Local bourses wipe off some gains; broader indices outperform

Local bourses after extending gains for the third straight session in the early trade have now knocked off some points as fears of sticky inflation hitting economic growth and earnings has triggered some sell off in the stocks belonging to the FMCG, Power and TECk counters. Though the Indian Prime Minister Manmohan Singh has expressed confidence that his government will be able to achieve 8.5 per cent growth during the current fiscal despite concerns over high oil prices, which is well above the RBI forecast of 8% pegged in annual credit policy, but FIIs turning net sellers for most of May over India's macroeconomic concerns have dented investor's sentiment. Further, wobbly Global markets have also led to the spate of pressure points as Asian markets are trading lacklustre. Meanwhile, the Dow and S&P 500 closed out their fourth week of losses with a small gain on Friday. The US future indices are too trading mixed in the screen trade. Back home, the 30-share index of the Bombay Stock Exchange (BSE)-Sensex -after touching a week high has continued trading above its 18,300 mark. In a similar fashion, the broad-based National Stock Exchange Nifty index gaining over 10 points is trading above 5,450 mark. The broader indices still are outdoing their larger counterparts as both midcap and smallcap index are trading above 0.50% each. The overall market breadth on the BSE is in the favour of advances which have outnumbered declines in the ratio of 1423:687, while 86 shares remained unchanged.

The BSE Sensex is currently trading at 18,300.41, up by 34.31 points or 0.19%. The index has touched a high and low of 18,380.17 and 18,276.72 respectively. There were 17 stocks advancing against just 13 declines on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 0.64% and 0.76% respectively. 

The top gaining sectoral indices on the BSE were, HC up by 1.39%, Realty up by 1.21%, CD up by 1.05%, Bankex up by 0.61% and Metal was up by 0.49%. On the flip side, FMCG down by 0.23%, Power down by 0.13%, TECk down by 0.09% were the top losers on the index.

The top gainers on the Sensex were DLF up by 2.00%, Cipla up by 1.62%, Sterlite Industries up by 1.58%, HDFC up by 0.97% and Wipro up by 0.89%. While, Reliance Infra down by 1.28%, ITC down by 0.79%, Infosys down by 0.58%, NTPC down by 0.50% and Bharti Airtel was down by 0.44% were only losers on the Sensex.

Meanwhile, the government is expected to revise its GDP forecast of 9% for the current financial year. The downward revision is expected because of the rising global commodity prices and high inflation. Earlier, many international and national organizations had also revised downward their forecast of growth on account of high inflation, the steepest being the Goldman Sachs that had cut growth estimate for the 2011-12 by over a percent to 7.8% from 8.7% estimated originally. Another international organization, OECD has projected the Indian economy to expand 8.5% in 2011-12, much lower than the growth of 9.6 percent witnessed in 2010-11 financial year. Two other international bodies, the International Monetary Fund and the World Bank too had forecast that India's economy would grow at 8 per cent and 9 per cent, respectively. While, on the domestic front the Reserve Bank of India has reduced the growth target of Indian economy at about 8% in the current financial year after it increased the policy rates for the ninth time in over a year.

The mid-term review of the economy was due in October 2011, but the finance ministry has decided to review its forecast next month itself because of the fast changing economic conditions. Chief Economist Advisor Kaushik Basu said, "This year, because of changing global scenario and many other important organisations having downgraded India's growth rate, we have decided that we would go back and take another look at our (GDP) numbers in mid-June". However, Basu expects a small revision in the forecast. Finance Minister has also hinted that high inflation and any further rise in crude oil prices may pull down India's economic growth to 8% from a projected 9%.

The Wholesale Price Index inflation marginally decreased to 8.66% in April from over 9.04 % in March but may accelerate again after the increase in petrol prices. The government is likely to increase the prices of diesel, kerosene and LPG, in order to reduce the revenue losses of Oil Marketing Companies.

The S&P CNX Nifty is currently trading at 5,489.65, higher by 13.55 points or 0.25%. The index has touched a high and low of 5,509.30 and 5,479.05 respectively. There were 32 stocks advancing against just 18 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 3.16%, DLF up by 2.00%, Dr Reddy up by 1.76%, Sterlite Industries up by 1.61% and Cipla up by 1.54%.

Cairn India down by 2.16%, Reliance Infra down by 1.57%, ITC down by 0.77%, Bharti Airtel down by 0.75% and Infosys down by 0.63% were the major losers on the index.

Asian markets were trading mixed; Shanghai Composite gained 0.47%, Hang Seng was up by 0.51%, Straits Times gained 0.58%.

On the flip side, Jakarta Composite declined 0.07%, KLSE Composite shed 0.03%, Nikkei 225 trimmed 0.24%, Seoul Composite gave up 0.44% and Taiwan Weighted lost 0.16%

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