Market headed for a weak close; heavyweights drag

BSE small-cap and mid-cap indices are up marginally

Market is set for a weak close today ahead of key economic data set to be released later in the day. Key indices recovered from their day's lows in the afternoon trades but continue to trade in the red zone dragged down by heavyweight stocks.  Sentiment is also hit on account of a provisional budget deal out of Washington which removed one of the near-term reasons for the Fed to keep up its current pace of economic stimulus also known quantitative easing.

Overnight, U.S. stocks posted their biggest drop in a month, with the Standard & Poor's 500 down 1.1 percent, as traders locked in recent gains after Congress announced the provisional budget deal. S&P 500 E-mini futures inched up 0.1 percent in Asian trade on Thursday.

The bipartisan budget agreement reached late on Tuesday, though modest in spending cuts, would end three years of political squabbling in Washington that climaxed in October with a two-week partial government shutdown. The U.S. House of Representatives could vote on the deal on Friday.

At 2:33 PM, The 30-share BSE Sensex was down 156 points at 21020 and the 50-share Nifty was down 41 points at 6,264.

the rupee was trading at Rs 61.58 compared with previous close of Rs 61.57 per dollar.

"The Nifty is testing support in the 6250-6275 zone. If that breaks, next support is at 6225," says technical analyst Devangshu Datta.

Asian shares too slipped to a four-week low on Thursday on heightened expectations the Federal Reserve may act sooner than later to unwind its stimulus after a provisional budget deal in Washington eased some of the fiscal drag on the US economy. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6 percent, adding to Wednesday's 1.1 percent decline, its sharpest one-day fall in three weeks.

Back home, the retail price index-based inflation for the month of November is slated to be released in the evening today, is keenly watched as it comes ahead of RBI monetary review next week and a few days after the Congress faced drubbing in assembly elections. It gains more significance because the drubbing was mainly on  the issue of price rise among other factors. RBI is expected to take  anti-inflationary stance as inflationary pressures have resurfaced.

In October, expensive vegetable prices had catapulted consumer price index (CPI)-based inflation to double digits after a gap of six months, even as normal monsoon is expected  to yield a bumper crop this financial year.

Vegetable prices have  abated a bit in November, but its exact impact on retail inflation would be known later in the day.

The inflation had risen to 10.09% in October from 9.84% in September as the rate of price rise surged to 45.67% against 34.93%  over the  period.

Tackling inflation will be a key priority, RBI Governor Raghuram Rajan said on Wednesday, raising expectations that the central bank could raise interest rates for a third time in four months if prices remained high.

Street expects consumer prices to rise on an annualised rate of 10%,in November a Reuters poll showed. It stood at 10.09 per cent clocked in October

Market participants are also on the lookout for Index of Industrial Production (IIP) data which will be released later today. Industrial activity may show a contraction in the factory output in October.

This may be a result of the high base in the same month last year and also due to sluggish performance by the eight infrastructure industries. The core sectors, which constitute around 38% of the IIP, contracted after eight months in October by 0.6% after growing at a high pace of 8% in the previous month.

In October last year, the IIP grew by a massive 8.4% -- a 16-month high at that time.

Market breath remained weak on the BSE as 1048 stocks advanced against a decline seen in 1341 stocks.