Markets make flat start; ADAG pack declines

The Indian equity markets have made a flat start with a negative bias tracking weak Asian stocks. All the Asian counterparts barring Nikkei and KLSE Composite were trading in the red at this point of time. However, the US markets recovered on Friday and closed with gains supported by good earnings announcement and report of rise in retail sales. Back Home, fast moving capital goods, software and banking were the top gainers in trade, on the other hand auto was feeling the maximum selling pressure followed by power and realty. Meanwhile, Anil Ambani group companies viz Reliance Infra, Reliance Power, Reliance Capital all are trading with a cut of about 4-5% after the SEBI's ruling in Reliance Infra and RNRL case, though the junior Ambani has categorically denied of any ban by the market regulator and termed the settlement as voluntary. While, Aviation stocks like Kingfisher Airlines, Jet Air India and Spicejet all edged down in the trade as the Aviation Turbine Fuel increased by 2 percent to Rs 48,764 per kilolitre from Jan 16. However, PSU oil marketing companies (OMC's) like BPCL, HPCL and IOC all are trading with a gain of about 2-3% after raising their price for petrol ranging from Rs 2.50 to Rs 2.54 per litre. The market breadth on the BSE was evenly divided; there were 833 shares on the gaining side against 879 shares on the gaining side while 84 shares remained unchanged.

The BSE Sensex opened at 18,911.43; about 51 points higher compared to its previous closing of 18,860.44, and has touched a high and a low of 18,967.53 and 18,779.38 respectively. The index is currently trading at 18,905.83, up by 45.39 points or 0.24%. There were 16 stocks advancing against 14 declines while on the index.

The overall market breadth is evenly divided with 46.38% stocks advancing against 48.94% declines. The broader indices were slightly in better conditions than the benchmarks; the BSE Mid cap and Small cap indices were down by 0.22% and 0.04%, respectively.

The top gaining sectoral indices on the BSE were, FMCG up by 0.84%, IT up by 0.58%, Bankex up by 0.51%, CD up by 0.50% and TECk was up by 0.35%. While, Auto down by 0.79%, Power down by 0.70%, Realty down by 0.57% and Metal down by 0.34% were the major losers on the index.

The top gainers on the Sensex were HDFC up by 1.63%, ITC up by 1.56%, Cipla up by 1.09%, TCS up by 1.07% and HDFC Bank was up by 1.04%.

Reliance Infra down by 5.37%, RCom down by 2.96%, Hero Honda down by 1.87%, Tata Motors down by 1.66% and Jaiprakash Associates down by 1.07% were the top losers on the index were.

Meanwhile, the ongoing high inflation in India has been caused more by bottlenecks on the supply side rather than by strong demand, said the World Bank on Friday. "As opposed to necessarily tightening monetary policy, I think the focus has to be on the increase production and productivity of agricultural products and thereby making the markets work more effectively," Group president of the World Bank Robert B Zoellick said in New Delhi.

On whether the ongoing high inflation would affect India's growth prospects going forward, Zoellick said during a conference with finance ministry, "Most of the developing economies, which have recovered fast from the global slowdown, are experiencing high inflation." He was referring to perhaps China and other Asian economies where inflation, though lower than India, has picked up rapidly over last few months.

In context of focus of the multilateral agency in India he said, "World Bank's efforts are to bring the best development practices from around the globe to India and to share India's experience and expertise with others. Infrastructure and agriculture are the key areas, which will help in solving the increasing food prices." Zoellick had a meeting with Union finance minister Pranab Mukherjee with regard to macroeconomic scenario and Indian policies.

"We would like our economy to post double digit growth in coming years. But we will aim for high growth with modest rate of inflation and enhanced focus on fiscal consolidation," Mukherjee said after the meeting with World Bank group president. He added that Indian government was working on a path to fiscal consolidation and fiscal deficit will be brought down to 4.8% in the next financial year compared with target budgeted level of 5.5% for FY11.

Zoellick supported the idea of reforms in the retail sector but disagreed with import-export curbs. He said that over time the retail market reforms would provide better services, more jobs, lower prices, increased productivity and therefore India should continue to open up the economy for long-term benefit. The government has been toying with the idea of opening up the multi-brand retail to draw investment in back-end infrastructure which can improve efficiency of distribution and bring inflation down. However, due to lack of political consensus on the matter, no decision has so far been taken.

The S&P CNX Nifty opened at 5,648.80; about 6 points lower compared to its previous closing of 5,654.55, and has touched a high and a low of 5,682.05 and 5,624.05 respectively. The index is currently trading at 5,658.20, up by 3.65 points or 0.06%. There were 22 stocks advancing against 28 declines on the index.

The top gainers of the Nifty were Axis Bank up by 1.70%, Kotak Bank up by 1.51%, HDFC up by 1.49%, BPCL up by 1.48% and Suzlon up by 1.34%.

The top losers of the index were Reliance Infra down by 5.50%, Reliance Power down by 4.73%, Reliance Capital down by 4.29%, RCom down by 2.45% and Sesa Goa was down by 2.20%.

Asian equity indices were trading mostly in the red; Shanghai Composite was down 58.59 points or 2.10% to 2,732.76, Hang Seng was down 84.94 points or 0.35% to 24,198.29, Jakarta Composite was down 39.14 points or 1.10% to 3,530.00, Straits Times was down 1.43 points or 0.04% to 3,244.53, Seoul Composite was down 1.52 points or 0.07% to 2,106.65 and Taiwan Weighted was down by 57.33 points or 0.64% to 8,942.17.

On the flip side, KLSE Composite was up 3.03 points or 0.19% to 1,572.92 and Nikkei 225 was up by 6.58 points or 0.06% to 10,505.62.

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