Public CompanyWeekly review: Markets slip on inflation fears
Inflation proved to be the market"s Archilles heel this week. The Sensex traded in a narrow range of 582 points before ending weaker by 399 points at 16,719 and the Nifty closed at 4987, lower by 129 points. Dalal Street closed below the dotted line on four out of the five trading sessions.
- US markets edge up on quarterly nos - Markets succumb to weak Asian cues - Sensex ends down 201pts - Asian markets have a weak day - Markets continue to trade sideways - Sensex flat; Tata Motors up 3%
Inflation jumped to 4.78 per cent in November from 1.34 per cent in October, driven by rising prices of essential food items such as pulses, fruits and vegetables. Inflation was 8.48 per cent in the corresponding period last year.
And food inflation rose to 19.95 per cent in the first week of December against 19.05 per cent in the previous week following the galloping prices of potatoes and pulses. The potato prices more than doubled at 136 per cent and pulses became costlier by over 40 per cent on an annual basis.
Not everything was bleak though!
India Inc reported healthy advance tax numbers. Tata Motors paid Rs 100 crore in third quarter. Mahindra & Mahindra paid Rs 195 crore versus Rs 4.5 crore in the same quarter last year, Tata Steel paid Rs 650 crore versus Rs 260 crore (YoY), Hindalco Industries paid Rs 100 crore as against Rs 40 crore in the same period last year, Hindustan Unilever paid Rs 200 crore versus Rs 155 crore and Larsen & Toubro paid Rs 270 crore as against Rs 210 crore in the year-ago period.
Exports arrested their 13-month decline to grow 18 per cent in November at $13.2 billion (Rs 61,800 crore) against $11.16 billion (Rs 52,250 crore) in the same month last year. The exports of petroleum products reached $2.4 billion (Rs 11,240 crore) in November against $1.3 billion (Rs 6,100 crore) in the same month last year, whereas gems and jewellery exports topped $2.15 billion (Rs 10,070 crore) from $1.6 billion (Rs 7,500 crore).
The government informed Parliament that India"s economic expansion could exceed 7.75 per cent in this fiscal, aided by high GDP growth recorded during the July-September quarter. The economy surpassed all expectations to grow by 7.9 per cent during the second quarter.
The rating agency Moody’s upgraded its outlook on Indian government’s local currency rating (Ba2) to positive from stable as a result of the economy"s proven resilience to the global crisis and expectations of a pick-up in growth.
And the Centre for Monitoring Indian Economy upped its GDP growth forecast for the current fiscal to 6.7 per cent from 6.2 per cent announced last month on the back of lower-than-expected damage to smaller crops and robust industrial growth numbers in September.
But the concerns surrounding inflation and resultant fears of monetary tightening dwarfed all positives.
Sterlite (weakened by Rs 70 or 8% at Rs 818), SBI (shed Rs 182 or 7% at Rs 2144) and Reliance (shed Rs 78 or 7% at Rs 1010) were the major weekly losers on the Sensex. ICICI Bank, HDFC Bank and HDFC were the other notable losers.
Among the weekly gainers, ACC strengthened by Rs 50 or 6% at Rs 826, Infosys hardened by Rs 143 or 6% at Rs 2526 and Wipro added Rs 37 or 5% at Rs 675.
Jaiprakash Associates closed at an adjusted ex-bonus price of Rs 147 as against the previous week"s close of Rs 229. The company had announced a bonus issue in the ratio of one equity share for every two equity shares held and fixed December 10 as the record date for the bonus issue.
Deven Choksey, managing director, KR Chokey, said, "The recent fall can be attributed to the strengthening dollar index. The markets may drift further as the festive season would be accompanied by less buying activity. But buying is likely to emerge at the 4900 level on the Nifty."