A spike in inflation numbers took its toll on stock indices as both Sensex and Nifty closed in the red. The Sensex fell 21 points to close at 17,097 and the Nifty was down by 11 points at 5,105. FMCG, banking and consumer durables sectors were among the weak links.
The inflation rate 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. It was 8.48 per cent in the corresponding period last year.
The markets opened soft in line with Asian cues. Most Asian stocks fell in the morning trade following a decline in oil and gold prices. The Dow and S&P 500 had, however, closed up for a third straight session on Friday after consumer reports pointed a steady economic recovery.
The indices rebounded swiftly after Dubai said it received $10 billion from Abu Dhabi to help repay $4.1 billion in an Islamic bond maturing on December 14.
Attributing rising prices to supply-side constraints, Suresh Tendulkar, former chairman of the Prime Minister’s Economic Advisory Council (PMEAC), said the Reserve Bank of India could take steps to withdraw liquidity and tame rising prices in the review of its annual credit policy next month.
However, Finance Secretary Ashok Chawla ruled out emergency action at this stage and said inflation numbers were within the range set by the central bank.
Meanwhile, the Centre for Monitoring Indian Economy has raised its GDP growth forecast for the current financial year to 6.7 per cent from 6.2 per cent announced last month. The revision comes on the back of less-than-expected damage to smaller crops due to natural calamities and robust industrial growth in September.
The leading Sensex gainers were ACC (up Rs 43, or 5.3 per cent, at Rs 858), Grasim (stronger by Rs 75, or 3.5 per cent, at Rs 2,470) and Wipro (up Rs 14, or 2.3 per cent, at Rs 658).
The major losers on the BSE were Bharti Airtel (down Rs 11, or 3.4 per cent, at Rs 319), Hindustan Unilever (down Rs 4, or 1.7 per cent, at Rs 268) and HDFC Bank (lower by Rs 27, or 1.5 per cent, at Rs 1756). ITC, ICICI Bank and Reliance Communication were the other notable losers.
The market breadth was weak. Out of 2,901 stocks traded on the BSE, there were 1,172 advances and 1,669 declines.
Dinesh Thakkar, chief executive, Angel Broking, said, “The markets are likely to trade sideways this month. The Sensex should remain range-bound from 16,000-17,500 in the absence of any domestic or global triggers.”
