Ease in weekly inflation helps benchmarks abate losses this afternoon

Resilient Indian benchmarks are trying hard to reverse the intraday losses in the afternoon session of trade as buying interests are on the rise after the 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. The key indices are currently trading at their intraday highs around the 5,550 and 18,550 levels. The latest inflation figures were seen as a silver lining after Wednesday's sluggish economic reports confirmed fears of a slowdown during the first quarter. However, the upside chances remained capped in the session as low economic growth expectations, high risk perceptions and a resulting moderation in valuations weighed on sentiments. Meanwhile daunting global leads from the Asian markets which traded with large cuts along with somber opening of European equity indices too restricted the local benchmarks from reversing initial losses. Defensive sectors like FMCG and Healthcare showed some fervor as they abstained from giving into the selling pressure as majors like HUL and Cipla moved higher by 3.39% and 0.36% respectively. However, the rate sensitive sectors like Banking and Real Estate had to bear the maximum brunt as they got pounded by 1.35% and 1.24% respectively.

Moreover, the broader markets also were not spared either as they traded in line with their larger peers and the midcap index shed 0.39% and the smallcap index fell 0.37% points. The market breadth on the BSE was in favor of declines in the ratio of 996:1501 while 93 scrips remained unchanged.

The BSE Sensex slipped by 78.13 points or 0.42% at 18,530.68. The index touched a high and a low of 18,540.67 and 18,390.57 respectively.

The BSE Mid-cap index shed 0.39% and Small-cap index fell 0.37%.

On the BSE sectoral front, FMCG up 1.35%, Healthcare up 0.65%, Consumer Durables up 0.52%, Oil and Gas up 0.12% and Power up 0.04% remained the only gainers.

While, Bankex down 1.35%, Realty down 0.1.24%, Auto down 1.14%, Metal down 1.09% and Capital Goods down 0.78% were the major laggards in the BSE sectoral space. The top gainers on the Sensex were HUL up 3.39%, NTPC up 1.55%, Bajaj Auto up 1.41%, ITC up 1.08% and Cipla up 0.96%.

On the flip side Tata Motors down 2.78%, ICICI Bank down 2.68%, M&M down 1.87%, Sterlite down 1.67% and DLF down 1.44% were the major losers on the index.

The Department of Industry Policy and Promotion (DIPP) under the Ministry of Commerce, is expected to move a proposal asking cabinet approval for 51% Foreign Direct Investment (FDI) in multi-brand retail sector. To avoid any political resistance from opposition and left parties, the DIPP proposal has made state government - the final authority to take any final decision on front-end retail store in their states.

Multinational retailers giants like Walmart, Carrefour and Tescoa are trying to enter in India's $400 billion retail sector which is traditionally dominated by small scale retailers or Kirana's. As per the DIPP official, a draft framework has been prepared keeping adequate safeguards to protect small shopkeepers, and to ensure that FDI actually helps in development of back-end infrastructure. The department has circulated a draft framework to a committee of secretaries (CoS), which will fine-tune it before a final cabinet note is moved.

At present, India allows 51% FDI in single-brand retail and 100% in wholesale cash-and-carry. The draft framework prepared by DIPP has a rider that foreign retail giants will have to invest a minimum of $100 million and it suggests that at least 50% of the total FDI proposed by an investor should be in back-end infrastructure for which a statement of account would be field with central bank and Foreign Investment Promotion Board. For monitoring purpose government will allow back end infrastructure to be executed through a devoted entity. According to draft proposal, the multi-brand retailers would be required to source at least 30% of their products, including food items from small and medium enterprises (SME), and these multi-brand retail outlets will be allowed to open in the cities with more than 10 lakh population (2011 census).

The DIPP official said, 'The government is very clear that FDI in multi-brand retail should create large-scale employment and bring quality investment into the country leading to development of back-end infrastructure". Recently, Inter Ministerial Group (IMG) too had suggested opening up Multi-brand Retails sector for FDI and changes in agriculture marketing lows to check the rate of price rise. Chief Economic adviser and Inter Ministerial Group (IMG) Chairman Kaushik Basu has said, "We are taking a clear position on FDI in multi-brand retail. Of course, it is a recommendation, not policy." The S&P CNX Nifty slipped 28 points or 0.50% at 5,564.00. The index touched high and low of 5,567.20 and 5,521.95 respectively.

The top gainers on the Nifty were HUL up 3.46%, R Capital up 3.02%, SAIL up 2.24%, Sun Pharma up 1.96% and Bajaj Auto up 1.76%.

On the other hand, Sesa Goa down 3.02%, Tata Motors down 2.94%, Grasim down 2.41%, Kotak Bank down 2.11% and Sterlite down 1.96% were the major losers on the index.

On the Asian front, Shanghai Composite plunged by 2.03%, Hang Seng eased 1.49%, KLSE Composite declined 0.10% Nikkei 225 plummeted 1.69%, Straits Times fell 0.69%, Seoul Composite inched down 1.27% and Taiwan Weighted declined 0.78%.

Markets in Indonesia remained closed for a public holiday.

The European markets have opened a flat note with a negative bias as the France's CAC 40 eased 1.10%, Germany's DAX added 1.20% and London's FTSE shed 1.15%.

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