Easing food inflation triggers markets upmove

The key indices gained momentum, with the Nifty closing above the 5500 mark and the Sensex above 18500 levels as a decline in food inflation triggered upmove.

Major headlines

Food inflation eases to 11.05% versus 13.07%

DQE soars on signing French licensing deal

Pipavav Shipyard inks MoU with Northrop



Indian indices

The Indian indices continued its upswing after a drop in food inflation to a two-month low at 11.05% for the week ended February 05, 2011. Buying interest was seen across the board, which led the Nifty to close above the 5500 mark and the Sensex above 18500 levels. It was a fifth straight session gains for the markets.

Top gainers in Nifty were Infrastructure Development Finance Corporation, HDFC Bank, Suzlon Energy, Housing Development Finance Corporation, Bharti Airtel, Larsen & Toubro, Ambuja Cement, Tata Steel, Sun pharma and Axis bank, up 2-5.5%. Top losers in Nifty were Gail, HCL Technologies, Wipro, Reliance Power, DLF, Hindustan Unilever, Oil & Natural Gas Corporation, Jindal Steel, ACC and NTPC. down in the range of 0.36-1.2%

The Sensex started the session on a positive note at 18345, higher by 44 points. In no time, the index turned negative and hit the day’s low of 18234. The Sensex erased losses and turned positive in mid-morning trade, extending gains after a decline in food inflation. In last half hour of trade, the Senses hit the day’s high of 18533 as buying activity was witnessed across the board.

The Sensex rose 206 points to settle at 18507 and the Nifty ended at 5546, up by 65 points.

Bond and Rupee update: The yield on India’s 11-year bond, the most-traded government debt, was near the lowest level in more than two weeks on speculation cooling inflation will boost demand for fixed-income securities. India’s rupee strengthened on speculation the government will unveil plans to privatize state assets and improve public finances in this month’s budget.

Market sentiment

The market breadth was positive. Of the 2,986 stocks on the BSE, 1,679 rose while 1,127 fell. However, 180 stocks closed unchanged.

Sectoral & stock screening

All the 13 sectoral indices ended the session on a positive note barring BSE Realty that closed lower by 0.89%. BSE Capital Goods (CG) was the top gainer surging by 1.93%, following that BSE Bankex up by 1.50% and BSE Auto up by 1%. Rest of the indices ended higher in the range of 0.32-0.80%.

Looking into 'A' group stocks, top three gainers - Coromandel International rose by 7.24%, Tata Global Beverages up by 6.72% and Jain Irrigation surged by 5.62%. Top three losers -Jubilant Life Sciences lost by 6.95%, Unitech declined by 3.80% and Hindustan Copper dropped by 3.60%.

Viewing volumes

India's second largest developer - Unitech was traded the most, with over 1.18 crore shares changing hands on the BSE. Following that a leading housing finance firm - LIC Housing Finance (0.54 crore shares), wind turbine major - Suzlon Energy (0.47 crore shares), Jaypee Group firm - Jaiprakash Associates (0.33 crore shares) and India's Number 2 mobile carrier - Reliance Communications (0.30 crore shares).

Global signals

European shares were flat after hitting 29-month highs in the previous session, with falls in industrial goods firms offset by gains in food stocks after upbeat results from Nestle.

All the major Asian indices ended higher except Straits Times and Kospi indices.

The US stock index futures point to a flat opening on the Wall Street ahead of weekly jobless claims.

Market outlook: In the US, weekly jobless claims data will be announced.