Benchmarks trade weak; Nifty holds 5550 mark

Indian equity indices continued their weak trade with investors arousing their buying interest after report released by commerce ministry opined that India's food inflation declined to 8.06% for the week ended May 21 on the back of cheaper pulses, wheat and some vegetables. However, global leads from the Asian markets which traded with large cuts along with negative trade in European equity indices too are putting pressure. Back home, shares in Sun TV and budget carrier Spicejet, controlled by Maran's elder brother, fell as much as 25.38 percent and 16.79 percent, respectively after the Central Bureau of Investigation (CBI) have started a preliminary investigation against Dayanidhi Maran, who was telecom minister from 2004 to 2007. The NSE Nifty and BSE Sensex were trading above their psychological 5,550 and 18,500 levels, respectively. The market breadth on the BSE was in favor of declines in the ratio of 1116:1600 while 109 scrips remained unchanged.

Moreover, UltraTech Cement's production for the month of May 2011 has declined by 4.93% at 32.52 lakh million tonnes and dispatches dropped by 3.27% at 32.44 lakh million tonnes over May 2010. For the April-May period, its cement production has slipped 4.79% at 64.89 lakh million tonnes as against 68.16 lakh million tonnes in the year-ago period. Dispatches during the period decreased 4.34% at 64.41 lakh million tonnes in April-May 2011 as against 67.33 lakh million tonnes during April-Feb 2010 while Ambuja Cements, in which Swiss major Holcim holds majority stake, reported a 6.57% dip in May sales at 17.64 lakh tones as compared to the same month last year. The company had recorded 18.88 lakh tones sales in May 2010. Cumulative sales of the company during the January-May period, however, were up by 1.77% to 93.32 lakh tones against 91.70 lakh tones during the corresponding period a year ago.

The BSE Sensex slipped by 78.65 points or 0.42% at 18,530.16. The index touched a high and a low of 18,540.67 and 18,390.57 respectively.

The BSE Mid-cap index shed 0.36% and Small-cap index fell 0.45%.

On the BSE sectoral front, FMCG up 1.73%, Consumer Durables up 0.67%, Healthcare up 0.27% and Oil and Gas up 0.06% remained the only gainers. While, Bankex down 1.43%, Realty down 0.1.43%, Metal down 1.23%, Auto down 0.93% and Capital Goods down 0.57% were the major laggards in the BSE sectoral space.

The top gainers on the Sensex were HUL up 4.29%, Bajaj Auto up 2.24%, ITC up 1.73%, NTPC up 1.23% and Hero Honda up 1.01%. On the flip side ICICI Bank down 2.79%, Tata Motors down 2.57%, M&M down 2.16%, DLF down 1.82% and Sterlite down 1.82% were the major losers on the index.

Meanwhile, India's food Inflation after soaring to its four week's high level in the previous week has eased considerably to 8.06% on annual basis during week-ended May 21, 2011 on the back of cheaper pulses, wheat and some vegetables, the latest numbers are likely to be seen by the government as a silver lining after the slowdown in economic growth during the first quarter.

According to the data released by the ministry of commerce and industry on Thursday, food price index declined to 8.06% on annual basis during week-ended May 21, from an annual rise of 8.55% recorded in the previous week. Meanwhile, the index of 'Food Articles' declined by 0.2% to 186.3 (Provisional) from 186.7 (Provisional) during the previous week due to lower prices of poultry chicken (7%), barley (3%), fish-marine and maize (2% each) and arhar, urad, egg and fruits & vegetables (1% each).  However, the prices of bajra (3%), gram (2%) and milk, jowar and ragi (1% each) moved up.

The index for 'non-food articles' group declined by 0.1% to 183.3 compared with 185.2 for the previous week due to lower prices of logs and timber (34%), raw silk (7%), gingelly seed and gaur seed (5% each), raw rubber (3%), mesta (2%) and fodder, raw jute, sunflower and niger seed (1% each).  However, the prices of rape and mustard seed (3%), soyabean (2%) and castor seed (1%) moved up. As a result, the broader 'primary articles' index, which has a weight of 20.12% in the overall wholesale price index (WPI) declined by 0.4% to 191.7 from 192.4 seen in the previous week. The annual rate of inflation, calculated on point to point basis, for this group stood at 10.87% for the week ended May 21 as compared with 11.60% in the previous week.

The index for 'fuel and power' with a weight of 14.91% in overall WPI rose by 0.4% to 160.7 from 160.1 for the previous week due to higher prices of petrol (9%) and bitumen (4%).  However, the prices of aviation turbine fuel (3%), naphtha (2%) and light diesel oil (1%) declined. The annual rate of inflation for this group, calculated on point to point basis, stood at 12.54% (Provisional) for the week ended May 21, 2011 as compared to 12.11% for the previous week.

Though, the weekly food inflation has slowed much from the double-digit rise for much of 2010 and also compared to week-ended May 14, 2011, but headline inflation at 8.66% in April remains considerably above the central bank's comfort level, thereby maintaining pressure on the apex bank to continue with its monetary policy stance in its upcoming monetary policy review on June 16, 2011. However, the slower than expected growth of the economy too might not be overlooked by the Central bank while reviewing its monetary policy stance as the economy grew 7.8% in the January-March quarter- its slowest pace in five quarters in the three months to March as rising interest rates crimped consumption and investment.

The S&P CNX Nifty slipped 27.25 points or 0.49% at 5,564.75. The index touched high and low of 5,568.20 and 5,521.95 respectively.

The top gainers on the Nifty were HUL up 4.11%, SAIL up 3.04%, Bajaj Auto up 2.71%, R Capital up 2.49% and Sun Pharma up 1.88%. On the other hand, Sesa Goa down 3.26%, Tata Motors down 2.68%, Kotak Bank down 2.30%, M&M down 2.18% and Sterlite down 2.07% were the major losers on the index.

On the Asian front, Shanghai Composite plunged by 1.40%, Hang Seng eased 1.58%, Nikkei 225 plummeted 1.69%, Straits Times fell 0.54%, Seoul Composite inched down 1.27% and Taiwan Weighted declined 0.78% while KLSE Composite inched up 0.10%. Markets in Indonesia remained closed for a public holiday.

The European markets are trading in red with France's CAC 40 declining down 1.26%, Germany's DAX slipped 1.16% and London's FTSE shed 0.84%.

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