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Inflation number deflates market sentiment — Auto components maintain smooth ride

S. Vaidya Nathan

EQUITIES ended the week on a tepid note, with widespread losses in Friday's trading. Higher-than-expected inflation numbers triggered the decline; stock prices had been flat till the headline inflation number of 7.5 per cent popped up on information boards.

The devil was in the details as the more than one percentage point increase in inflation (compared to the previous reported number) was driven by a spurt in the prices of fruits, vegetables and primary articles; as the effect of the hike in the prices of petrol and diesel gets reflected over the next couple of weeks, inflation in excess of 8 per cent appears a certainty. This was enough to dampen market sentiment, which had acquired a distinct bullish hue, especially in Thursday's trading.

The Nifty ended the day 1633.4 points, down 21.5 points; the BSE Sensitive Index was at 5196.9 points, a loss of about one per cent. Thirty six out of 50 stocks in the Nifty suffered declines.

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The picture in the Sensex was no different. Heavyweights - ONGC, Reliance, SBI, Infosys and Wipro - led the sell off and accounted for about 70 per cent of the decline in the Nifty and Sensex.

Steel sector stocks were in the limelight yet again, but finished in the red. In a break from trends in recent trading, Tata Steel, SAIL, Essar Steel, Ispat Industries and Jindal Vijayanagar were on the losers list. They however, figured at the top of the volume chart, which was consistent with the dominance that steel sector stocks have exercised over trading patterns over the past month.

A trading volume of 12-million shares in Ispat Industries tells the tale.

Jindal Strips managed to buck the trend and made its way into the list of top 10 gainers for the day with an increase of about 20 per cent in its price.

Cement stocks had yet another fine day in the office even as there was red splashed all around them. Stocks of frontline cement companies such as Grasim, ACC, Gujarat Ambuja Cements and Madras Cements posted smart gains; a host of stocks of smaller players, too, ruled firm with India Cements and Jaiprakash Associates at the forefront.

On a day when Maruti led the list of losers among large-cap stocks and Tata Motors also finished at a lower level, auto component stocks enjoyed market fancy. The stock of Sundaram Clayton continued its upward march. The likes of MICO, India Nippon Electricals, Amtek Auto and Sundram Fasteners sported gains in a widespread sector-specific ally.

Sugar stocks, which have been on a relentless upward trend over the past few weeks, took a breather. Stocks such as Bannari Amman, Bajaj Hindusthan, Upper Ganges Sugar and Thiru Arooran Sugars were prominent losers. The much-fancied Balrampur Chini, however, managed to buck the trend in the broad market as well as in the sugar sector to notch smart gains of about 5 per cent. Institutional investor interest appears to have pepped the stock.

If there was a star turn for media stocks across the board in Thursday's trading, less than 24 hours later, a sizeable proportion of the gains were shed. Barring Balaji Telefilms, which closed with a modest loss, the rest were mauled. Zee Telefilms was one of major losers in the large-cap Nifty; the likes of Padmalaya Telefilms, ETC Networks and Mukta Arts were prominent losers.

Other gainers included Sundaram Finance, Raymond, Ashok Leyland, Sterlite Industries and Hotel Leela Venture.

The losers list also featured VSNL, Bank of Baroda, Jay Bharat Maruti, Motherson Sumi Sytems and TVS Motor.

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