Nifty tests 5200 amid volatility; IIP in-line

Indian equity benchmarks slipped further - the Nifty has tested the 5200-mark at 11:43 hours. Industrial output data came in in-line with expectations but there was a decline in sectoral growth. Finance Minister said IIP numbers were disappointing.

The government has reported a growth in index of industrial production (IIP) at 1.6% for the month of December 2010 as against 2.7% in previous month while the CNBC-TV18 expected at 1.69%. For the period of nine months of FY11 - IIP data was unchanged at 8.6% on year-on-year basis. Growth in all sectors declined in December except electricity. Manufacturing sector grew at 1% versus 19.6%, mining grew at 3.8% versus 11.1% while electricity sector growth improved at 6% as against 5.4% (YoY). Consumer non-durables growth reported in negative 1.1% versus positive 3% and Capital goods growth too came in negative 13.7% versus 42.9% (YoY). Finance Minister said IIP numbers were disappointing. While commenting on IIP data, JPMorgan said much of the growth has been driven by fiscal stimulus. Standard Chartered said inflation will moderate over next 3-5 months and liquidity may ease over next 3-6 months. He feels that RBI will be calibrated in rate hike approach and he expects 25 basis points rate hike in March & May. The 30-share BSE Sensex was trading at 17,312, down 150 points and the 50-share NSE Nifty fell 42 points to 5,183. Metal, realty, technology and oil & gas sectors were putting pressure on the markets - respective indices were down 1-2%. Heavyweights ONGC, TCS, Bharti Airtel and Wipro were down 2.5%. Reliance Industries and BHEL declined 1-1.5%. Metal stocks were the major losers - Tata Steel, SAIL, Hindalco and Sesa Goa slipped 4% each. Jindal Steel was down 1% while Sterlite gained 1.5%. Anil Dhirubhai Ambani Group companies' shares too declined today after a rally seen yesterday. Reliance Capital, Reliance Infrastructure, Reliance Power and Reliance Communications fell 3-5%. However, buying in HDFC, ICICI Bank, NTPC, L&T, Tata Motors, HDFC, Maruti and Hero Honda was quite supportive and even capped the losses. _PAGEBREAK_ Nifty in narrow range; oil & gas, TECk slip The benchmark Nifty was consolidating in a narrow range of 5200-5250 at 10:39 hours, after a sharp cut seen since previous two weeks. The index shed more than 500 points in last two weeks. However, the broader indices managed to claw back with modest gain. Deven Choksey, managing director of KR Choksey Shares & Securities said the markets may be headed to a state of capitulation. However, he added that in this kind of a market one should look forward to more opportunities on the buying side.