Indian equities continue lackluster trade above neutral line

Indian equities continue its lackluster trade in green above neutral line in absence of any positive upside triggers in the late afternoon session. However, the encouraging WPI inflation numbers for January provided the much needed support to the local markets and prevented downside chances for the bourses. Traders were seen piling up positions in Auto, Realty and Bankex sector while selling was witnessed in HealthCare and Power sector. Hero MotoCorp, Maruti, M&M and Tata Motors from Auto pack were seen trading in green driving the markets higher. DLF from Realty counter was trading in green pulling the markets higher. SBI, Axis Bank, PNB and ICICI Bank from Banking sector were trading firm pushing the markets higher. Industry heavyweight RIL was seen trading in green giving the much needed support for the markets. PSU OMCs HPCL, BPCL and IOC were seen trading firm in green on reports that the prices of petrol may enhance by about Rs 3 per litre early next month after the assembly election in Uttar Pradesh. On the global front, Asian markets were trading on a mix note while the European markets were trading in red on pessimistic note. Investors at large took to risk aversion after Moody’s slashed credit ratings of six European nations and agency kept the coveted AAA credit rating for France and the UK on negative watch; it downgraded the ratings of Italy, Portugal, Spain, Slovakia, Slovenia and Malta. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,400 and 17,800 levels respectively. The market breadth on BSE was in favor of advances in the ratio of 1472:1294 while 105 scrips remained unchanged.

The BSE Sensex is currently trading at 17,817.42 up by 44.58 points or 0.25% after trading as high as 17,850.82 and as low as 17,742.58. There were 16 stocks advancing against 14 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index climbed 0.76% while Small cap rose 0.61%.

On the BSE sectoral space, Auto up 1.22%, Realty up 1.04%, Bankex up 0.64%, Metal up 0.61% and Consumer Durables up 0.61% were the major gainers while HealthCare down 0.50% and Power down 0.48% were the top losers in the space.

Hindalco Industries up 3.66%, SBI up 3.19%, Hero MotoCorp up 2.52%, M&M up 1.86% and Maruti Suzuki up 1.84% were the major gainers on the Sensex, while Cipla down 5.59%, Tata Power down 4.58%, ONGC down 1.53%, Bharti Airtel down 1.24% and HDFC Bank down 1.12% were the major losers in the index.

Meanwhile, India’s headline inflation slipped to a more than 2-year low in January, giving some relief to the policy-makers and the Reserve Bank of India (RBI) scope to cut interest rates in the forthcoming policy review to counter weakening economic growth. Headline inflation, as measured by the Wholesale Price Index (WPI), fell to 6.55% In January 2012 as compared to 7.47% in December 2011. The numbers were broadly in-line with the generally expected number of 6.7% and have confirmed the downward movement of prices.

As per data released by the Ministry of Commerce and Industry, the annual rate of inflation for ‘all commodities’, based on monthly WPI (Base: 2004-05 = 100), stood at 6.55% (Provisional) for the month of January, 2012 (over January, 2011) as compared to 7.47% (Provisional) for the previous month and 9.47% in January 2011. Build-up inflation in the financial year so far was 5.48% compared to a build-up of 8.58% in the corresponding period of the previous year.

Primary articles index was up by 0.9% for January 2012 as compared to December 2011. The index for ‘Food Articles’ group rose by 0.3% to 191.4 (Provisional) from 190.8 (Provisional) for the previous month due to higher prices of fish-marine (11%), bajra (7%), jowar, barley and maize (5% each), poultry chicken (4%), masur (3%), mutton (2%) and milk and wheat (1% each). However, the prices of condiments & spices (5%), tea (4%), fruits & vegetables (3%) and moong, urad, gram, ragi and rice (1% each) declined. 

The index for ‘Non-Food Articles’ group rose by 2.4% to 182.8 (Provisional) from 178.6 (Provisional) for the previous month due to higher prices of gaur seed (35%), flowers (16%), logs & timber (10%), soyabean (9%), groundnut seed and linseed (7% each), raw jute (6%), rape & mustard seed (4%), niger seed and gingelly seed (3% each) and safflower, raw silk and mesta (1% each).  However, the prices of castor seed (7%), raw rubber (6%), copra (4%), raw cotton (3%) and sunflower (1%) declined.

The index for ‘Minerals’ group rose by 1.9% to 324.5 (Provisional) from 318.5 (Provisional) for the previous month due to higher prices of sillimanite (22%), zinc concentrate and iron ore (4% each), magnesite and crude petroleum (2% each) and barytes (1%).  However, the prices of dolomite (2%) declined. Inflation numbers for fuel and power rose by 0.1% in January as compared to December 2011, due to higher prices of light diesel oil (4%), lignite (3%) and naphtha (1%).  However, the prices of bitumen (1%) declined.

The much awaited numbers of inflation in manufactured products showed a rise of 0.4% m-o-m. The index for ‘Food Products’ group rose by 0.3% and that for ‘Beverages, Tobacco & Tobacco Products’ group rose by 0.4%. Inflation numbers in the textile sector rose by 0.4% m-o-m and by 0.2% m-o-m for ‘Wood & Wood Products’ group. Inflation for the ‘Paper & Paper Products’ group rose by 0.2% and that for ‘Leather & Leather Products’ declined by 0.2% for Jan 2012 as compared to December.

Further the index for ‘Rubber & Plastic Products’ group rose by 0.8% and for ‘Chemicals & Chemical Products’ group rose by 0.7%. The index for ‘Non-Metallic Mineral Products’ group rose by 0.3% and for ‘Basic Metals, Alloys & Metal Products’ group rose by 0.8%, m-o-m. The index for ‘Machinery & Machine Tools’ group rose by 0.1%.

The final numbers for November were revised up to 9.46% from 9.11%. The WPI is more closely watched than the consumer price index (CPI) in India as it covers a higher number of products. C Rangarajan, Chairman of the Prime Minister's Economic Advisory Council stated that the fall in inflation numbers was welcome but it would be wiser to wait and watch at this stage. The finance minister too said that the numbers could fall further in the coming months.

The Reserve Bank of India has raised interest rates 13 times since March 2010 in a bid to bring down inflation, putting a dampener on industrial activity and slowing economic growth. Inflation was in double-digits for most of 2011 before easing in December, fuelled by surging food prices. Moreover, economic growth in India has slowed sharply and is expected to be around 6.9% for the current financial year to March.

The S&P CNX Nifty is currently trading at 5,407.30, higher by 17.10 points or 0.32% after trading as high as 5,415.60 and as low as 5,377.95. There were 30 stocks advancing against 20 declines on the index.

The top gainers on the Nifty were Reliance Communications up 4.79%, Hindalco up 3.95%, SBI up 3.28%, IDFC up 3.14%, and Hero MotoCorp up 2.82%.

Cipla down 5.29%, Tata Power down 4.49%, Siemens down 2.15%, ONGC down 1.34% and Bharti Airtel down 1.27% were the major losers on the index.

In the Asian space, Shanghai Composite declined 0.30%, Jakarta Composite eased 0.32%, Seoul Composite slipped 0.15% and Taiwan Weighted shed 0.36%.

On the flipside, Hang Seng rose 0.15%, Nikkei 225 advanced 0.59% and Straits Times added 0.21%.

The European markets were trading in red with, France’s CAC 40 descended 0.07%, Germany’s DAX dropped 0.19% and Britain’s FTSE 100 shed 0.38%.