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Thursday, February 17, 2011

Indian equity benchmarks Sensex ends 206 points up on easing inflation

Indian equity benchmarks Sensex ends 206 points up on easing inflation : Indian equity benchmarks gained strength in the second half of trade on Thursday - after witnessing consolidation since Tuesday - to close at three-week highs, especially triggered by easing food inflation in the month of February. Financial, capital goods, auto, select metal and technology companies' shares lent strong support to the markets. Heavyweight Reliance Industries too rallied.

India's food inflation eased to a two-month low in early February on moderating prices of onions and other vegetables, amid expectations that the government may announce fresh measures to boost productivity for key staples in the upcoming budget.

India's food price index rose 11.05%, the lowest reading since the first week of December, and the fuel price index climbed 11.92% in the year to February 5, government data on Thursday showed. Primary articles index increased 14.59% as against 16.24% on week-on-week basis.

Aditi Nayar, Economist of ICRA said the decline in food inflation was led by continued correction in vegetable prices. However, this was offset to an extent by an increase in the price of pulses, non-vegetarian protein items, fruits and condiments.

"While wholesale prices of vegetables may ease further in the coming weeks, prices of other food items are likely to remain sticky and average food inflation may remain in the low double-digits in February 2011," she said.

Finance Minister Pranab Mukherjee sees overall inflation going down over the next 1-2 months.

The benchmark Nifty continued the uptrend for the fifth consecutive session and settled a tad below the 5550 level. Abhijit Chakraborty, Fortune Financial said that pre-budget rally might take the Nifty to 5,600 and beyond.

He explained that people are still waiting for clarity before rushing to buy. However, Chakraborty does not see the budget to be a game-changer.

The 50-share NSE Nifty went up 65 points, to end at 5,547 and the 30-share BSE Sensex jumped 206 points, to close at 18,507.

Deven Choksey of KR Choksey believes that around 5500-5550 levels the Nifty is quoting at 16% growth rate and at 15 times forward PE that is giving a kind of a stability to the market. "We should be seeing some stability taking place at least prior to the budget then probably take a larger call and the movement of the market," he said.

Heavyweights HDFC Bank, HDFC and Bharti Airtel were the leading stars on Nifty with 3.5-4% gain. Other largecaps like Reliance Industries, SBI, BHEL, L&T, TCS and L&T gained 1-2.5%.

IDFC was the top gainer with 5% rally. SAIL and Tata Steel from metal space went up 2%. ICICI Bank and Tata Motors climbed 0.6-%.

However, ONGC, Wipro, NTPC, HUL, HCL Tech, GAIL and Reliance Power were down 0.4-1.4%.

In midcap space, ARSS Infra surged 20%. Manappuram, Sobha Developer, Techno Electric and Coromandel International gained 7-12% while Jubilant Life, KGN Industries, Gujarat NRE Coke, Prakash Industries and Prestige Estate fell 4-7%.

In smallcap space, Zee Learn, Madhucon Project, Everonn Education, Entegra and HBL Power jumped 12-20% whereas Parrys Sugar, Goodyear, Garware Poly, Balmer Invest and Asian Hotel (E) lost 5-8%.

About 1727 shares advanced as against 1151 shares declined on Bombay Stock Exchange.

(With inputs from Reuters) For the latest updates PRESS CTR + D or visit Stock Market news Today

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