Indian equities continue lackadaisical trade in red

Indian equities continued its lackadaisical trade below neutral line in the late afternoon session hovering near the lowest point of the day. The weak trade continued as sentiments across global space remained uninspiring along with a government data, which showed India’s headline inflation rose in May. The sentiments further got dampen after the government revised inflation for March upwards to 7.69% from a provisional reading of 6.89%. Traders were seen piling up position in FMCG, IT and TECk sector while selling was witnessed in Capital Goods, Bankex and Realty sector. Fertilizer counters were in action amid large volumes since morning trades on the buzz that government may raise urea price by 10 percent with an aim to cut up to Rs 2,000 crore on the total subsidy outgo on urea. Besides, data on first installment of the advance tax payment, which is due tomorrow on June 15, 2012 could provide cues on Q1 2012 corporate earnings and provide further directions to the market. In the scrip specific development, Hotel Leela Venture was seen trading firm in green on reports that lenders approved company's debt restructuring programme of Rs 4,300 crore. Henkel India surged after the company stated that its board will meet on Friday to consider the proposal of amalgamation of the company with Jyothy Laboratories.

On the global front, the Asian markets were trading in red barring KOSPI Composite while the European markets were too trading in red on pessimistic note. Lingering uncertainties over Europe's financial turmoil kept investors away from riskier asset classes as Greek banks saw elevated levels of withdrawals ahead of the country's crucial general elections this weekend. On the home turf, the NSE Nifty and BSE Sensex were trading below their psychological 5,100 and 16,800 levels respectively. The market breadth on BSE was negative in the ratio of 928:1555 while 141 scrips remained unchanged.

The BSE Sensex is currently trading at 16,717.41 down by 163.10 points or 0.97% after trading as high as 16,921.49 and as low as 16,717.41. There were 5 stocks advancing against 25 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index declined 1.03% while Small cap index fell 0.45%.

On the BSE sectoral space, FMCG up 0.60%, IT up 0.54% and TECk up 0.30% were the only gainers, while Capital Goods down 2.93%, Bankex down 2.70%, Realty down 1.94%, Power down 1.81% and Consumer Durables down 1.76% were the top laggards in the space.

ITC up 1.52%, Infosys up 1.17%, TCS up 0.47%, Cipla up 0.31% and Sterlite Industries up 0.10% were the only gainers on the Sensex, while L&T down 4.36%, ICICI Bank down 3.59%, NTPC down 3.50%, Tata Motors down 3.43% and SBI down 2.87% were the major losers in the index.

Meanwhile, the annual rate of inflation, based on the wholesale prices index (WPI) in India, inched up in the month of May to 7.55% as compared to 7.23% for the previous month, while it was lower than 9.56% during the corresponding month of the previous year. Though the rise in headline inflation was largely on the expected lines, the markets participants now are likely to turn their focus towards the Reserve Bank of India’s (RBI) mid quarter monetary policy review meeting on June 18.

According to the data released by the ministry of commerce and industry, the annual rate of inflation, based on monthly WPI, rose to 7.55% for the month of May, 2012 while build up inflation in the financial year so far was 1.80% compared to a buildup of 1.94% in the corresponding period of the previous year. The index for primary articles group, which has a weightage of 20.12% in overall WPI, rose 0.1 percent to 216.1 from 215.9 for the previous month largely because of 1.7 percent jump in index of non-food articles.

The index for fuel and power group with a weightage of 14.91% in WPI rose by 0.1 percent to 178.9 from 177.1 for the previous month due to higher prices of petrol (3%), bitumen (2%) and lubricants (1%).  However, the prices of light diesel oil (4%) and furnace oil, aviation turbine fuel and naphtha (1% each) declined. The index for Manufactured Products, which has weight of almost 65% in the WPI, rose by 0.5 percent to 144.3 from 143.6 for the previous month.

After the disappointing industrial production data, market participants were eagerly awaiting the monthly WPI inflation data for May, which has come largely in line with consensus estimates. However, the investors focused more closely on the core inflation number, which has come in at 4.99%, slightly below the 5 percent threshold, and is likely to compel RBI to resort to monetary easing policies. Moreover, connoisseurs were also of the belief that the RBI would cut key interest rates irrespective of the headline inflation number, in order to bring Asia’s third largest economy, which hit a 9-year low of 5.3 percent in the quarter that ended in March, out of the doldrums.

The S&P CNX Nifty is currently trading at 5,077.90, lower by 43.55 points or 0.85% after trading as high as 5,130.00 and as low as 5,073.35. There were 12 stocks advancing against 37 declines while 1 stock remained unchanged on the index.

The top gainers on the Nifty were ITC up 1.68%, ACC up 1.65%, Infosys up 1.29%, Siemens up 0.75% and TCS up 0.73%.

L&T down 4.10%, IDFC down 3.69%, ICICI Bank down 3.58%, NTPC down 3.47% and Tata Motors down 3.14% were the major losers on the index.

In the Asian space, Shanghai Composite plunged 0.99%, Hang Seng declined 1.15%, Jakarta Composite sank 2.01%, KLSE Composite fell 0.15%, Nikkei 225 dropped 0.22%, Straits Times Index eased 0.25% and Taiwan Weighted shed 0.19%. On the other hand, KOSPI Composite Index climbed 0.65%.

The European markets were trading in red with, France’s CAC 40 slipped 0.76%, Germany’s DAX fell 0.57% and the United Kingdom’s FTSE 100 shed 0.92%.