The benchmark indices grinded lower towards the latter part of the week to make it three out of four weeks in the red, dragged by slower April industrial output growth, high inflation and weak global markets. Reversing the 110-pts gains of the previous week, the Sensex ended at 18268, lower by 116 points or 0.5% and Nifty shut shop at 5,484, down 36 points or 0.6%. The midcap index ended virtually unchanged at 6898 and the smallcap index ended at 8288, up 0.6%. The auto index slid by 1.9%, metal index shed 1.3% and banking lost 0.6%, while the consumer durables index added 3.1%.
Industrial output growth dipped in April, the latest sign that the rising cost of credit and inflation are slowing the economy, which may compel the central bank to pull back from its aggressive monetary policy tightening. Manufacturing activity, which contributes 80% to the IIP index, grew at 8.4% in April, lower than 10.4% in May. This data was the first of a new series with a different base year of 2004-05 comprising of new components and weightage. Under the old series, annual industrial output growth in April was at 4.4%.
Food inflation picked up to 9.1% from a year earlier for the week ended May 28, higher than 8.55% recorded in the previous week, raising concerns of further monetary tightening. Prime Minister’s economic advisor Kaushik Basu said that petroleum product prices need to be hiked in order to maintain the FY12 fiscal deficit target and projected inflation for March 2012 at 6.5%.
And world stocks saw their sixth weekly loss, depressed by concerns about a slowing global economy and Europe's ongoing struggle to control Greek debt.
The major Sensex losers were Hero Honda (weakened by 7.2% at Rs 1723), ONGC (shed 4.6% at Rs 266) and JP Associates (lost 3.6% at Rs 81). Bajaj Auto, SBI and Hindalco were the other significant losers.
Among the auto heavyweights, Hero Honda slid by 7.2% at Rs 1723, Bajaj Auto shed 3.3% at Rs 1325, M&M lost 0.7% at Rs 662 and Tata Motors lost 0.5% at Rs 1019. Data showed car sales in India rose 7 per cent in May, their slowest pace of growth in two years, and analysts expect a further decline in momentum as higher fuel prices, interest rates and vehicle costs crimp demand.
Among the metal majors, Bhushan Steel slid by 7.9% at Rs 420, JSW Steel shed 4.1% at Rs 899, Hindalco lost 2.6% at Rs 184 and Sail lost 0.9% at Rs 144.
Banking also had a rough ride as the central bank reviews its policy on June 16, when it is expected to raise rates for the 10th time in 15 months. SBI weakened by 3% at Rs 2242, ICICI Bank shed 1.3% at Rs 1034 and Axis Bank lost 0.6% at Rs 1235.
And PSU refiners fell as the government had again deferred a decision on raising prices of diesel, kerosene and cooking gas. IOC weakened by 3.1% at Rs 314, HPCL shed 3% at Rs 365 and BPCL lost 2.7% at Rs 604.
On the other hand, TCS strengthened by 3% at Rs 1188, Cipla gained 2.4% at Rs 323 and Infosys added 1.7% at Rs 2861.
In the midcap space, FK Oncology soared by 17.1% at Rs 128, UTV Software jumped 11.3% at Rs 741 and Bajaj Finserv added 10.8% at Rs 561. HCC, Raymond and Shoppers Stop were the other significant gainers.
And in the smallcap space, Empire Industries soared by 25.4% at Rs 921, Elantas Beck jmped 25.5% at Rs 1455 and Nesco added 24.5% at Rs 656.
