Markets extend their losses, ignore lower inflation numbers

Indian markets are holding their morning loses despite a good set of inflation numbers. Food inflation decreased by 139 bps to 0.42% for the week ended Dec 17, 2011, while Primary Articles' inflation stood at 2.7% versus 3.78% on a WoW basis. Healthcare, Auto and Metals are trading marginally in the green, while Oil & Gas, Capital Goods, and Realty are among the worst performers.

The Asian markets are looking nervous. The Nikkei and Hang Seng are trading in the red zone, while Shanghai is trading marginally in the green, up by 3 points. Chinese markets are in the positive, with low valuations attracting investors and on the back of anticipated policy easing.

The European markets have opened in the green ahead of the Italian debt auction.

Back home, Tata Power saw profit booking and is among the leading index losers, down 2.45% to Rs 89.45. Capital Goods heavy weights, L&T and BHEL, are down by 1.25% and 0.59% respectively. HDFC Bank and ICICI Bank are also trading down 0.84% and 0.80% respectively. Other losers include Wipro, Jindal Steel, ITC, Coal India and Tata Steel, all marginally in the red.

Sterlite Industries is the leading index gainer, up 1% to Rs 90.60. Auto stocks like Mahindra & Mahindra, Tata Motors etc. are trading higher on the bourses. Cipla, SBI and Jaiprakash Associates are trading marginally in the green zone.

Stone India is up 3.61% at Rs 28.70 after the news that company has signed an agreement with UK-based Turbo Power Systems. IDBI Bank is trading down by 1.54% at Rs 80.05, even after the news that the govt. may infuse capital in the bank.

The market breadth, which indicates the overall health of the market, is weak. The total number of shares on the losing track is higher than the number of shares moving upwards.

We expect the markets to remain volatile for the rest of the day and advise investors to wield caution.