata Steel, SAIL, Sesa Goa, Sterlite and Hindalco from Metal counter were trading weak in red pulling the markets down. DLF and Unitech from Realty pack were trading in red exerting pressure on the market. Power Grid, NTPC, Reliance Power, Tata Power, Siemens and Thermax from Power counters were trading weak edging the markets lower.

In the scrip specific development, Tata Teleservices (Maharashtra) is trading firm in green on reports that Japan's NTT Docomo may increase its stake in the company's parent firm, Tata Teleservices, to 35% in next four months. Tata Communications was trading in green on reports that the Department of Telecom has circulated a Cabinet note to various ministries for their comments in 15 days for selling 770 acres of surplus land of VSNL. Cairn India inched higher after crude oil futures gained to settle at $100.14 a barrel on the New York Mercantile Exchange yesterday.

On the global front, all Asian markets were seen trading in red barring Taiwan Weighted while the European markets were trading on a mix note. German Chancellor Angela Merkel rejected the idea of boosting the ceiling of the European Stability Mechanism, or the permanent rescue fund for the euro area. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 4,750 and 16,000 levels, respectively. The market breadth on BSE was in favor of declines in the ratio of 1211:1321 while 141 scrips remained unchanged.

The BSE Sensex is currently trading at 16,024.46 up by 21.95 points or 0.14% after trading as high as 16,133.41 and as low as 15,912.91. There were 17 stocks advancing against 13 declines on the index.

The broader indices were trading on pessimistic note; the BSE Mid cap index eased 0.34% while Small cap was down 0.13%.

On the BSE sectoral space, the FMCG up 0.97%, Capital Goods up 0.27%, TECk up 0.21%, Bankex up 0.17% and Oil & gas up 0.12% was the top gainer while Consumer Durables down 1.53%, Metal down 1.07%, Realty down 0.93%, PSU down 0.75%, and Power down 0.69% were the losers in the space.

Sun Pharma up 2.44%, JP Associates up 1.90%, ITC up 1.87%, Bharti Airtel up 1.18% and RIL up 1.09% were the major gainers on the Sensex, while Tata Steel down 2.83%, HDFC down 1.75%, DLF down 1.61%, Coal India down 1.59% and Tata Power down 1.55% were the major losers in the index.

Meanwhile, India’s headline inflation measured by the Wholesale Price Index (WPI) for the month of November 2011 fell to its lowest level in last 12 months, stood at 9.11% as compared to 9.73% in last month. The decline in headline inflation is on the back of the sharp decline in prices of primary articles and food articles. However, in the month of November, manufactured products and fuel and power article, showed surge in prices, it increased to 7.7% and 15.48% as compared to 7.66% and 14.79% respectively.

According to the data released by the ministry of commerce and industry, the WPI for 'All Commodities' for the month November, 2011 rose by 0.1% to 156.9 (Provisional) from 156.8 (Provisional) for the previous month. Build up inflation in the financial year so far was 4.95% compared to a buildup of 5.50% in the corresponding period of the previous year.

On the month-on-month basis the primary articles declined by 1.6% to 201.1 (Provisional) from 204.3 (Provisional) for the previous month. The index for ‘Food Articles’ group declined by 2.0% to 196.9 (Provisional) from 200.9 (Provisional) for the previous month due to lower prices of fruits and vegetables (7%), poultry chicken (6%), fish-inland and moong (4% each), urad (3%), masur (2%) and condiments and spices, rice and wheat (1% each).  However, the prices of tea (5%), fish-marine and egg (4% each), gram and coffee (3% each) and pork, jowar, mutton and ragi (1% each) moved up.

The index for ‘Non-Food Articles’ group declined by 1.5% to 176.3 (Provisional) from 178.9 (Provisional) for the previous month due to lower prices of logs and timber (17%), mesta (11%), raw rubber (9%), raw silk and raw jute (5% each), groundnut seed (4%), niger seed and raw cotton (3% each) and coir fibre (2%). However, the prices of gingelly seed (5%), soyabean (4%), flowers, fodder and gaur seed (3% each) moved up.

The index for ‘Minerals’ group rose by 1.1% to 310.5 (Provisional) from 307.0 (Provisional) for the previous month due to higher prices of barytes (8%), bauxite (4%), crude petroleum (3%), chromite (1%). However, the prices of zinc concentrate (6%), sillimanite and copper ore (3%) and dolomite, manganese ore and iron ore (1% each) declined.

The index for the Fuel and Power, which has weight of almost 15% in the WPI, rose by 0.9% to 171.6 (Provisional) from 170.0 (Provisional) for the previous month due to higher prices of aviation turbine fuel, furnace oil and naphtha (6% each) and bitumen and petrol (1% each).  However, the prices of light diesel oil (1%) declined.

The index for Manufactured Products, which has weight of almost 65% in the WPI, rose by 0.5% to 139.8 (Provisional) from 139.1 (Provisional) for the previous month. Under this segment, the index for Beverages, Tobacco & Tobacco Products, Textiles, Paper & Paper Products, Leather & Leather Products, and Chemicals & Chemical Products saw increase in prices in November 2011. However, the index for Food Products, Wood & Wood Products, and Rubber & Plastic Products registered decline in prices in November compared to month of October.

Despite the marginal decline in headline inflation, it has remained above 9% mark for straight 12 months, which indicates that the Reserve Bank of India (RBI) has failed to control inflation by its anti-inflationary stance. The government also has done upward revision of inflation for the month of September, which stood at 10% as compared to 9.72%. The data further revealed that moderating prices of essential food items like onions, potatoes and milk have pulled down inflation marginally to 9.11% in November, a development that may prompt the RBI to halt its monetary tightening strategy at its policy review on December 16.

Since March 2010, the RBI has increased its key policy rates for 13 times, this non-stop increase in key policy rates has increased the interest rates, which have affected the investment in the industrial sector.   India’s industrial production in the month of October declined to -5.1%, which is its lowest level in last two years. However, the high inflation, weak economic growth, decline in industrial production and declining rupee, has left RBI with difficult policy choices.

The S&P CNX Nifty is currently trading at 4,799.90, lower by 0.70 points or 0.01% after trading as high as 4,839.55 and as low as 4,771.20. There were 22 stocks advancing against 28 declines on the index.

The top gainers on the Nifty were Sun Pharma up 2.43%, ITC up 2.05%, JP Associates up 1.99%, Bharti Airtel up 1.24% and RIL up 1.12%.

BPCL down 4.74%, Tata Steel down 3.17%, GAIL down 2.24%, Tata Power down 2.10% and HDFC down 1.91% were the major losers on the index.

Asian markets largely traded on a pessimistic note, Shanghai Composite plunged 0.89%, Hang Seng eased 0.50%, Jakarta Composite shed 0.49%, Nikkei 225 declined 0.39%, Straits Times fell 0.20% and Seoul Composite dropped 0.34%. On the flipside, only Taiwan Weighted rose 0.38%.

The European markets were trading on a mix note with, France’s CAC 40 declined 0.89%, Germany’s DAX shed 0.24% and Britain’s FTSE 100 jumped 0.72%.