Benchmark continues to trade in a narrow range around the neutral line

Indian equity indices continue to trade in a narrow range with a positive bias. Investors were still showing reluctance to buy in the absence of any significant positive triggers. Market participants were seen piling up the positions in Consumer Durables, Capital Goods and Metal while, selling was witnessed among Oil & Gas, IT and FMCG. It has been reported that so far in 2011, foreign institutional investors have offloaded shares worth nearly Rs 3,000 crore in 23 Indian companies, such as mortgage lender HDFC and Bombay Dyeing.  10 foreign fund houses, such as Citigroup, Morgan Stanley, Merrill Lynch, Deutsche Securities and JP Morgan, sold shares of Indian companies worth Rs 2,939 crore through open market transactions on the Bombay Stock Exchange in 2011. On the global front the situation has recovered and majority of the Asian markets were trading in green barring Seoul Composite and Taiwan Weighted, the European markets too are trading in green after an agreement by French banks to roll over Greek debt. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,500 and 18,400 levels, respectively. The market breadth on the BSE was in favor of advances in the ratio of 1397:1308 while, 137 scrips remained unchanged.

Shares of PSU OMC's like Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Indian Oil Corporation were trading in red due to profit booking. Shares of OMC's rallied on Monday, 27 June 2011 after the government announced a hike in the price of diesel by Rs 3 a litre, kerosene Rs 2 a litre and cooking gas by a steep Rs 50 a cylinder. Share price of telecom major Bharti Airtel hit 52-week high today. Also, shares of Jaiprakash Associates were down today after the Supreme Court pulled up the Mayawati government in Uttar Pradesh for its land acquisition practices in Greater Noida.

Tata Motors was trading in green, the company will move the Supreme Court against distribution of land which the West Bengal government had taken back from the company through an Act passed in the Assembly.

The BSE Sensex is currently trading at 18,462.68 up by 50.27 points or 0.27% after trading as high as 18,527.45 and as low as 18,323.44. There were 17 stocks advancing against 13 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap and Small cap indices advanced by 0.75% and 0.62% respectively. 

On the BSE sectoral space, Consumer Durables up 1.00%, Capital Goods up 0.82%, Metal up 0.65%, Health Care up 0.62% and Auto up 0.61% were the major gainers, while Oil & Gas down 0.59%, IT down 0.36%, FMCG down 0.31%, Realty down 0.25% and  PSU down 0.20% were the major losers on the index.

The top gainers on the Sensex were Hindalco up by 3.77%, Bajaj Auto up by 1.82%, HDFC up by 1.82%, BHEL up 1.38% and Sterlite up 1.24%. On the flip side, JP Associates down by 2.31%, DLF down by 2.28%, Wipro down 1.20%, Jindal Steel down 0.82% and Reliance Infra down 0.72% were the only losers on the index.

Meanwhile, finance minister Pranab Mukherjee has expressed concerns over elevated inflation and said, inflation poses a major challenge to the Indian economy and projected that the rate of inflation is going to be more than 6.5% for this year.  While addressing a meeting of India and American corporate leaders and policymakers, finance minister said, 'There are problems (with the Indian economy) and one of the major problems is inflation." Finance Minister is on three day visit to United States leading a high-powered Indian delegation for the second Indian-US Economic and Financial Partnership discussions.

Emphasizing on India's growth potential Pranab Mukherjee said 'We do not believe, in theory, one is to be dispensed for the other. Yes, we can have a moderate rate of inflation and at the same time, reasonable developed growth. The monetary and fiscal policy must move in tandem. In India, we are doing so. Therefore, in short term, I would like to emphasis that in India, the growth potential is there. The rate of saving and rate of investment is reasonably high. The various structural reforms which we have undertaken and which will come in course of time, will ensure that investment-friendly environment which can attract investment from various parts of the world" he added.

On the issue of quality and unwanted blips in economic data from time to time, finance minister said, 'Sometimes questions have been raised, particularly looking at a figure in a short campus of time. (For example) whether FII in the current financial year is slowing down. In every year, the first quarter's FII investment slows down, particularly the equity. But in the later part of the years, it makes up. This is not in one year, but year after year. Therefore, we need not be unnecessarily overly worried.'

Returning to inflation, Finance Minister said Inflation is an important constrain to India's economic growth, which the government has to tackle. On the acceptable rate of inflation, finance minister said, 'To be very frank, what shall be acceptable and what can be a tolerable level of inflation is very difficult to define. But in our economy, we feel that if we can keep the inflationary pressure within 5 to 6%, it could be ideal, but we can live with 6 to 6.5%.'

The headline inflation surged to higher than expected at 9.06% in May from 8.66 % in April, recent hike in diesel and other petroleum products is also expected to push inflation further. On the inflation for current year finance minister said, "This year I do hope it will be a little more, not because of near supply constraints on the agricultural front, which was one of the major reasons for inflationary pressure of the previous and current year, which we have substantially addressed by taking appropriate measures.'

'But the international commodity prices, including food and fuel, is causing severe constraints,' Finance Minister said.  'The food prices have started coming down. We have taken steps very recently. And have reduced subsidy burden by adjusting the price of oil and also providing relief to the consumers by doing away with central taxes and appealing to provincial governments to reduce their taxes on petroleum and petroleum products. I do have hope that it will have some impact. But this is going to be a major problem and it would have its impact on the overall growth scenario,' Mukherjee said.

The S&P CNX Nifty is currently trading at 5,534.70, up by 8.10 points or 0.15% after trading as high as 5,558.30 and as low as 5,496.35. There were 24 stocks advancing against 26 declines on the index.

The top gainers of the Nifty were Hindalco up by 3.65%, HDFC up by 1.99%, Bajaj Auto up by 1.50%, BHEL up by 1.36% and Dr Reddy up by 1.31%.

JP Associates down by 2.37%, Gail down by 2.31%, DLF down by 1.91%, BPCL down by 1.85% and HCL Tech down 1.33% were the major losers on the index.

Majority of the Asian markets are exhibiting positive trends as Shanghai Composite rose 0.04%, Hang Seng added 0.09%, Jakarta Composite gained 0.51%, KLSE Composite inched up 0.48%, Nikkei 225 climbed 0.74% and Straits Times increased 0.06%. On the flipside, Seoul Composite slipped 0.36% and Taiwan Weighted declined 0.25%.

The European markets are trading in green with, France's CAC 40 added 0.77%, Germany's DAX advance 0.24% and London's FTSE rose 0.64%.

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