Sensex recover from 10K levels (- 228 pts) , Inflation Cools to 11.44 percent

Equities sheds losses; Sensex closes 2% down

MUMBAI: Equities
rebounded sharply on Thursday from fresh lows of the year but still ended in the negative terrain weighed by losses in index heavyweights Reliance Industries, TCS and Hindalco Industries. Markets opened with a sharp gap-down following selloff in global markets which plunged on recessionary and economic slowdown fears. Bearish sentiments pulled benchmarks to new lows of 2008.

However, both Sensex and Nifty fell short of breaking important psychological supports. Measures announced by Reserve Bank of India overnight to address liquidity, and earlier than scheduled release of inflation data during the day, checked markets from tripping further. Positive opening of US stocks futures and European markets paring losses lifted sentiments.

Bombay Stock Exchange’s Sensex closed 227.63 points or 2.11 per cent down at 10,581.49. The index recovered over 500 points from the low of 10,017.80. National Stock Exchange’s Nifty ended at 3,269.30, down 2.07 per cent or 69.10 points. It touched a high of 3,333.85 and low of 3,099.90.

“Sensex went close to 10,000 and bounced back as fresh buying came in and some short positions were also covered. But the mood is bad and Sensex may go down to 9000 and Nifty may test 2900,” said chief technical analyst, Sandeep Waghle of Angel Stock Broking. Hindalco Industries (-12.15%), Tata Motors (-11.17%), TCS (-8.64%), Grasim Industries (-8.05%), Reliance Industries (-8.03%) and Larsen & Toubro (-7.55%). Reliance Communications (9.80%), DLF (8.25%), Hindustan Unilever (7.22%), HDFC (5.17%) and State Bank Of India (3.13%) were amongst the gainers. Interest rate sensitive sectors like realty and banking recovered sharply and ended in the green after inflation eased further and RBI cut CRR rate.

India's wholesale price index-based inflation rate rose 11.44 per cent in the week to Oct 4, against the previous week's rise of 11.80 per cent. The rate was below a median forecast of 11.86 per cent. In addition to that, RBI cut cash reserve ratio by another 100 basis points with retrospective effect from October 11 in addition to 150 basis points cut announced earlier. With this move, the federal bank has brought around 1 lakh crore to boost liquidity in the system. BSE Realty Index which was over 7 per cent down in the morning closed 5.15 per cent higher. BSE Bankex closed 0.43 per cent up. Vinod Nair of Religare Hichens Harrisons pointed out that the cooling off in global commodity prices has helped to bring down domestic inflation.

Nair said that towards the middle of November, the high base effect of the previous year should help to possibly bring inflation down to single digits. According to Sujan Hajra of Anand Rathi, the easing in inflation was anticipated and a further cooling down in the months ahead is expected. US stock futures were pointing towards a firm opening ahead of quarterly results by financial institutions and economic data. This gave further support to recovering domestic market. But post market hours, US stock futures pared gains and Dow Jones futures were down from 120 points to 52 points and Nasdaq futures were up 6 points from 16 points. Meanwhile, Citigroup reported a fourth consecutive quarterly loss. The third quarter loss was at $2.8 billion. Merrill Lynch reported $5.15 billion of losses.

Nifty Oct premium widens on short covering; Reliance, L&T tumble
Sensex ends off lows; Realty stocks gains
Realty stocks back in action; BSE Realty up 8%
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Inflation cools a bit to 11.44% amidst market volatility

NEW DELHI: The annual inflation rate took a slight dip to 11.44 per cent for the week ended October 4. It was 11.80 per cent for the week ended September 27. The dip has been attributed to cooling of commodity prices.

The WPI for all commodities has dipped by 0.5 per cent for the week ended October 4.
Meanwhile inflation for the week ended August 9 was revised up to 12.82 percent from 12.63 percent.

The wholesale price index is forecast to have risen 11.86 per cent in the 12 months to October 4, having posted a rise of 11.80 percent in the previous week. In early August, the inflation rate was 12.91 per cent, the highest reading since annual numbers in the current data series became available in April 1995. It jumped into double digits after a hike in government-controlled retail fuel prices in June. Analysts said inflation has probably already peaked, and may now embark on a downtrend, but the base effect was likely to play a key role in the next few weeks. "Shortages of primary articles at the start of the festival season will also be seen and the import of non-oil articles will play some role," said Rupa Rege Nitsure, chief economist at Bank of Baroda.

However, three of the 10 economists saw inflation slowing further from the previous week and continuing to ease. "Everything will see a fair bit of decline. There will be some fall in the manufacturing, a small bit in the primary articles as well. The fuel index is also likely to go down," said Saugata Bhattacharya, economist with Axis Bank.


Source:ET