Selling pressure intensifies; SBI result eyed

Selling pressure has aggravated into equity markets as the local bourses have lost some more ground amidst listless global cues. Equity markets are also trading sideways ahead of country's premier lender -State Bank of India (SBI) - reporting its number. On the global front, after the overnight fall on US markets, regional counterparts are mixed bag with three stocks markets closed on account of local holiday. Meanwhile, the US future indices are showing a downtick in the screen trade. Back home, the downtrend of the bourses can also be contributed to the fall of the Index heavyweights such as Reliance Industries (RIL), ICICI Bank, ONGC and State Bank of India (SBI). Heavyweight ONGC plunged more than 5% on high volume on reports, the government has increased subsidy burden on upstream companies with respect to under-recoveries of oil marketing firms on sale of fuel at controlled price. Meanwhile, State bank of India is down on the reports that it may have to delay its Rs 20,000 crore rights shares issue plan as cash-starved government, which its majority shareholder, does not seem to be in a position to shell out money for SBI's planned rights issue of shares in the current financial year. Besides large cap stocks, small cap stocks too have now slipped into red and both the broader indices i.e. Small cap and Midcap Index have edged lower over 0.10% each. On the BSE Sectoral front, stocks belonging to the Consumer Durables, Fast Moving Consumer Goods counters are limiting the losses of the bourses, while stocks belonging to the Oil & Gas, Public Sector Undertaking (PSU) and Auto are the losers with notable losses. The BSE 30-share Sensex despite losing over 25 points is hovering above the psychological 18300 mark. Meanwhile, the 50-unit S&P CNX Nifty too dropping over 10 points has lost its psychological 5,500 mark. The overall market breadth on BSE is in the favour of declines which have outpaced advances in the ratio of 1268:1104, while 112 shares remained unchanged.

The BSE Sensex is currently trading at 18,306.87, down by 38.16 points or 0.21 %. The index has touched a high and low of 18,435.80 and 18,264.42 respectively. There were 18 stocks advancing against 12 declining stocks on the index.

Both the indices were trading down in red. The BSE Mid cap index lost 0.11%, while the Small cap index dropped 0.02%.

The top gainers on BSE sectoral space were Consumer Durables (CD) up 1.06%, FMCG up 0.91%, Capital Goods (CG) up 0.51%, IT up 0.48% and TECk up 0.37%.

On the other hand, Oil & Gas down 2.46%, PSU down 0.91%, Auto down 0.74%, Realty down 0.35%, and Power down 0.25% were the major losers on the BSE sectoral space.

The top gainers on the Sensex were Cipla up by 1.25%, ITC up by 1.13%, Jindal Steel up 1.09 %, TCS up 1.08%, L&T up 0.99%.

On the flip side, ONGC down 4.89%, Hero Honda down 2.72%, RIL down 1.09%, NTPC down 1.75 % and Tata Motors down 1.29% were the major losers on the index.

Meanwhile, world's most aggressive central bank may sacrifice Asia's 3rd largest economy's growth in order to manage inflation, the indication came after the reserve Bank of India hiked its policy rates by more than expected 50 basis points (bps) to tame the inflation menace, but still the WPI inflation for the month of April came more than anticipated 8.66%. "High inflation negatives prospects of growth", said RBI governor Subbarao.

The main cause of the inflationary pressure is coming from the international commodity prices and these commodity prices have been subsequently been passed through into the entire range of domestic manufacturing goods indicating that fluctuation in international commodity prices make deep impact. In simple words, demand has been strong enough to allow major go through input price increases. Importantly, this is happing even as there are visible signs of moderating growth, particularly in capital goods production and investment spending, suggesting that cumulative monetary action are begging to have any impact on demand.

Commenting on the April headline inflation number as measured by the WPI declined to 8.66 % from 9.4% in March as the prices of food and manufactured products eased ,  Subbarao said, "Inflation numbers are still high and above comfort level. 'For more rapid growth, we need to manage the growth-inflation trade-off. Constant high inflation over past two of years highlights the dangers of negligence of inflation,' Subbarao added.

The food habits of rural poor are also changing dramatically, because of Demonstration Effect of the LPG (Liberalization- Privatization-Globalization). Few months ago, the inflation was due to much talked supply-side constraints and higher global commodity prices. Whereas, over the period of time, demand side pressures have also emerged, higher demand along with higher income is stoking inflation.  As a result of this combination of high income and high demand, producers have been passing on higher input prices to consumers in the form of higher output prices. 

Now the main challenge is for the Monetary and Fiscal policy to work together to manage demand.  We need to focus on the quantity and quality of the fiscal adjustment, the Governor said.The S&P CNX Nifty is currently trading at 5,483.90, down by 15.10 points or 0.27%. The index has touched a high and low of 5,523.85 and 5,471.40 respectively. There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were Cipla up by 1.17%,ITC up by 1.13%, L&T up by 1.04%, Jindal Steel up by 0.98% and Sesa Goa up by 0.92%.

On the flip side, ONGC down 4.66%, Gail India down 3.34%, Ambuja Cement down 3.05%, Hero Honda down 2.68% and SAIL down 2.56% were the major losers on the index.

Other key Asian markets were trading mixed; Hang Seng dipped 0.10%, Seoul Composite decreased 0.08% and Taiwan Weighted declined 0.31%; On the flip side, Shanghai Composite increased 0.33%, Nikkei 225 gained 0.09%Meanwhile, the Stock markets in Indonesia, Malaysia and Singapore will remain shut today for a public holiday.

Unit-8, 3rd Floor, First Mall, The Mall, Ludhiana-141001, Punjab (INDIA).

To unsubscribe or change subscriber options visit: http://www.aweber.com/z/r/?TJzsLEwstCyc7OysHMyctEa0nBycDKyM7A==