Markets Directionless, IIP At 8.20%

The Indian markets have been majorly volatile in terms of direction. The indices have touched 3 peaks so far and have come down to yesterday’s closing between them. The volatility has resulted out of the release of the Index of Industrial Production (IIP) data for October 2012, which surprised the markets with a growth of 8.20%. This is the fastest growth that the index has recorded in 2012, and has come in significantly higher than expected. However, it has resulted out of a low base and on account of the post Diwali numbers usually being good. The market reaction, thus, has been quite dull.

Moreover, this IIP data reading has resulted in throwing a wet blanket over hopes of a rate cut by the RBI in its monetary policy review meeting scheduled for Dec 18, 2012. This has resulted in a rather lacklustre movement on the bourses. The Sensex is trading higher by 26.93 points or 0.14% at 19414.07 and Nifty is up by 5.55 points or 0.09% at 5904.35.

The Asian markets have been positive since their opening today. This strength has come from the optimism over the fiscal cliff issue being resolved. The Asian markets are trading higher in the range of 0.40%-0.70%.

The European markets have opened flat to positive today.

Back home, the market breadth is neutral, with 1333 (46.89%) advances and 1381 (48.58%) declines. Midcaps and smallcaps have been following a trend similar to that seen on the broader indices. The BSE midcap and smallcap indices are trading higher by 0.20% and 0.19% respectively. Of the 13 sectoral indices, 7 are positive and 6 are trading negative. The highest gains are seen in Auto, IT and Teck, which are currently higher by 1.04%, 0.83% and 0.69% respectively.

The technology indices have been lifted upward due to the movement seen in the stock price of Tech Mahindra. British Telecom, a partner in the venture sold its stake in Tech Mahindra at Rs 871 per share. On the back of this news, the latter is currently trading higher by 3.88% at Rs 912 per share. The intraday high touched by this scrip is 6.07%.

NMDC has been seeing excessive volatility today as the government is in the process of selling 10% stake in the company. The stock price, amidst large volumes, is lower by 0.88%.

We expect the markets to remain low on gains today over reduced chances of a rate cut being announced by the RBI.