Weakness persists as rate sensitives weigh

May WPI inflation stood at 7.55%

The markets continued in the negative terrain in late noon trades, led by rate sensitive shares, after higher-than-expected May WPI inflation diminished hopes of a rate cut by the central bank.

India's wholesale price inflation accelerated to 7.55 percent in May from a year earlier, driven by double-digit rises in food and fuel prices, government data showed on Thursday.

Analysts, on average, had expected an annual rise of 7.60 percent, a Reuters poll showed. Wholesale prices rose 7.23 percent in April.

The BSE Sensex is currently at 16,806, down 75 points and the Nifty is at 5,096, down 25 points. Earlier in the day, the BSE benchmark index touched the day's high at 16,922 and the day's low at 16,765.

In Asia, Japan's Nikkei share average dipped as investors continued to cut their exposure to risky assets, hedging against the potentially disruptive consequences of Greece's election at the weekend and Federal Reserve and G20 meetings next week. The Nikkei index is currently at 8,569, down 0.22%. The Shanghai Composite Index is down 0.99% and the Hang Seng index is at 1.06%.

European markets are mixed to lower. Shares in Germany are off as the DAX drops 0.06%. The FTSE 100 is down 0.05% while the CAC 40 in France is unchanged.

Meanwhile, the rupee recovered its initial loss this morning and was trading at 55.68 per dollar due to uneven demand and supply of the American currency from banks and corporates. The rupee resumed weaker at 55.75 per dollar as against the last closing level of 55.68 at the Interbank Foreign Exchange (Forex) market.

On the sectoral front, the BSE Capital Goods, Bankex, Power, Realty and PSU indices are leading the losses, down 1-2% each. Shares of frontline banking shares such as State Bank of India (SBI), ICICI Bank and HDFC Bank have dipped more than 1-3% each, after the May inflation numbers came higher as compared to that of the previous month, leaving little hope for the Central Bank to cut key policy rates in its mid-quarterly policy review next week.

The ones leading the gains include the defensive BSE FMCG and IT indices, up nearly 1% each.

Among the Sensex 30 stocks, NTPC, Larsen & Toubro, Tata Motors, ICICI Bank and SBI are among the prominent losers, down 2-3% each. The gainers from the space are ITC, Infosys, Tata Steel, Mahindra & Mahindra and Sterlite industries, having advanced 0.39-1% each.

Colgate-Palmolive (India) has moved higher by nearly 3% at Rs 1,166 on reports that the oral and dental hygiene products manufacturer has begun construction work at its upcoming plant site in Sanand, Gujarat with an investment of Rs 200 crore. “This will be Colgate's fifth plant after Aurangabad, Baddi in Himachal Pradesh, Hyderabad and Kundaim in Goa which is expected to commission by late 2014,” the report suggests.

The overall market breadth is negative as 1,373 stocks have declined against 969 advancing ones, on the BSE.