Local bourses pare off some losses; IIP data higher than expected

Indian equity markets after starting on subtle note have now trimmed some of its losses supported by the gains of stocks from Fast Moving Consumer Goods, Realty, Oil & Gas counters. However, weak US economic data and unrest in Saudi Arabia that spooked Asian stocks kept a check on the market. Meanwhile, the much await IIP numbers were released, the IIP data for the month of January came at 3.7% v/s 1.6% in December, more than the market expectation of 2.7-3%. On the global front, after a decline of US stocks overnight on reports of Saudi police firing on protesters, Asian stocks continue to trade weak as oil prices rose further, while the US future indices were showing mixed trend. Back Home, however, the markets are trading sideways after the IIP data ahead of the release of the major economic data Wholesale inflation data for February which will be released on Monday, just two days ahead of the Reserve Bank of India's mid-quarter review on March 17, 2011. On the BSE Sectoral front, stocks from Metal, Information Technology, TECk counters wilted under intense selling pressure, while stocks from Fast Moving Consumer Goods, Realty, Oil & Gas counters are helping the markets in trimming their losses. The overall market breadth on BSE was in the favour of advances which outnumbered declines in the ratio of 1150:1053, while, 112 shares remained unchanged.

The BSE Sensex is currently trading at 18,305.51, down by 22.47 points or 0.12%. The index has touched a high of 18,352.49 and a low of 18,200.37 respectively. There were 12 stocks advancing against 7 declines on the index, while 1 stock remained unchanged.

The broader indices gained some momentum; the BSE Mid cap and Small cap indices were up by 0.12% and 0.10%, respectively.

The top gaining sectoral indices on the BSE were, Fast Moving Consumer Goods ( FMCG)  up by 0.70% Realty up by 0.60%, Oil and Gas up by 0.53%,HC up by 0.48% and Public Sector Undertaking  (PSU) was up by 0.23%.

While, Metal down by 0.76%, Information Technology  down by 0.58%, TECk down by 0.53%, Power down by 0.27% and Auto down by 0.25% were the major losers on the index.

The top gainers on the Sensex were ONGC up by 2.25%, Tata Power up by 0.68%, L&T up by 0.56%, Hero Honda up by 0.54% and ITC up by 0.53%.

BHEL down by 1.72%, Sterlite Industries down by 1.36%, Tata Steel down by 1.24%, TCS down by 1.20% and Hindalco Industries down by 0.96% were the top losers on the index.

Meanwhile, in view of foreign institutional investors (FII) pulling their money out of India, rising inflation and widening of current account deficit (CAD), the government is looking for ways to attract foreign direct investment (FD) in various fields. The government is considering allowing foreign direct investment in multi-brand retailing as part of a slew of measures to make India more attractive to overseas investors and also as this move will go a long way in containing inflation, a major cause for concern of both consumers and the government. The government is thinking of opening up this gate gradually as introduction of FDI is feared to be eating into the business of small stores. Though the Finance Minister (FM) was silent on allowing FDI in multi-brand retail, the current scenario which is worsening day by day may push the government to take some steps in this regard in coming few months. Meanwhile, the Economic Survey, tabled in Parliament last month, had also suggested gradual opening up of retail to FDI with the initial go ahead limited to a few cities as FDI in a phased manner beginning with metros and incentivizing the existing retail shops to modernize could help address the concerns of farmers and consumers.

Though the government is keen on allowing FDI in this sector and as the move is at the stage of discussion with political clearance yet to be accorded to the proposal, any major steps in this direction before elections are unlikely, because they face opposition from 'kirana' stores -- small mom-and-pop shops -- which account for the majority of India's retail market and are valuable vote banks for politicians.

India's $450 billion retail sector is among the fastest growing in the world, but it remains heavily regulated, with strict limits on foreign investment. Just 6% of retail trade is organized. Multi-brand global retail giants like Wal-Mart, Metro and Tesco have shown interest to invest in the segment in the country. At present, government allows 51% FDI in wholesale cash-and-carry where global players such as Wal-Mart and Carrefour are only allowed to sell to bulk customers such as hotels, canteens and local retailers.

The S&P CNX  is currently trading at 5,481.70, down by 12.70 points or 0.23%.The index has touched a high of 5498.35 and a low of 5450.60 respectively. There were 16 stocks advancing against 23 declines on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were ONGC up by 2.14%, Ranbaxy up by 1.72%, Sun Pharmaceuticals up by 0.99%, BPCL up by 0.98% and Hero Honda up by 0.58%.

The top losers of the index were BHEL down by 2.05%, Kotak Bank down by 1.83%, TCS down by 1.48%, Sterlite Industries down by 1.45%, and Tata Steel was down by 1.27%.

Swiss foods giant Nestle India is planning to set up its ninth manufacturing facility in the country in the state of Himachal Pradesh. The new facility to manufacture chocolate and noodles may entail an investment of anywhere between Rs 400 to Rs 500 crore.  The company has also planned to set up a new Research and Development unit in Karnataka at an investment of $50 million and would also invest Rs 200 crore by this year-end for manufacturing chocolates in Punjab.

Asian equity indices were trading in the red; Shanghai Composite was down by 0.27%, Hang Seng was down by 0.77%, Jakarta Composite was down by 0.81%, KLSE Composite was down by 1.02%, Nikkei 225 was down by 0.99%, Straits Times was down by 0.78%, Seoul Composite was down  by 1.17% and Taiwan Weighted was down by 0.67%.

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