Indian Markets end lower on hawkish economic data announcements - Eastern Financiers

Markets ended lower for the week as investors sold equities over hawkish economic data announcements. Positive surprise from narrowing trade deficit data was out-weighed by stubborn inflationary pressure and contraction in the factory output. Also, there was little in terms of meaningful business being transacted in the parliament's winter session. Nifty ended the week at 6168.40, down 91.50 points or 1.46 percent and Sensex shrugged-off 280.95 points or 1.34 percent to draw curtains at 20715.38. Sectoral indices were mixed in nature with more losers than gainers. Overseas-investors, however, remained net buyers for yet another week as they invested Rs.3587.35 Cr during the week. The rupee lost ground against the dollar losing 0.74 percent in the week's trade.

The trade deficit data, that came in during the week bought cheer amongst market participants. India's trade deficit narrowed in November as exports rose, while imports hit the lowest level in more than two-and-a-half years after gold shipments from overseas fell sharply. Last month's deficit stood at $9.22 billion compared with $10.56 billion in October, a traditional gold buying season. The deficit had previously narrowed to a two-and-a-half-year low in September.

Merchandise exports rose by 5.86 percent year-on-year in November to $24.6 billion. Imports fell by 16.37 percent yearon-year to $33.83 billion. Gold and silver imports slumped 80.49 percent to $1.05 billion in November compared to a year earlier.

However, the cheer was short-lived, as the factory output for the month of October, was a big disappointment for the market. Industrial production entered the negative territory after three months, contracting by 1.8 per cent in October this year mainly due to poor performance of the manufacturing sector. Factory output, as measured in terms of the Index of Industrial Production (IIP), grew by 8.4 per cent in October last year. Meanwhile, IIP growth for September this year has been revised marginally higher to 1.96 per cent from the provisional estimate of 2 per cent. In terms of industries, 10 out of 22 industry groups in the manufacturing sector have shown negative growth during the month of October.

Also, to make matters worse, the inflation at the retail level jumped once again in November creating jitters amongst market participants. Sharply higher food prices drove India's annual consumer price inflation to a higher-than-expected 11.24 percent in November from 10.17 per cent in October. Inflation in the food and beverages segment was 14.72 percent compared with 12.56 percent in the previous month.

The Auto numbers once again disappointed investors as sales once again dipped in the month of November. Car sales declined 8% to 1.42 lakh units in November with wary customers avoiding new purchases after some modest festive sales.

Source : Equity Bulls

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