Market remains directionless; WPI spooks

Gains in Infosys, TCS, ICICI Bank, L&T and Sesa Sterlite were offset by losses in Reliance, HDFC Bank, ITC, Bharti Airtel and Sun Pharma

Markets recovered from their day's lows after hitting a trough post wholesale inflation data for November came in at a 14-month high of 7.52% in November
 led by a sharp uptick in food prices.

Key benchmark indices continued to trade flat with negative bias in noon trades on Monday as higher-than-expected November wholesale price inflation has upped the probability of a rate hike by the Reserve Bank of India (RBI) in its upcoming monetary policy review.

At 2:35PM, the 30-share Sensex was down almost 19 points at 20,699 levels and the 50-share Nifty was down almost 6 points at 6,163 levels.

The Wholesale Price Index (WPI), a measure of inflation at wholesaler's level, rose to 7.52% in November from 7% a month ago mainly due to continued rise in vegetable prices. This takes the wholesale price inflation to a 14 month high. Markets were expecting inflation to be around 7%.

The prices of vegetables went up by 95.25% in November against a price rise by 78.38% in the previous month, marked by a rise in the prices of potato this time.

Stocks in Asia were trading weak as investors remained cautious ahead of the US Fed's 2-day policy meet. The Shanghai Composite and Nikkei down 1.6% each. China's benchmark stock index, the Shanghai Composite was down after factory output was marginally down in December compared to the previous month. Among other indices in the region, Straits Times and Hang Seng were down over 0.4% each.

The BSE Oil and Gas index was the top loser among the sectoral indices followed by Auto and Power indices. Meawhile IT index was the top gainer up 1.7% followed by Capital Goods index.

Among the index heavyweights Reliance Industries was down over 1.5% and ONGC was down 1.6%.

FMCG majors ITC and Hindustan Unilever were down 1% each after high inflation levels are likely to reduce spending power thereby hurting volume growth going forward.

Other Sensex losers include, Sun Pharma, HDFC, Mah&Mah and Tata Motors.

IT shares firmed up after the rupee weakened agains the US dollar. Infosys was up 2.4% and TCS gained 1.2% and Wipro was up 0.7%.

Other Sensex gainers include ICICI Bank and L&T.

In the broader market, the BSE Mid-cap index and Small-cap index were trading flat with positive bias.

Market breadth was weak with 1,255 losers and 965 gainers on the BSE.

Other shares

Shares of GlaxoSmithKline Pharmaceuticals has surged nearly 20% at Rs 2,952 in early morning deals on the BSE after its parent company GlaxoSmithKline plc announced a voluntary open offer to increase its stake in its Indian arm, from 50.7% to up to 75% at a price of Rs 3,100 per share.

Shares in Elder Pharmaceuticals tanked 8% to Rs 276, extending its Friday’s 9% fall, after the company sold its domestic formulations business in India and Nepal, to Torrent Pharmaceuticals for Rs 2,004 crore.

Aurobindo Pharma is trading higher by 2.4% at Rs 317, extending its Friday’s 4% rally, after said it has received the final approval from the U.S. health regulator to manufacture and market Duloxetine Hydrochloride Delayed-Release capsules, an anti-depressant drug, in the American market.