Benchmarks in good shape;broader indices outperform

The domestic equity markets are trading in a jubilant mood on the last trading day of the controversial year 2010.Though the key equity markets have peeled off minor gains, but today in the early trades they managed to scale a new 7 week high (sensex) and one and half month high (Nifty), the indices  now trading in a good mood. The broader indices have expanded their gains and are outperforming their larger peers and are ruling up by 0.83% (Mid cap index) and 1.05% (Small cap index) respectively on the BSE. On the global front, cues seem to be quite as Asian stocks are trading mostly high, barring strait times, which is languishing in red since morning.US future indices were trading mixed with negative bias. Back home, on the BSE sectoral space stocks from TECk have succumbed to selling pressure along with the Information Technology space which was battered down in the early trades. Realty sector was the leader in the gainers list , following the track were stocks from Capital Goods, Consumer Durables and Bankex. The market breadth on the BSE was extremely strong; the gainers outperformed the losers in a ratio of 1817:656 while 72 shares were unchanged.

The BSE Sensex is currently trading at 20,461.56, up by 72.49 points or 0.36% from the previous close of 20,389.07.

At the broader space BSE Mid cap index was up by 0.83% and BSE Small cap index was up by 1.05%

The top gaining sectoral indices on the BSE were, Realty up by 1.53 %, Capital Goods  up by 1.04%, Bankex up by 0.77%, Consumer Durables up by 0.75% and Power was up by 0.64%. While, TECk was down by 0.46% and Information Technology has shed 0.75% on the index.

Even as the recovery in Indian economy continues unabated and growth outlook remains strong, high inflation, on the back of sticky food prices and rising global commodity prices, is becoming a major concern and will dominate policy making going forward, said the Reserve Bank of India (RBI) in its latest Financial Stability Report (FSR) on Thursday. 

Indian economy grew at 8.9% in the first half of the fiscal, raising hopes that full fiscal growth will be close to the 9% level. "Buoyed by strong domestic demand, GDP growth rates have rebounded after some moderation in the aftermath of the global financial crisis. Going forward, the growth momentum is expected to be sustained by increased corporate capital expenditure, infrastructure investments and strong consumption demand," said the RBI. 

However, inflation continues to remain a major concern for the central bank. The Indian monetary authority has hiked its key policy rates six times so far this fiscal to curb inflation. As a result the headline inflation rate dropped to an 11-month low 7.48% in November. However, it still remains significantly above the comfort level of the central bank. Further, the food inflation which has been a major contributor to the latest inflation cycle has, after going down for several week, increased sharply in December. Food inflation surged to a 10-week high of 14.44% for the week ended 18 December against 12.13% in the previous week.

The major gainers on the Sensex were Jai Prakash Associate up by 3.11%, Reliance Communication up by 2.79%, DLF up by 1.83%, Reliance Infra up by 1.82% and Bajaj Auto up by 1.31%.

The major loser on the Sensex were Infosys down by 0.77%,Sterlite down by 0.50%,Hero Honda down by 0.49%,NTPC down by 0.47%.

High food inflation prevailing in the economy seems to have deterred the government from taking any decision on hiking the administered prices of fuels including diesel and cooking gas. A meeting of empowered group of ministers (EgoM) headed by finance minister Pranab Mukherjee, which was due on Thursday to discuss a diesel price hike, has been postponed as government feels it would be difficult to hike prices at the moment.

However, the development would mean higher losses for public sector oil marketing companies (OMCs) and fuel their under-recoveries. It will also interfere with the follow on issues of these companies such as Indian Oil which is now likely to be postponed in wake of ambiguity on the subsidy sharing formula. The FPO of upstream companies however will go on according to the oil ministry.

Secretary in the ministry of oil and natural gas, S Sundareshan said on Thursday that even though diesel prices might not be hiked immediately, government will fully compensate the OMCs through the subsidy sharing formula. He also cleared that upstream companies will not bear more than 33% of the under-recovery, as has been the case in the past, and therefore there would be no delay in FPO of ONGC which is expected to be completed within current fiscal. 

The S&P CNX Nifty rose 26.10 points or 0.43 % to 6,127.95 from its previous closing.The index touched a high and a low of 6,138.15 and 6,103.55, respectively.

The top gainers on the Nifty were JP Associates up by 3.21%,Reliance Communication up by 2.71%,Reliance Capital up by 1.99% ,DLF up by 1.69% and Reliance infra up by 1.69%.

The top losers on the Nifty were Infosys Tech down by 1.06%, Sterlite Industries down 0.74%,Dr Reddy down by 0.68%, NTPC down by 0.64% and HCL Technologies down 0.56%.

Asian market were trading mostly in the green, Hang Seng was up 0.16% and Taiwan Weighted was up 0.82% On the flip side, Straits Times was down by 0.70%. 

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