Sept WPI eases at 2.38%, food inflation cools to 33-mth low

Inflation data based on Wholesale Price Index (WPI) for September eased to 5-year low at 2.38 percent against 3.74 percent on a month-on-month basis on lower food and fuel prices. Food inflation, which came in at 33-month low, stood at 3.52 percent against 5.15 percent, while the fuel and power group inflation came in at 1.33 percent against 4.54 percent on a month-on-month basis. Manufactured products inflation came in at 2.84 percent against 3.45 percent. The July WPI inflation has been revised to 5.41 percent from 5.19 percent. A CNBC-TV18 poll had estimated WPI to come in at 3.1 percent on a lower primary and fuel inflation. Even the consumer price inflation data for the month of September, which was released yesterday, cooled off to its all-time low of 6.46 percent, the lowest since India started computing consumer price index (CPI) in January 2012, led by lower food prices and fuel costs. Elated by the double cheer brought in by CPI and WPI, Aditi Nayar, Senior Economist at ICRA, said falling crude, coupled with softening in food prices, have helped in bringing down the inflation numbers. Nayar had expected WPI number at around 3-3.1 percent, and says 2.38 percent is definitely positive news. “The good news at this point in time is that we haven’t seen the impact of diesel cuts yet. That would bring some more softening going ahead and something to look forward to. However, we should still remain little bit cautious as far as other food prices are concerned other than the vegetable reversals,” she said. According to Samiran Chakraborty, Head of Research at Standard Chartered Bank, the numbers reflect the decline in global commodity prices as it is WPI that picks up the metal, chemical and fuel price declines faster than CPI. He expects the core inflation to come in lower than 3 percent (better than 3.5 percent seen last month). “So in conjunction with the food price decline which is reflected in both CPI and WPI, the WPI move looks spectacular. Therefore, very good news that on both WPI and CPI we are now getting confirmation that the inflation numbers are low,” he said. Within the monthly WPI data, growth in its respective components (MoM) stood at: Vegetable Index down 13 percent Primary Articles Index down 1.3 percent All Commodities Index down 0.4 percent Manufactured Products Index unchanged Non-food Articles Index down 2 percent Primary Articles Inflation at 2.18 percent against 3.89 percent Fuel & Power Group Index down 0.3 percent Food Articles Index down 1.4 percent

Sensex weak, Nifty struggles at 7900; BHEL, Bajaj Auto up

Investors are currently awaiting the Maharashtra and Haryana states elections results on the assumption that once this event is out of the way, the Prime Minister will finally settle down and look at administration changes and reforms, says Saurabh Mukherjea, chief executive officer, Institutional Equities at Ambit Capital. Speaking to CNBC-TV18, Mukherjea says the economy continues to be soft and no infra project has taken off significantly. “We need reforms to come in soon now. Also the next Budget will be very critical for the market as the July Budget was a damp squib. The government should be able to convey its focus on fiscal discipline come what may,” he says. The areas, Mukherjea says, that need attention to are: labour reforms, land reforms and goods and services tax (GST). On the market-front, Mukherjea says the market will pick up pace only if reform momentum kicks off and adds that he isn’t too worried about global slowdown. He has a year-end target of 30000 on the Sensex with a 10 percent downside risk if the policy reforms don’t come in.

MCX Gold February contract gains

At 10:35 hrs MCX GOLD December contract was trading at Rs 27095 up Rs 123, or 0.46 percent. The GOLD rate touched an intraday high of Rs 27111 and an intraday low of Rs 27055. So far 875 contracts have been traded. GOLD prices have moved down Rs 726, or 2.61 percent in the December series so far. MCX GOLD February contract was trading at Rs 27240 up Rs 129, or 0.48 percent. The GOLD rate touched an intraday high of Rs 27240 and an intraday low of Rs 27193. So far 13 contracts have been traded. GOLD prices have moved down Rs 999, or 3.54 percent in the February series so far.

Nifty reclaims 7900; DLF crashes 21%, Reliance Ind gains

Equity benchmarks gained half a percent led by easing CPI inflation in September and better-than-expected numbers from Reliance Industries in Q2. The Sensex rose 164.58 points to 26548.65 and the Nifty climbed 39 points to 7923.25. About 403 shares have advanced, 73 shares declined, and 21 shares are unchanged.   Shares of Bajaj Auto gained 1.5 percent ahead of Q2 earnings. Axis Bank, Coal India, Bharti Airtel, Reliance Industries and IndusInd Bank rose 1.3-1.6 percent. However, DLF tanked 18 percent after market regulator SEBI barred company and its six executives from accessing capital markets for 3 years. Hero Motocorp, Cipla, ITC, Dr Reddy's Labs, BPCL and HCL Technologies were under pressure. And what brought some much-needed macro cheer for the economy, the consumer price index (CPI) for September fell to all-time low of 6.46 percent versus expectations of 7.2 percent. Meanwhile, in key data today, the wholesale price index (WPI) for September is expected to soften further to 3.1 percent. The Indian rupee gained in the opening trade. It rose 15 paise to 60.93 per dollar versus previous day's closing value of 61.08 a dollar. Ashutosh Raina of HDFC Bank said the global growth concerns are back to haunt the markets, resulting in re-emergence of risk-off sentiment. "The WPI inflation number, declared after market hours yesterday, should cheer the markets," he added. He expects the currency to trade in a 60.50-61.50/dollar range, with an appreciating bias." The dollar fell against a basket of major currencies on persisting concerns about global economic growth and worries that the Federal Reserve may delay its first interest rate hike. On the global front, markets were in the red with the US markets slumping and the S&P 500 falling below its average from the past 200 days. Meanwhile, the CBOE VIX jumped 16 percent, the highest level since June 2012. Nikkei that opened after a day’s holiday tanked 2 percent on a strong yen.