Markets hold the strength; Sensex at 27850 level

Markets were continuing their rally mood in the early noon session on across-the-board buying by funds as well as retail investors. There was value buying being seen in the fundamentally strong stocks after the recent beating that has helped improving the trading sentiments across the street, though the regional peers were still showing mixed trend and were putting some pressure. Traders were however encouraged by an UN report saying that India's economic growth is projected to surpass that of China's, with the GDP expected to zoom by 7.7 per cent in 2016, it has also said that India will help accelerate economic growth in South Asia. The IT sector was in most jubilant mood after the rupee depreciated considerably against the US dollar due to appreciation of the American currency overseas riding on strong economic data. In other sectoral indices, tech, banking, power and consumer durables were powering the markets, while metal was the lone pack witnessing some somberness.

There were lots of scrip specific actions, keeping the markets buzzing, PVR was moving higher since morning on reports that it may acquire DT Cinemas, the wholly-owned subsidiary of DLF, while the Ultratech Cements was up on report that it is eyeing Jaypee Group’s cement plant in Bhilai, Chhattisgarh. Both JP Group and UltraTech have been evaluating the valuation and the enterprise value that is being discussed is around Rs 2100-2200 crore. On the same time some result reaction too were being witnessed, Tata Power was up by 2.3% after posting a consolidated net profit of Rs 159.14 crore for the January-March quarter of 2014-15 against a loss of Rs 145.33 crore in same quarter last year.

The BSE Sensex is currently trading at 27849.65, up by 204.12 points or 0.74% after trading in a range of 27743.99 and 27903.01. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices too were trading in green; the BSE Mid cap index was up by 0.39%, while Small cap index was higher by 0.51%.

The top gaining sectoral indices on the BSE were IT up by 1.72%, TECK up by 1.57%, INFRA up by 1.10%, Bankex up by 1.06%, Consumer Durables up by 0.70% while, Metal down by 0.53%, Auto down by 0.22% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 1.66%, TCS up by 1.66%, Tata Power up by 1.65%, ICICI Bank up by 1.46% and Infosys up by 1.45%. On the flip side, Bajaj Auto down by 2.62%, Tata Steel down by 2.00%, BHEL down by 1.04%, Hindalco down by 1.00% and Mahindra & Mahindra down by 0.44% were the top losers.

Meanwhile, amid rising demand for reducing policy rates again, the Reserve Bank of India (RBI) Governor Raghuram Rajan has said that lower interest rates and tax incentives can boost investments, but it is consumer demand that holds the key for pushing economic growth. Rajan raising concern over central banks globally being pushed into 'competitive monetary easing' said that the 'current non-system in international monetary policy is, in my view, a source of substantial risk, both to sustainable growth as well as to the financial sector. He further said that it is not an industrial country problem, nor an emerging market problem, it is a problem of collective action'.

Governor Rajan pointing that policy rates cannot be reduced significantly below zero, though a number of European countries are testing these limits, said equilibrium long term interest rates may stay higher than levels necessary to incentivise investments. Rajan, making a familiar argument for better global coordination on monetary policy, said central bankers in developed economies should take more seriously their international responsibilities.

Talking about the possible solution, he said that another way to stimulate demand is for governments that still have the ability to borrow to increase spending. Since this will increase already-high levels of government debt, proponents suggest investing in infrastructure, which may have high returns today when construction costs and interest rates are low. Though, he added that high-return infrastructure investment is harder to identify and implement in developed countries where most obvious investments have already been made political influence is as likely to create bridges to nowhere or unviable high speed train networks as needed infrastructure.

The continuously lowering inflation has raised expectation and voices of another rate cut from the RBI. WPI inflation dipped to record (-)2.65% in April, while the Consumer Price Index based inflation fell to a 4-month low of 4.87 per cent in April. Further, the retail inflation based on consumer price index (CPI) for rural labourers eased to 5.49% in March from 6.19% in the previous month. The rate of price-rise based on CPI for agricultural labourers too softened to 5.24% in March from 6.08% in February.

The CNX Nifty is currently trading at 8427.65, up by 62.00 points or 0.74% after trading in a range of 8391.45 and 8440.35. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 3.44%, HCL Tech up by 2.44%, Tata Power up by 1.78%, TCS up by 1.66% and SBI up by 1.63%. On the flip side, Bajaj Auto down by 2.73%, Tata Steel down by 2.38%, Cairn India down by 1.62%, BHEL down by 1.17% and Hindalco down by 1.04% were the top losers.

Asian markets were trading mixed; FTSE Bursa Malaysia KLCI was up by 1.09 points or 0.06% to 1,810.81, KOSPI Index gained 18.69 points or 0.88% to 2,139.54, Jakarta Composite was higher by 24.81 points or 0.47% to 5,294.18, Shanghai Composite added 90.55 points or 2.05% to 4,508.10 and Nikkei 225 surged by 170.18 points or 0.85% to 20,196.56.

On the other hand, Hang Seng lost 54.16 points or 0.2% to 27,639.38, Taiwan Weighted declined by 31.46 points or 0.32% to 9,685.31and Straits Times was down by 14.04 points or 0.41% to 3,440.00.