12th June, 2013 : Comments by Amar Ambani, Head of Research, India Infoline
“Reinforcing that economic activity remains anemic and that it would be premature to expect a quick turnaround, April IIP data came below market expectations and the May print. CPI for May at 9.31% was also disappointing as the street was expecting a sharp moderation month-on-month. These conflicting data points increases RBI’s dilemma with respect to cutting the repo rate further in the upcoming policy. May WPI data to be released on Friday could act as a key decisive factor,” says Amar Ambani, Head of Research, IIFL.
The bears took charge on day five with no let up in the continued onslaught. Disappointing economic cues released around noon was the proverbial straw that broke the camel’s back.
The Index of Industrial Production for April came below market expectations at 2% as compared to 2.5% in March. Consumer price for May came in at 9.31% as against 9.39% in April. This too disappointed as the street was expecting a sharper moderation month-on-month. Consumer food price-based inflation came in at 10.65% versus 10.61% MoM.
Commenting on today’s top newsmaker, Amar Ambani, Head of Research at IIFL, said the conflicting data points will make RBI cautious ahead of its policy meet on June 17. “Today’s data reinforces the fact that economic activity remains anemic. It would be premature to expect a quick turnaround. These conflicting data points increase RBI’s dilemma with respect to cutting the repo rate further in the upcoming policy.” He added that the May WPI data to be released on Friday could act as a key decisive factor.”
The metals, IT, power, FMCG and auto stocks led today’s decline. Even the mid- and small-cap stocks witnessed selling pressure. On the other hand, oil and gas and healthcare stocks led the gainers pack.
From its May peak of 6,229, the Nifty has lost another 30 points taking its tally to almost 470 points. The Sensex lost over 1,400 points from its peak of 20,443.
For Wednesday, the Nifty ended lower by 28 points to close at 5,760 while the Sensex closed at 19041, down 101 points over Tuesday’s close.