Markets recovered smartly from the day's low on the back of a easing food inflation data and positive cues from European markets. The Sensex, after touching a low of 15,479, recovered to a high of 15,901. The index finally ended up 159 points at 15,858. Nifty was up 50 points at 4,756.
Food inflation fell sharply to single digit at 9.01% for the week ended November 12 even as prices of most agricultural items, barring potatoes, onions and wheat, continued to rise, on an annual basis. Food inflation, as measured by the Wholesale Price Index (WPI), was 10.63% in the previous week.
Inflation is expected to moderate if the current easing trend in weekly food and fuel prices continues, Finance Minister Pranab Mukherjee said. "If this trend continues for the next two weeks for the month of November, I hope there will be a moderation in inflation," Mukherjee said.
European stock markets continued to remain positive after a firm opening on the back of value buying at lower levels after a survey showed a surprisingly improvement in German business during November, boosted sentiment. Key European share indices such as FTSE-100, CAC-40 and DAX were all up between 0.5%-1% each.
Asian markets ended on a flat note although Japanese markets slumped to two year lows. Asian shares have been under broad selling pressure this week, as investors reacted to heightened concerns about Europe’s debt crisis and its potential impact on global economic growth. Hang Seng added 0.4% to 17,935. However, Nikkei slipped 1.8% to 8,165.
BSE metal index touched a low of 9,811 but recoeverd to end flat at 10,040. as China - a key consumer of aluminium and copper - reported weak economic data. Hindalco and Sterlite from the metal pack dropped around 1% each. Jindal Steel ended flat at Rs 500.
"Currently Metal space looks weak, any rise in the Metal sector stocks should be used to exit long positions. Among the IT space heavy weights like INFY and TCS are looking weak at current levels, any rise in these counters should be used to exit longs," said Ashish Chaturmohta, Vice President (Derivatives & Technical Analyst), IIFL Wealth.
IT, oil & gas and FMCG indices showed weakness initially but rebounded in late trades. BSE auto and capital goods indicess helped in the recovery - gaining 2.5% each in the process.
Bajaj Auto and Maruti from the auto pack went up 4% each. Mahindra & mahindra gained 2.5% at Rs 713. Larsen & Toubro, Bharti Airtel and TCS advanced. IT major Wipro and power stocks - NTPC and Coal India also gained.
Shares of Tata group firms went up after the group holding firm, Tata Sons named Cyrus Pallonji Mistry as the successor to Tata Group Chairman Ratan Tata. Tata Steel went up 0.6% to Rs 385. Tata Communications added 0.7% at Rs 182. Tata Motors surged 2.7% at Rs 173.
Meanwhile, Reliance ended almost unchanged at Rs 774.
Sugar prices declined by 0.70% to Rs 2,991 per quintal in futures trade today, as speculators booked profits. Shares of sugar companies such as Dhampur Special Sugar, Bannari Amman Sugar, Piccadily Agro slipped 3-10% each. However major stocks such as Balrampur Chini Mills, Bajaj Hindustan and Shree Renuka Sugar advanced 1-6% each.
Shares of public sector oil companies were trading mixed after the finance ministry, in an effort to shore up its finances, has asked cash-rich oil PSUs to consider special dividend over and above the 30 per cent interim dividend they anyway have to pay. GAIL added 4% at Rs 387 on a 15% rise in net profit in H1 to Rs 2,029 crore. ONGC advanced 3% at Rs 253.
Shares of retailers were up on expectation that the government may announce foreign direct investment in multi-brand and increase the ceiling on single-brand retail. The Union Cabinet on Thursday will discuss allowing 51% foreign direct investment (FDI) in multi-brand retail and 100% in single-brand retail, a government spokeswoman said on Wednesday. Pantaloons Retail jumped 12% to Rs 200. V2 Retail, Provogue, Shoppers Stop and Trent went up 1-19% each.
BSE market breadth turned positive. Out of 2,892 shares traded, 1,460 shares advanced while 1,313 shares declined.