NARROW RANGE

Indian equity markets continued to trade in a narrow range with gains of around half a percent in Thursday afternoon trades as investors remained on the sidelines awaiting the European market opening. The psychological 4,780 (Nifty) and 16,900 (Sensex) levels are once again proving as though nuts to crack for the frontline indices despite repeated attempts to claw beyond those levels. Hefty buying interests were evident in the beaten down Automobile index which surged around one and half a percent a day after plummeting over a percent. While the banking stocks too gained traction in the session after encouraging weekly food inflation numbers supported sentiments. India's weekly food inflation plunged in to the negative terrain to -3.36% for the week ended Dec 24 after hovering in the double digits for nearly two long years. The sharp decline in food inflation is seen as a major incentive for the RBI to look at the option of easing interest rates sooner than later. On the global front, stock markets in Asia traded on a mixed note. Though some markets traded on positive note in the region, gains remained less pronounced as persistent worries over the Euro-zone sovereign debt crisis kept investors cautious. European futures pointed at a flat opening for the markets there ahead of a French bond auction and a slew of US economic reports. Back home, on the BSE sectoral space, the Auto index remained the top gainer in the space with about one and half a percent gains followed by the beaten down Capital Goods and Bankex pockets which traded about a percent gains. On the other hand, the Rate sensitive Realty index plummeted about a percent followed by the defensive FMCG counter that slipped by around half a percent.
Moreover, the broader markets continued to show resilience and traded with gains of over half a percent, performing better than their larger peers. The bourses rose on good volumes of over Rs 0.50 lakh crore. The market breadth on BSE was in favor of advances in the ratio of 1549:849 while 99 scrips remained unchanged.
The BSE Sensex is currently trading at 15,944.62 up by 61.98 points or 0.39% after trading as high as 15,980.17 and as low as 15,875.08. There were 19 stocks advancing against 11 declines on the index.
The broader indices were trading on an optimistic note; the BSE Mid cap index gained 0.62% and Small cap rose 0.70%.
On the BSE sectoral space, Auto up 1.47%, Capital Goods up 1.28%, Bankex up 0.97%, Power up 0.80% and Consumer Durables up 0.67% were the major gainers while Realty down 0.94%, FMCG down 0.44%, Oil & Gas down 0.32% and PSU down 0.15% were the only losers in the space.
JP Associates up 2.31%, Hero Moto up 2.24%, Tata Power up 2.18%, Bajaj Auto up 2.12% and Tata Motors up 2.10% were the major gainers on the Sensex, while DLF down 3.05%, HUL down 1.42%, Maruti down 0.68%, NTPC down 0.50% and ITC down 0.48% were the major losers in the index.
Meanwhile, India's weekly food inflation, measured by the Wholesale Price Index (WPI), extended the declining streak for the eighth week in a row and even plunged in to the negative terrain to -3.36% for the week ended December 24 from 0.42% for the previous week thanks to sharp decline in the prices of onions, potatoes and vegetables. The food inflation has turned negative after hovering in the double digits for nearly two long years.
The sharp slump in the rate of price rise of food items in the last one and half months has come as a sigh of relief for economic policymakers and also the government who had been battling to control the rampant inflationary pressure on the economy since two years. In a bid to rein inflation, RBI hiked key policy rates by 13 times since March 2010 only to pause the liquidity tightening measures in its recent meeting. The Union Finance Minister Pranab Mukherjee opined that this is the first time in almost six years, for which data with base year 2004-05 is available, that food inflation has shown a decline on an annual basis. The decline in food inflation is seen as a major incentive for the RBI to look at the option of easing interest rates sooner than later.
According to the data released by the Ministry of Commerce and Industry, the index for 'Food Articles' group declined by 0.2% to 190.0 from 190.3 for the previous week due to lower prices of jowar, fruits & vegetables, gram and moong (1% each).  However, the prices of poultry chicken (3%), egg, ragi and maize (2% each) moved up.

The index for 'Non-Food Articles' group rose by 0.6% to 178.7 (Provisional) from 177.6 for the previous week due to higher prices of soyabean (6%), raw jute (4%),  gaur seed and gingelly seed (3% each), cotton seed and raw cotton (2% each) and coir fibre, groundnut seed and mesta (1% each).  However, the prices of flowers (7%) and castor seed, fodder and copra (2% each) declined.

As a result, the index for 'Primary Articles', which accounts for 20.12% of the WPI, rose by 0.1% for the week ended December 24 to 197.6 from 197.5 for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 0.10% for the period under consideration as compared to 2.70% for the previous week. Meanwhile, the index for Fuel & Power group which carries a weightage remained unchanged at its previous closing levels of 172.7 in the week.
The S&P CNX Nifty is currently trading at 4,776.15, higher by 26.50 points or 0.56% after trading as high as 4,779.10 and as low as 4,745.50. There were 35 stocks advancing against 15 declines on the index.
The top gainers on the Nifty were Cairn up 3.95%, IDFC up 3.79%, JP Associates up 3.51%, Axis Bank up 3.17% and BHEL up 2.33%.
GAIL down 3.41%, DLF down 2.54%, HUL down 1.42%, ONGC down 1.05% and Maruti down 0.76% were the major losers on the index.
Asian markets traded on a mixed note; Hang Seng added 0.20%, Jakarta Composite rose 0.10%, Straits Times climbed 0.72% and Taiwan Weighted advanced 0.68%.
On the flipside, Shanghai Composite plunged 0.98%, Nikkei 225 sank 0.83% and Seoul Composite declined 0.13%.