Sensex slids on disappointing November IIP data

The domestic equity markets have pared all their gains on getting lower November IIP data. Though 50 share index--Nifty--is hanging in green but it has dropped substantial amount of gains, while the 30 share index--Sensex--has entered into the red zone. Trade in today's session has shown volatile move and the traders remained vigilant opting to stay on the sidelines ahead November industrial output data and December inflation on Friday which would determine the quantum of rate increase by the RBI on January 25, 2011.Some amount of resilience was seen in early trade tracking positive global cues as the regional counterparts were in upbeat mood. Back home weakness is clearly visible on the BSE sectoral space as most of the sectoral indices have succumbed to selling pressure, however, stocks from Capital goods, Healthcare and Realty space are taking maximum amount of beating. While, stocks from information Technology, Bankex and Consumer Durables counters are keeping up the spirit.  The broader indices are afloat in green and are ruling up by 0.37 (Midcap index) and 0.48% (Smallcap index) respectively. Meanwhile, growth in the index of industrial production (IIP) came down to a very disappointing level of 2.7% in the month of November. The figure was way below consensus expectations of around 6-6.5%. The overall breadth on BSE is in the favour of advances which are currently outperforming the declines in the ratio of 1541:910, while, 108 shares remained unchanged.

The BSE Sensex is currently trading at 19,192.93, down by 3.41 points or 0.02%. There were 13 stocks advancing against 16 declines on the index, while 1 stock remained unchanged on the index

The broader indices were outperforming the benchmarks; the BSE Mid cap and Small cap indices were up by 0.37% and 0.48 % respectively.

The top gaining sectoral indices on the BSE were, Information Technology up by 0.75%, Bankex up by 0.67%, Consumer Durable up by 0.65%, TECk was up by 0.55% and FMCG up by 0.18%.

On the other hand, Capital Goods down by 0.97%, Healthcare down by 0.58%, Realty down by 0.42%, Metal down by 0.30% and Power down by 0.14% were the losers on the index.

The top gainers on the Sensex were Tata Motors up by 1.93%, Sterlite up by 1.80%, TCS up by 1.61%, ICICI Bank was up by 1.49% and SBI was up by 0.96%.

Tata Steel down by 2.87%, L&T down by 2.11%, Bajaj Auto down by 2.07%, Reliance Communication down by 1.89% and Tata Power down by 1.87% were the top losers on the index were.

Meanwhile, after the food inflation reversed the downside trajectory over the month of December, the Indian government is likely to review the decision to export sugar. It was earlier decided that at least half a million tonne of the commodity will be exported, but the decision might be relooked into now due to surging food commodities' prices.

India, the largest consumer and second largest producer of the sweetener, is expected to produce 25-25.5 million tonne of sugar in the current season that started from Oct 1. This compares with production of 18.9 million tonne a year ago and domestic demand of around 23 million tonne. This would leave an exportable surplus of about 2 million to 2.5 million tonne.

Considering the good domestic demand-supply equation, the food ministry had earlier allowed exports of raw sugar lying at ports. Some exports were also allowed against the earlier imports which carry a condition of equivalent exports in a specified time. As the production outlook improved further, the government announced export of 0.5 million tone under the open general license (OGL).

However, the recent surge in food inflation, which nearly doubled in the month of December, has forced the government to have second thoughts. It is understood that an empowered group of ministers (EGoM) will look into the matter. This is in line with the government's policy of going very cautious on allowing export of any food commodity given the high domestic prices.  

The Union Food and Agriculture Minister, Sharad Pawar, however has hinted that there might not be any rethinking on the matter and the export of already committed quantities is very much on the cards. He said the centre would start issuing permits for export under open general license (OGL) after January 30. This however does leave the probability that in case the EGoM decides to cut down on exports, permits may not be issued. Analysts however feel that the while already committed exports might be allowed, any further export of commodity would need approval of EGoM.

The uncertainty in the Indian exports coupled with possibility of lower global production has been boosting prices in the international markets. Sugar futures in New York have once again reached the highest level in 30 years last month on concern that supplies from Brazil, the top producer may not be enough to meet demand and India may not export any significant amount of the sweetener given its domestic inflation scenario. 

The S&P CNX Nifty is currently trading at 5,758.00, up by 3.90 points or 0.07%.There were 23 stocks advancing against 27 declines on the index.

The top gainers of the Nifty were Suzlon up by 2.74%, Cairn up by 2.68 %, Sterlite Industries up by 2.37%, Tata Motors up by 2.13% and TCS up by 1.72%.

The top losers of the index were Tata Steel down by 2.78%, Tata Power down by 2.25%,Bajaj Auto down by 2.14%, L&T down by 1.98% and Reliance Communication down by 1.89%.

All the Asian equity indices barring Straits Times were trading in the green; Hang Seng was up by 0.81%, Jakarta Composite was up by 2.21%, KLSE Composite was up by 0.05%, Nikkei 225 was up by 0.16%, Seoul Composite was up by 0.31% and Taiwan Weighted was also up by 0.40%.

On the flip side, Straits Times down by by 0.19 was the lone looser in the Asian pack.

 

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