Rising inflation, CRR hike fears haunt markets

Negative newsflows have spooked the markets badly today. Rising inflation and due to which rumours of likely hike in CRR by RBI worried the markets. Capital Goods, power, banks, telecom and auto stocks were worst hit. All BSE Indices ended with sharp fall. Market breadth has remained 1:4 after inflation announcement.

This whole week has been very bad for the markets, Sensex lost more than 1000 points and the Nifty down 5.2%. Capital goods, metals, realty and banking stocks were the biggest losers.

Inflation has worried the markets, it has hit a three-year high of 7% this week as against 6.68% in the previous week. Government has been trying ways to cool off the inflation because it has crossed RBI's targeted 5% level. Experts feel that monetary tightening may be there in near term from RBI by way of CRR hike. These fears has hammered banking stocks a lot.

The Sensex has touched a low of 15,303.04 (down 528 points) before closing the day at 15,343.12, down 489.43 points or 3.09% and the Nifty down 2.61% or 124.60 points at 4647.

Exchanges has touched total turnover of Rs 50,773.03 crore, inclusive of NSE cash at Rs 12095.44 crore, NSE F&O at Rs 33723.32 crore and BSE cash at Rs 4954.27 crore.

Market breadth has remained weak through the day. About 978 shares have advanced, 2014 shares declined, and 79 shares remained unchanged.

BSE Midcap and Small Cap Indices were down 1.95% or 124.38 points at 6,262.85 and 1.60% or 125.30 points at 7,714.99, respectively. The CNX Midcap fell 2% at 6110.30.

Top losers were BHEL, HDFC, M&M and L&T while gainers - Ranbaxy Labs, Tata Steel, Sterlite Industries, Suzlon Energy and Hero Honda.

Capital goods stocks have witnessed huge selling pressure, continued downtrend from yesterday itself. The BSE Capital Goods Index slipped 4.5% or 594.38 points at 12,620.35 on the back of selling pressure in stocks like Crompton Greaves, Alstom Projects, BHEL, L&T, Praj Industries.

The BSE Bankex closed at 7,589.96, down 230 points or 2.95% as banking stocks like IOB, Oriental Bank, Kotak Mahindra, Bank of Baroda, Allahabad Bank, Axis Bank and ICICI Bank have lost gains.

Power stocks have also knocked back heavily. The BSE Power Index fell 2.99% at 2,964.08. Crompton Greaves, BHEL, ABB, Tata Power, Punj Lloyd and Areva T&D were losers which have led Power Index to slip.

Telecom stocks like Reliance Communication, Bharti Airtel and Idea Cellular also lost ground.

Amongst auto space, Mah and Mah, TVS Motor, Amtek Auto, Maruti Suzuki and Escorts were major losers. The BSE Auto Index fell 2.5% at 4,378.54.

Oil and Gas stocks like Reliance Natural, Reliance Industries, Petronet LNG, GAIL and Essar Oil also dropped. The BSE Oil & Gas Index finished at 10,282.64, down 2.37% or 249.24 points.

Realty space also collapsed like pack of cards. Anant Raj Ind, HDIL, Unitech, Phoenix Mills, Ansal Properties and DLF have led the fall. The BSE Realty Index ended at 7,346.96, down 2.34%.

FMCG stocks including United Breweries, ITC, Tata Tea, Bata India, GSK Consumer also cracked. the BSE FMCG Index fell 2.21% at 2,292.76.

Technology stocks have lost ground after yesterday's sharp surge, the BSE IT Index closed at 3,687.40, down 2.06%. Wipro, Infosys, Tech Mahindra, HCL Tech and TCS were major losers.

Metal stocks like Maha Seamless, Ispat Industries, Hind Zinc, Nalco and Sesa Goa have lost shine. The BSE Metal Index fell 1.09% at 13,440.35.

The BSE Healthcare Index ended at 3,845.83, down 1.08% due to selling pressure in pharma stocks like Dr Reddy's Labs, Cipla, Sun Pharma, Pfizer and GSK Pharma.

Markets This Week

• Indian markets underperform major Asian markets as inflation hits 3-year high at 7%
• Sensex down 6.3% at 15343; NIfty down 6% at 4647
• CNX Midcap Index down 3.8%, BSE Small-cap Index down 2.4%
• All BSE Sectoral Indices end in the red
• BSE Capital Goods Index crashed after BHEL numbers disappoint market
• BSE Capital Goods Index down 12.7%; BHEL down 22%, L&T down 14.7%, Siemens down 9.7%
• BSE Metal Index down 8.3%; SAIL down 16.7%, Tata Steel down 7.6%, Nalco down 7.2%
• BSE Bank Index down 7.5%; OBC down 10%, ICICI Bank down 8.5%, HDFC Bank down 8%
• Midcap gainers; Dhanus Tech up 28%, Orchid Chem up 24%, HOEC up 10%

Markets Today

• Markets slide after inflation surged to 3-year high at 7%
• Sensex down 490 pts at 15343 and Nifty down 125 pts at 4647
• CNX Midcap Index down 2%, BSE Small-cap Index down 1.6%
• All BSE Sectoral Indices end in the red
• BSE Capital Goods Index continue to be under pressure after BHEL disappointing numbers
• BHEL down 6.8%, L&T down 5.6%, ABB down 4.5%
• BSE Bankex down 3%: ICICI Bank, HDFC Bank down nearly 2.8% each
• Index losers; HDFC down 7%, M&M down 6.2%, Wipro down 4.9%, Bharti down 4.4%
• NSE Advane Decline at 2:7
• Non-index losers; Orbit Corp down 10% due to supply of pre-ipo shares
• Mid-cap Cap Goods under pressure: Voltas down 8.4%, Crompton Greaves down 7.2%, Alstom Projects down 7.2%
• Total market turnover at Rs 50773 cr Vs Rs 49886 cr Yesterday

FNO Snapshot

• Turnover continues to remain low:
• NSE FNO turnover at Rs 33723 cr Vs Rs 32513 cr Yesterday
• Nifty sees significant short buildup at higher levels; some shorts book profit at lower levels by day end
• Nifty April future ends day at a 19 pts premium after going into a discount post inflation data
• 4800 & 5000 Call Add significant Open Interest
• 4500 put continues to add Open Interest
• No major unwinding of 4600 and 4700 puts

Asia Today

• Asian markets end mixed ahead of US Job data
• China, Hong Kong & Taiwan mkts shut for Tomb sweeping day
• Nikkei, Straits Times, Thailand end marginally in the red

Mkts spook by CRR hike fears: Banks, cap gds down

Negative newsflow of rising inflation and due to which, experts expecting the monetary tightening by increasing CRR further have weighed heavily on markets, which slipped further; Sensex was down over 450 points and the Nifty down over 120 points. Capital Goods and banking stocks have hit badly. Market breadth is negative - 1:4 as 245 shares have advanced while 964 shares declined. On the global front, Asia ended lower. European markets are trading higher.

At 13.03 hrs IST, the Sensex was down 437.30 points or 2.76% at 15395.25, and the Nifty down 117.00 points or 2.45% at 4654.60. About 1018 shares have advanced, 1973 shares declined, and 80 shares are unchanged.

All BSE Indices are in the red; BSE Capital Goods Index own over 4%, Bankex down 3.4%. BSE IT, Power, TEck, Realty and Auto indices fell over 2.5%. BSE Midcap and Small Cap indices were down more than 1.5% each.

L&T, BHEL, ICICI Bank and Nalco were amongst the top losing counters.

Inflation has continued its rise for this week as well, rose to 7% as against 6.68% in previous week. Experts believe that RBI may look at monetary tightening. HSBC says there is expectation of policy measures inclusive CRR hike from RBI and another financial firm, Morgan Stanley says there is probability of monetary tightening increasing

Markets plunge; Inflation at 3-yr high - 7%

The markets have taken a knock back approach after inflation numbers announcement, which are high by quite a percentage points as against earlier numbers of 6.68%. Today it touched a 7% mark, which is ahead of markets expecations of 6.52%. Capital Goods, technology, auto, banking, power and telecom stocks have hit hard. Market breadth is negaitve with ratio of 1:3 as 318 shares have advanced while 900 shares declined.

At 12.02 hrs IST, the Sensex was down 239.71 points or 1.51% at 15592.84, and the Nifty down 70.35 points or 1.47% at 4701.25. About 1267 shares have advanced, 1710 shares declined, and 94 shares are unchanged.

BHEL, HDFC, L&T and M&M were top losing counters while gainers - Ranbaxy, HUL, Tata Steel and Hero Honda gainers.

Finally, inflation has hit 7% mark today for the week ended March 22 as against 6.68% in the previous week. Vegetable prices went up 4.9%, primary articles WPI up 1.8%, minerals WPI up 38.2% and metallic minerals WPI up 42.8%.

Midcap and small cap stocks have slipped further. Reliance Petro, BHEl, Tulsi Extrusion and Reliance Industries were most active counters.

Mkts slip further: L&T, BHEL, HDFC Bank top losers

The markets have slipped further as the selling pressure continues in capital goods, technology, banking, auto, telecom and power stocks. Market breadh is also negative, 467 shares have advanced while 674 shares declined on the NSE. However, some buying interest has seen in pharma and metals stocks.

At 11.28 hrs IST, the Sensex was down 137.69 points or 0.87% at 15694.86, and the Nifty down 29.60 points or 0.62% at 4742.00. About 1516 shares have advanced, 1465 shares declined, and 89 shares are unchanged.

Capital goods, technology and banking stocks are under bears' control, the BSE Capital Goods, IT and Bankex fell, 2.3%, 1.6% and 1.5%, respectively.

L&T, BHEL, Marut Suzuki and HDFC Bank were top losers while Ranbaxy Labs, Tata Steel, HUL and Hero Honda gainers.

Reliance Petroleum, Tulsi Extrusion, BHEL, and L&T were most active shares on the bourses.

ACC's March Cement sales went up by 4.9% at 1.92 MT versus 1.83 MT. The stock was up marginally by 0.13% or Rs 1.10 at Rs 828.

Indian rupee has fallen to 39.98 per dollar as against its previous close.

Mkts rangebound: Tech, cap goods, bank stocks down

The markets have lost their footings a bit and are trading lower as selling pressure has seen in technology, capital goods, banking, FMCG and telecom stocks. Market breadth is negaitve, about 1477 shares have advanced, 1505 shares declined, and 88 shares are unchanged. Midcap and small caps are flat. On the global front, Asian markets were trading lower.

At 10.29 hrs IST, the Sensex was down 84.80 points or 0.54% at 15747.75, and the Nifty down 18.70 points or 0.39% at 4752.90.

Top losers were Infosys, HDFC Bank, L&T and Sun Pharma while gainers - Tata Steel, Grasim, Ranbaxy Labs, RPL and SAIL.

Technology stocks have lost ground after yesterday's sharp increased in their respective prices.

Reliance Petroleum, Essar Oil, GSS America, BHEL and L&T were most active shares on the bourses.

Markets choppy in opening trade

The markets have opened higher but selling pressure weighed immediately a little bit by bears and markets turned into the red. Capital goods, power, banking, technology and FMCG stocks are under bears control. However, oil stocks are witnessing buying interest. Market breadth is also in negative. On global front, Asian markets are trading lower.

Ambuja Cements, BHEL, SBI, HDFC Bank, HUL, Tata Power, Reliance Energy and Hero Honda were losers in early trade.

At 9:57 am, the Sensex was down 13 points at 15,818 and the Nifty down 0.40 points at 4771.

Asian markets were trading lower. Japan's Nikkei plunged 0.68% or 90.92 points at 13,298.98. Singapore's Straits Times declined 0.38% or 11.92 points at 3,159.63. South Korea's Seoul Composite dropped 0.16% or 2.85 points at 1,760.78.

US stocks ended higher with marginal gains amid choppy session. The Dow Jones industrial average advanced 20.20 points, or 0.16%, to 12,626.03 and the Nasdaq composite index added 1.90 points, or 0.08%, to 2,363.30.

Market cues:

• FIIs net sell $5 mn in equity on Apr 2
• MFs net sell Rs 128 cr in equity on Apr 2
• NSE F&O Open Int up Rs 1,173 cr at Rs 52,414 cr
• Reports suggest govt weighs price cap on key items to curb inflation

F&O cues:

• Futures Open Interest up by Rs 193 crore and Options Open Interest up by Rs 980 crore
• Nifty Futures shed 5 lakh shares in Open Interest; at 13-point premium
• Nifty Open Interest Put-Call ratio at 1.26 Vs 1.25
• Nifty Puts add 10.8 lakh shares in Open Interest
• Nifty Calls add 7.7 lakh shares in Open Interest
• Nifty 4700 Put adds 2.5 lakh shares in Open Interest
• Nifty 4400 Put adds 2.1 lakh shares in Open Interest
• Nifty 5000 Call adds 2.2 lakh shares in Open Interest
• Nifty 4800 Call adds 1.5 lakh shares in Open Interest
• Stock Futures add 1 cr shares in Open Interest

Inflation continues to be of concern: RBI

Reserve Bank today said inflation, which surged to a 13-month high of 6.68 per cent for the week ended March 15, continues to be a concern and stressed it aimed to keep it under five per cent and bring it still lower in the medium term.

"The objective currently is to contain the inflation rate within an upper bound of 5 per cent and attempt to reduce it further in the medium term," RBI Deputy Governor Rakesh Mohan said at the enterprenuership Development Institute of India at Ahmedabad, a speech copy released here stated.

"Inflation was an issue during much of 2007, and continues to be of concern now," Mohan said.

Speaking on the role of financial sector to promote innovation and growth, Mohan said monetary policy endeavour was to provide a financial environment of low inflation and stability.

"To keep the momentum of high growth, it is extremely important to recognise that the best contribution monetary policy can make is indeed to ensure that inflation and inflation expectations are well anchored," Mohan said.

He said that monetary policy can foster innovation through an environment of low inflation, low inflation expectations and maintaining financial stability.

The RBI Deputy Governor said price and financial stability were very crucial to sustain the growth at current levels without any disruptive forces coming into play.

"In view of the success in reducing inflation from the long-run average of 7-8 per cent to 4-5 per cent now, the society's tolerance rate of inflation has also come down," Mohan said.

Inflation rises to 11-month high of 5.92%

Inflation surged by 0.81% to over 11-month high of 5.92% for the week ended March 8 as essential items like fruits and vegetables and pulses as well as some manufactured items turned expensive.

The whopping rise in inflation rate would not allow RBI to go for soft monetary stance as it is way above the central bank's tolerance level of 5% for this fiscal, analysts said.

The wholesale prices-based inflation stood at 5.11% in the previous week.

The spurt in inflation rate happened despite a high base of 6.51% a year ago.

During the week, food articles like arhar, gram, moong, maize, fruits and vegetables as well as condiments and spices went dearer.

Prices of furnace oil, which is an industrial oil, went up by 2%.

Manufactured products like imported edible oil, coconut oil, mustard oil, also turned dearer. The Government had announced a ban on export of all edible oils with effect from March 17 for a period of one year to curb their rising prices.

The Prime Minister's Economic Advisory Council Chairman C Rangarajan had said yesterday that inflation rate was little above comfort level, and it does not favour interest rates cut policy.

Rangarajan's statement had come when inflation rate was 5.11%. With the figures, released today, a possibility of such cuts have become more remote, analysts said.

Inflation still high: RBI

NEW DELHI: India's inflation rate is still high by world standards and needs to be brought down further, the Reserve Bank of India deputy governor Rakesh Mohan said on Thursday.

Inflation, as measured in wholesale prices, breached 4 per cent in late January, its highest in nearly five months, and analysts have said the upswing meant the RBI was unlikely to loosen rates anytime soon despite slowing growth.

"Our inflation is still high by world standards and it needs to be brought down further," Mohan said at the Institute of Economic Growth in New Delhi. "The RBI's objective has been to ensure liquidity and still keep inflation and interest rates low."

Inflation is below the central bank's target of 5 percent for now, but it is expected to head up further in the weeks ahead due to high food and fuel prices, which are expected to remain a challenge in the 2008/09 fiscal year that starts on April 1.

At a policy review last month, the central bank left its key interest rates steady, saying inflation risks persisted. It had raised rates five times in 10 months from June 2006 to tackle inflation and credit growth in Asia's third-largest economy.

Benchmark 10-year bond yields rose 1 basis point to 7.47 percent as traders saw Mohan's comments as a sign that the central bank was unlikely to cut rates in the near term, despite worries about global growth and turmoil in financial markets.

Last week, the statistics office said India's economy was expected to grow 8.7 percent in 2007/08, slowing from the previous year as higher interest rates dent consumer demand.

Mohan, who outlined the challenges facing policy makers as India seeks 10 percent-plus growth rates in the next five years, said excessive credit growth could lead to an asset price bubble.

He said revenues need to be raised if the government wanted to meet its targets to lower the budget deficit and implement the recommendations for a pay rise for public service employees.

Economists say the government should not consider a surge in tax revenues as a windfall for it to spend as it has some big-ticket costs coming up, such as pay rises to over 3 million government workers in the next fiscal year.

Inflation drops to 3.01%

India`s wholesale price index (WPI) based Inflation moved to 3.01% for the week ended November 24, as against 3.21% in the previous week. The annual rate of inflation stood at 5.55% a year ago.

Headline inflation is low due to cheap price of vegetables and essential food items.

Moreover, India`s inflation remains modest due to consistent efforts by the centre as well as the Reserve Bank of India (RBI).

Finance Minister P Chidambaram said that maintaining price stability have always been a top priority for the centre. To contain inflation, the centre cut duties on essential items such as food items and cement to increase the supplies.

The Reserve Bank of India had tightened monetary policy, in order to tighten liquidity conditions. Huge capital inflows into the local bourses, had led the Rupee to gain for considerable period of time.

Appreciation of Rupee did hit the exporters on large scale, which led the centre to cut duties on essential items to increase supplies.

Also, although crude oil rose and touched USD 100 a barrel last month, centre did not pass the burden to consumers. Centre have not raised state-fuel price since one and half years.

Going forward, India`s exposure to troubled US subprime assets and related derivatives were negligible in comparison to many other economies, said Deputy Governor Rakesh Mohan.

He added, that RBI is maintaining an enhanced vigilance to be able to respond appropriately to the prevailing heightened uncertainties in global financial conditions.

Moreover, RBI`s aim in the medium term is to contain inflation at 5%.