Food inflation eases to 7.78%; Stock markets celebrate

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Food inflation eases to 7.78%
Food inflation eased to 7.78% for the week ended June 18 as per the data released by the government today. The major contribution came from cheaper vegetables and pulses.

Vegetables became over 10% cheaper year-on-year during the week ended June 18.

Prices of pulses also lowered by 9.50% during the week on an annual basis.

Benchmarks tracked positively and witnessed a choppy session during the day leading Consumer durables and FMCG shares.

The 30-share BSE Sensex was trading at 18,762, up 68 points and the 50-share NSE Nifty rose 17 points to 5,617, supported by Reliance Industries, SBI, NTPC, HUL, Jindal Steel, HDFC, Infosys and ITC.

HUL was trading in the zone of Rs 341 - 346 during the day, after factoring inflation numbers.

ONGC, Wipro, BHEL, ICICI Bank and Bharti Airtel showed the downtrend.

Market was getting some support from global equities as well - especially after approval for austerity plan by Greece Parliament through voting. European peers also opened higher, in line with others.

Foreign institutional investors (FIIs) bought shares worth Rs 669.35 crore on Wednesday, June 29 2011, as per the provisional figures released by the stock exchanges. FII inflow in June 2011 totalled Rs 3800.40 crore (till 28 June 2011), as per data from the Securities & Exchange Board of India. Lowered inflation figures might attract more FII inflows further.

The latest numbers on price rise of food items are the lowest since the week ended May 7, when food inflation stood at 7.47 per cent.

Prime Minister Manmohan Singh said that headline inflation will come down to 6.5 per cent by March-end if international oil prices soften and commodity prices do not rise further.

The latest fall in food inflation numbers may bring relief to the government which is fighting hard to overcome inflation. The RBI had said that inflation in the next few months would be driven more by high global commodity prices, rather than prices of food items.

OneIndia Money

Read more about: inflation, rbi, greece, bse, nse
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