Resilient benchmarks pare losses; positive European markets lift local sentiments

After drifting to lower levels on getting dismal inflation numbers, Indian frontline indices are showing some signs of recovery as benchmarks have gone on to pare initial losses and moved closer to the previous closing levels. The positive opening for European counterparts has spilled over some optimism in domestic bourses. Investors are showing huge buying interests in capital goods and power heavyweights like L&T, BHEL and NTPC which are trading with gains of around a percent point. While the index heavyweight Reliance Industries too has made its presence felt by advancing around half a percent point. However, profit booking remained intact in rate sensitive banking and automobile indices as investors feared that RBI would further its hawkish stance against the towering inflation and raise key policy rates for the tenth time. The rebound in international crude oil prices which has advanced above the $100-a-barrel level, too pounded on sentiments as it augmented rate hike fears. Market participants remained cautious amid thin trades ahead of Friday's release of factory output data for March and the Indian central bank's next rate-setting meeting on June 16. Moreover, the broader markets traded on a flat note in line with their larger peers. The market breadth on the BSE was in favor of declines in the ratio of 1138:1382 while 108 scrips remained unchanged.

The BSE Sensex shed 61.62 points or 0.33% at 18,332.67. The index touched a high and a low of 18,449.64 and 18,327.01 respectively.

The BSE midcap index eased 0.15% and the smallcap index slipped 0.06% points.

On the BSE sectoral front, consumer durables up 0.73%, Capital Goods up 0.54% and Power up 0.10%, remained the only gainers.

While, Auto down 1.10%, Healthcare down 0.54%, Bankex down 0.47%, Realty down 0.40% and Metal down 0.37% were the major laggards in the BSE sectoral space.  The top gainers on the Sensex were NTPC up 1.23%, L&T up 0.83%, BHEL up 0.77%, TCS up 0.73% and RIL up 0.32%.

On the flip side Tata Motors down 1.83%, R Com down 1.54%, SBI down 1.41%, Hero Honda down 1.28% and ONGC down 1.28% were the major losers on the index.

Meanwhile, Stubborn food inflation numbers have ricocheted a week after showing some signs of moderating and have put the Indian central bank in a tight corner. The inflation numbers have remained above comfortable levels for quite a long time now despite the hawkish stances by RBI, which has already raised key policy rates nine times.

According to the data released by Ministry of Commerce and Industry, the index for Food Articles group rose to 9.01 percent for the week ended May 28, from 8.06 percent for the previous week due to higher prices of tea, pork and maize, jowar, fish-inland and milk, egg, urad, barley, poultry chicken and wheat.

The index for primary articles group which has the highest weightage of 20.12% in WPI rose to 11.52 percent for the week ended May 28, from 10.87 percent for the previous week.

The index for 'Non-Food Articles' group eased to 20.97 percent from 21.31 percent for the previous week due to decline in the prices of raw silk, gingelly seed, sunflower, copra and fodder, soyabean and raw jute (1% each).

The index for Fuel and Power group which has weightage of 14.91% remained unchanged at its previous week's level. The S&P CNX Nifty receded 22.10 points or 0.40% at 5,504.75. The index touched high and low of 5,538.60 and 5,502.05 respectively.

The top gainers on the Nifty were SAIL up 1.80%, NTPC up 1.06%, BHEL up 0.95%, L&T up 0.87% and TCS up 0.39%.

On the other hand, Ambuja Cement down 2.38%, BPCL down 2.04%, Tata Motors down 1.94%, HCL Tech down 1.83% and R Com down 1.59% were the major losers on the index.

On the Asian front, Shanghai Composite plummeted 1.53%, Hang Seng plunged 1.07%, Jakarta Composite shed 0.40%, Straits Times slipped 0.12%, Seoul Composite sank by 0.58% and Taiwan Weighted dropped 0.07%. On the flipside, KLSE Composite rose 0.13% and Nikkei 225 advanced 0.19%.

The European markets have opened a flat to positive note as the France's CAC 40 added 0.55%, Germany's DAX rose 0.53% and London's FTSE gained 0.37% 

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