Local bourses lose more ground; April WPI data eyed

Fresh round of selling by funds and retail investors has led the local bourses lose more ground. The downslide in the bourses is in par with weakening trend in other Asian bourses and is mainly due to the hike in the petrol prices by state oil companies. However, bucking the trend, state-run oil companies such as Bharat Petroleum, Hindustan Petroleum and Indian Oil Corporation are trading in the positive zone, as the biggest ever hike in petrol prices (of Rs 5/ per litre ) will reduce their subsidy burden. Meanwhile, the investors are also wary ahead of the Wholesale Price Index (WPI) April data later today. As per the street expectation that India's wholesale price index likely rose 8.43 percent in April from a year earlier, slower than March's 8.98 percent increase due to base effect. Besides, the hike in the petrol prices, it is the fear of the hike in diesel prices that is haunting investor's as increase in diesel prices this week would lift inflation further, thereby forcing the RBI to boost rates in its next monetary policy review in June.

On the global front, U.S. stocks ended a second week of losses on a down note Friday, reflecting growing worries that stocks are on the precipice of a pullback. Asian stocks fell as renewed concerns of a possible euro zone debt restructuring prompted market players to reduce risk. The US future indices too were trading in red. Back home, the 30-share barometer, is down by over 100 points. Similarly, the wide-based National Stock Exchange Nifty index has declined close to 0.50%, however, is holding onto its 5500 mark. Both the broader are trading lower by 0.10% each. On the BSE sectoral front, stocks from Healthcare, Consumer Durable counters are the only that are defensive against the selling pressure, while stocks from rate sensitive sector such as Auto, Bankex and Realty space are down with prominent losses. The overall market breadth on BSE is in the favour of declines which have outnumbered advances in the ratio of 1155:1018, while 98 shares remained unchanged.

The BSE Sensex is currently trading at 18,418.73, down by 112.55 points or 0.61%. The index has touched a high and low of 18,492.68 and 18,392.07 respectively. There were just 7 stocks advancing against 23 declines on the index.

The broader indices to give in to the selling pressure; both BSE Mid cap index and Small cap index declined 0.16% and 0.11% respectively.

The only gaining sectoral indices on the BSE were, HC up by 1.11%, CD up by 0.10%. While Auto down by 0.98%, Bankex down by 0.90%, Realty down by 0.74%, IT down by 0.62% and Metal down by 0.56% were the top losers on the index.

The top gainers on the Sensex were Bharti Airtel was up by 1.69, Hero Honda up by 1.59%, BHEL up by 1.21%, HUL up by 0.93% and TCS up by 0.51%.

On the flip side, M&M down by 2.58%, Reliance Infra down by 2.10%, Jaiprakash Associates down by 2.00%, HDFC down by 1.55% and ONGC down by 1.54% were the top losers on the index.

Meanwhile, after the five state election results, the UPA government allowed its Oil Marketing Companies (OMCs) to increase the price of petrol by Rs 5; this is the second time in this calendar year. The government is also expected to increase the prices of other petroleum products like diesel, LPG and kerosene. At present, diesel which is being sold at Rs 16.17 lower than the benchmark price and kerosene and LPG is being sold at a loss of Rs. 29.69 a litre and Rs 329.73 on every 14.2 KG LPG cylinder, respectively.

Petrol price was officially decontrolled on June 26, 2010 under Petroleum Minister Murli Deora. The increase was then Rs 3.50 a litre. Successive hikes in petrol prices after decontrol had pushed up prices by almost Rs 7 till then.  Since then prices have been hiked seven times, except in Mumbai where it marginally came down once. Despite decontrol and international prices rising, oil companies did not raise prices since January 2011. Last such hike was in December 2008 when petrol cost Rs 50.56 a litre. Now petrol will cost Rs 68.33 from Rs. 63.00 in Mumbai, and Rs 63.37 from Rs. 58.37 in Delhi. This is the steepest ever hike since December 2008 and a second one in the calendar year.

The OMCs said that the last increase in price was only 50% of the required increase. The full price increase has not passed on to consumers. At present OMCs are incurring a loss of Rs 10.50 on every litre of petrol. Bharat Petroleum (BPCL) hiked price by Rs 4.99 a litre and Hindustan Petroleum (HPCL) by Rs 5.01. The revenue loss on petrol that includes a portion of marketing margins now stands reduced by half. "Despite very high global crude oil prices and a huge debt burden of oil companies, the increase is only moderate keeping the consumers' interest in view," said an Indian Oil statement.

Increase in fuel prices can further push up inflation which is ruling at 8.98%. Since diesel and petrol has a combined weight age of 5.76% in the Wholesale Price Index. The fuel Price Index was 12.25% for the year to April 30, 2011. The Union Finance Minister Pranab Mukharjee has already indicated that the country's GDP growth might be lower than the target of 9% by a per cent age point due to inflationary pressure coming from oil prices

The S&P CNX Nifty is currently trading at 5,518.50, down by 26.25 points or 0.47%. The index has touched a high and low of 5,541.80 and 5,541.80 respectively. There were 15 stocks advancing against 35 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 3.25%, Ranbaxy up by 3.17%, Ambuja Cement up by 2.68%, Bharti Airtel up by 1.82% and Hero Honda up by 1.61%.

On the flip side, M&M down by 2.44%, Reliance Infra down by 2.14%, JP associates down by 1.83%, Cipla down by 1.78% and Reliance Capital down by 1.75% were the major losers on the index.

Asian markets were trading mostly in the red; Shanghai Composite declined 0.28%, Hang Seng plunged 1.19%, Jakarta Composite slid 1.04%, Nikkei 225 dropped 0.83%, Straits Times skid 0.88%, Seoul Composite decreased 0.46% and Taiwan Weighted was down by 0.72%.while, KLSE Composite was trading flat.

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