Benchmarks continue firm trade; Nifty above 5,300 mark

Indian equity indices continue its firm trade and are trading in a positive zone unperturbed by the weekly food inflation numbers that were released by the commerce ministry. Market participants were seen piling up the positions in FMCG, Oil & Gas and Consumer Durables while, selling was witnessed among Realty, Health Care and Metal. As per the report, after the gap of one year the government will raise diesel, cooking gas and kerosene prices next month as cash-strapped state firms say it will be forced to cut fuel supplies, starting with cooking gas after their borrowings have risen alarmingly. The empowered group of ministers (EGoM), which is authorized to raise fuel prices, is expected to meet early next month to decide partial price hike on individual products against companies' demand to increase diesel rates by Rs 15.44 per litre, kerosene by Rs 27.47 per litre and cooking gas by Rs 381 per cylinder. Majority of the Asian markets were trading in red barring Shanghai Composite, Jakarta Composite and Straits Times while, the European markets were trading in red on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,300 and 17,700 levels, respectively. The market breadth on the BSE was in favor of declines in the ratio of 973:1680 while, 128 scrips remained unchanged.

Moreover, Reliance Industries (RIL) has made a natural gas discovery in the Krishna Godavari (KG) basin off the east coast of India. The company has made discovery in the very first well drilled on its D9 block. Reliance holds 90% interest and is the operator of the deep-sea block KG-DWN-2001/1 (D9) while London-listed Hardy holds 10% interest in the block. In 2003, under New Exploration Licensing Policy (NELP), Reliance-Hardy combine had won the 11,605 square kilometer (equivalent to 48 North Sea blocks). Also, Omkar Speciality Chemicals has received FDA Licence for its Unit No. III for manufacture of Selenium Sulphide (USP) which is the key ingredient for production of anti-dandruff shampoo. Vivimed Labs and International Finance Corporation (IFC), a World Bank Group has entered into an FCCB subscription agreement wherein IFC  will subscribe to the company's FCCB's, on private placement basis to the tune of $7.5 million. SMS Pharmaceuticals has received a closure order from Andhra Pradesh Pollution Control Board (APPCB) for its Unit -1 located at Kazipalli industrial area Medak District, Andhra Pradesh for non compliance of certain conditions.

The BSE Sensex is currently trading at 17,718.93 up by 168.30 points or 0.96% after trading as high as 17,754.55 and as low as 17,482.21. There were 24 stocks advancing against 6 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap and Small cap indices fell by 0.32% and 0.63% respectively. 

On the BSE sectoral space, FMCG up 1.83%, Oil & Gas up 1.81%, Consumer Durables up 1.30%, IT up 0.99% and Teck up 0.82% were the major gainers, while Realty down 1.01%, Health Care down 0.78% and Metal down 0.28% were the only losers on the index.

The top gainers on the Sensex were RCom up by 3.19%, ITC up by 2.97%, RIL up by 2.68%, ONGC up 1.84% and HUL up 1.75%. On the flip side, Cipla down by 1.89%, Maruti Suzuki down by 1.39%, BHEL down by 0.92%, Hindalco down by 0.66% and HDFC down by 0.55% were the top losers on the index.

Meanwhile, the food inflation in the Indian economy is still hovering at the 9% benchmark, which is a great concern for the Indian government. The latest rise is seen as a challenge for the government, which has been battling high rate of price rise across all segments for the past few months. Food inflation, as measured by the Wholesale Price Index (WPI), for week ended June 11 has reached to 9.13% highest in the last two and half month due to increase in the prices of fish-marine, milk, tea, egg and poultry chicken. From the second half of the May, food inflation is stated to move up to the bench mark of 10%. 

According to the data released by the ministry of commerce and industry, food price index rose to two month high of 9.13% for week ended June 11, from an annual rise of 8.96% recorded in the previous week.  However, the index for the 'Food Article' group rose by 1.5% to 191.3 (Provisional) from 188.4 (Provisional) for the last week because of increase in prices of fish-marine (5%), milk (4%), tea and poultry chicken (3% each), jowar and egg (2% each) and moong, fish-inland and fruits and vegetables (1% each).  However, the prices of bajra and urad (5% each) and ragi, barley, condiments and spices and pork (1% each) declined.

The Index for 'Non-Food Article' group declined by 1.5% to 183.9 (Provisional) from 183.9 (provisional) for the previous week due to lower prices of raw cotton (9%), mesta and sunflower (4% each), raw jute (3%) and castor seed, linseed and fodder (1% each).  However, the prices of raw silk (7%), groundnut seed (5%), gaur seed (2%) and cotton seed and copra (1% each) moved up. Therefore, the broader 'Index for Primary Article' which has weight of 20.12% in the Wholesale Price Index (WPI) increased by 0.8% to 198.1 (provisional) from 196.6 (provisional) for the last week. The annual rate of inflation, calculated on point to point basis stood at 12.62% (Provisional) for week ended June 11 as compared to 12.86 for the week ended June 04.

The Index for 'Fuel and Power' which has weight of 14.91% in WPI remained unchanged from its last week's level of 159.9 (provisional) and annual rate of inflation for fuel and power, calculated on point to point basis, has also remained same at 12.84% from previous week. This two and half month surge in food inflation is in the line of the central banks expectations that the headline inflation would be mostly driven by the commodity prices in the next few months and the rates of price rise in food items would moderate. The recent forecast of monsoon to be below the normal level also has increased the temperature in the economy.

The S&P CNX Nifty is currently trading at 5,316.85, higher by 38.55 points or 0.73% after trading as high as 5,330.60 and as low as 5,252.25. There were 30 stocks advancing against 20 declines on the index.

The top gainers of the Nifty were ITC up by 3.16%, RCom up by 2.96%, Reliance up by 2.56%, Reliance Capital up by 2.33% and HUL up by 2.12%. On the flip side, Cipla down by 1.84%, Ranbaxy down by 1.76%, Maruti down by 1.73%, Sesa Goa down by 1.64% and IDFC down 1.52% were the major losers on the index.

Asian markets are exhibiting mixed trends as Shanghai Composite surged 1.44%, Jakarta Composite gained 0.05% and Straits Times amassed 0.09%. On the flipside, Hang Seng down 0.46%, KLSE Composite inched down 0.27%, Nikkei 225 eased 0.34%, Seoul Composite declined 0.39% and Taiwan Weighted decreased 0.62%.

The European markets are trading in red, with France's CAC 40 eased 0.89%, Germany's DAX shed 0.72% and London's FTSE fell 0.59%.

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