Weakness persists despite lower Dec inflation data

The benchmark share indices continued to trade lower, amid weak Asian cues and despite lower December headline inflation data, on profit booking in Reliance Industries and financial shares.

Overall inflation for the month of December 2011, dropped to a two-year low of 7.47% from 9.11% in November.

At 11:50AM , the Sensex was down 65 points at  16,089 and the Nifty was down 25 points at 4,841.

On the international front, all the Asian markets were in the red after S&P’s downgrade of nine European economies on Friday. The major losers were Nikkei, Hang Seng, Shanghai Composite and Taiwan Weighted down 1per cent each.

Last week, the Sensex surged 306 points or 1.9 per cent to 16,154 and the Nifty ended up 2.5 per cent at 4,866, led by rate sensitives on the back of declining inflation and better-than-expected industrial production numbers.

In the broader markets, only the smallcap index was marginally up 0.2% outperforming the Sensex and midcap indices which were both down nearly 0.5% each.

Among the sectoral indices, Healthcare, Bankex, Oil and Gas indices were down over 1% each. On the other hand, IT and TECk are the only ones in the green, up 1.5 per cent and 1.3 per cent respectively.

 Among Sensex shares, Reliance Industries was down nearly 2%. According to reports, the company plans to acquire a minimum 26% in leading cable operators, including multi-system operators.

Financial shares were down on profit booking after they gained last week. HDFC Bank was down over 2% while HDFC and SBI lost over 1% each.
However, technology shares along with Bharti Airtel were among the gainers. TCS was up over 2% ahead of its Oct-Dec earnings on Tuesday. Infosys rebounded today to gain over 1% after the stock fell sharply last week on the back of lower dollar revenue growth guidance. Wipro was up 0.8%.

Among others, shares of fertiliser companies are in limelight on the bourses on reports that the government is planning to raise the price of urea by 40%.National Fertilisers, Rashtriya Chemicals and Fertilisers, Chambal Fertilisers and Chemicals, GSFC and GNFC are trading higher by 2-8% on the National Stock Exchange.

UB Group stocks – United Spirits and United Breweries – have rallied 5% each on reports that the group will consolidate its foreign alcohol assets ahead of an overseas listing of the brands.
 
“UB will bring its foreign assets under the Whyte & Mackay (W&M) brand and list the Scottish subsidiary as part of a strategy to help with Kingfisher's financial troubles,” reports suggest. The group plans to bring its French wine subsidiary Bouvet Ladubay and some other brands under Whyte & Mackay. Both Mackay and Ladubay are 100% units of United Spirits.