Markets have a volatile afternoon

The markets have turned volatile in the past one hour as the attempt at an pullback in the course of the afternoon turned out to be unsustainable. The Sensex kissed positive territory for a brief instant, only to come off yet again and is now quoting at 17502, lower by 90 pints and the Nifty is at 5242, down 10 points. The midcap index is at 6280, lower by 18 points and the smallcap index is at 7569, down 82 points.

The intra-day pullback may be attributed to the heartening decline in food inflation, which eased in end-January due to the moderating prices of fruits and vegetables. The food price index rose 13.07% and the fuel price index climbed 11.61% in the year to January 29, government data on Thursday showed. In the prior week, annual food and fuel inflation stood at 17.05% and 11.61% respectively. The primary articles price index was up 16.24% in the latest week, compared with an annual rise of 18.44% a week earlier. But the annual headline inflation in January is still expected to remain high. Headline inflation was 8.43% in December as the food inflation had reached a one-year high then.

However, there was nothing to cheer on the global market front. Indices across Asia, including the Hang Seng, Taiwan, Seoul and Straits Times, slumped more than a percent, taking cues from the fact that the Wall Street retreated in overnight trades. The Dow was up six points, while the Nasdaq was down seven points.

Reliance Infrastructure has soared 10.2% at Rs 592 after the company announced a meeting of its board on February 14 to mull buyback of its equity shares. Yesterday, the stock was hammered nearly 20% in intra-day trades on rumours that the CBI could question or even arrest senior officials of the group in connection with the 2G scam. The denial by the Anil Ambani Group, post the market closing on Wednesday, about group companies Reliance Infra and RNRL having received any notice from auditing regulator ICAI with regard to the consent settlement reached by the two companies with Sebi, would have also aided the recovery. Among the other major gainers, Jaiprakash Associates has jumped by 3.3% at Rs 74 and Tata Motors has added 2.5% at Rs 1104.

On the other hand, SBI has weakened by 3.5% at Rs 2500 to emerge as the top loser on the BSE. Bhel has shed 2.7% at Rs 2038 and HDFC has lost 2.7% at Rs 593. And index heavyweight has shaved off another 1.5% at Rs 897.

The market breadth is extremely negative; Out of 2893 stocks traded on the BSE, there are 930 advancing stocks as against 1184 declines.