Low industrial growth, rising inflation drag Indian equities

The double whammy of a fall in the industrial output growth and rising retail inflation dragged key Indian stock market indices on Friday to their lowest level in six weeks. The mood was also affected by weak global cues.

The sensitive index (Sensex) of the Bombay Stock Exchange (BSE) opened lower at 25,724.09 points, against the previous close at 25,866.95. After oscillating in a narrow band, it finally closed at 25,610.53 at points -- with a loss of 256.42 points, or 0.99 percent.

The situation was similar at the National Stock Exchange. The broader 50-share Nifty opened at 7,762.45 points, against the previous close at 7,825.00 and finally settled at 7,762.25 points -- to log a loss of 62.75 points, or 0.80 percent.

Of the 30 shares that go into the Sensex basket, only eight managed to stay afloat and as many as 22 ended in the red, data with the bourse showed. Coal India, Bharti Airtel and Dr. Reddy's were the main gainers, while Vedanta, Cipla and Hindalco were the principal losers.

Official data showed on Thursday that India's factory output growth decelerated to 3.6 percent in September from 6.4 percent in the month before, even as the annual retail inflation for October moved up significantly to 5 percent from 4.41 percent in the month before.

"The short trading week ended on a negative note as the acceleration of Consumer price Index inflation in October and a fall in industrial production data for September added to the weak sentiments," said Vinod Nair, head of fundamental research with Geojit BNP Paribas

"On the macro front, concerns over the Chinese economy also fuelled the selling pressure."

Among the 12 industry-specific indices only consumer durables and metals ended a tad higher. The other 10 ended in the red, with losses as much as 1.97 percent for capital goods, 1.61 percent for automobiles and 1.50 percent for fast-moving consumer goods.

According to Gaurav Jain, director, Hem Securities, the bears continued to tighten their grip on Dalal Street in line with poor global cues, adding that the markets also fell on fears of a rate hike by US Federal Reserve next month.

"Further disappointing domestic macroeconomic numbers released yesterday evening -- Industrial production and CPI numbers -- also dampened the sentiment," he said.

Anand James, co-head of technical research at Geojit BNP Paribas said amid worries that the Bihar election setback could force the government on the back foot, the announcements on Diwali eve was a confidence booster, indicating the government is still on the reform path.

But the economic data released on Thursday was a dampener. This apart, on the global front, Chinese markets closed 1.43 percent down after the industrial production there fell to a seven-month low to 5.6 percent, and the US markets ended lower after a fall in crude oil prices.