Markets continue to trade higher; banking, Auto counters lead the rally

The local equity markets continued to trade higher in late morning session on the back of sustained buying in several blue chip stocks, after the release of better than expected macroeconomic data. Besides, a firm trend in other Asian markets, tracking rallies in the US and Europe as oil prices pushed up to 2016 highs on reports of an Russia-Saudi Arabia agreement to freeze output, also buoyed the sentiments. The rally in markets was also supported by surplus monsoon forecast by the weather office this year after two consecutive droughts.  According to India Meteorological Department (IMD), Monsoon rains will be above long-period average this year and the El Nino conditions will be seen diminishing by June and July. On the macroeconomic front, India’s industrial production expanded at 2% year-on-year in February after staying negative for the last three months on better performance of mining, power and consumer goods, while retail inflation in March fell to a six-month low of 4.83% on account of cheaper food articles such as vegetables and pulses.

On the global front, Asian markets trading on a firm note on Wednesday as investors turned optimistic after upbeat Chinese trade data offered hope the economy was stabilizing, underpinning both risk sentiment and commodity prices. Further, Wall Street gained on Tuesday, led by surging energy shares that were buttressed by rising oil prices, as investors scooped up equities at the start of corporate earnings season. Back home, all BSE sectoral indices were trading in the green. Among them, Banking index gained the most by 2.56 per cent, followed by Auto 2.41 per cent, Consumer Durables 1.62 per cent and Metal 1.59 per cent.

In scrip specific development, shares of Kaveri Seed surged after the company commenced operations at its new facility located at Molangur Village, Shankarapatnam Mandal, Karimnagar District in the state of Telangana. Furthermore, Wipro has gained 4 after India's third largest software exporter announced that it will consider a proposal to buy back shares of the company on April 20, 2016.

The market breadth on BSE was positive, out of 2375 stocks traded, 1664 stocks advanced, while 608 stocks declined on the BSE.

The BSE Sensex is currently trading at 25568.49, up by 422.90 points or 1.68% after trading in a range of 25358.42 and 25579.17. There were 29 stocks advancing against 1 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.23%, while Small cap index up by 1.25%.

The top gaining sectoral indices on the BSE were Bankex up by 2.56%, Auto up by 2.41%, Consumer Durables up by 1.62%, Metal up by 1.59% and Realty up by 1.44%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were Mahindra & Mahindra up by 6.31%, ICICI Bank up by 4.75%, Bharti Airtel up by 3.16%, Wipro up by 2.78% and Hindustan Unilever up by 2.45%. On the flip side, GAIL India down by 0.83% was the only loser on BSE index.

Meanwhile, in a morale booster to the government, the International Monetary Fund (IMF) in its latest World Economic Outlook report though nudged down its global growth projection for 2016 from 3.4 percent to 3.2 percent, but has said that India's growth is projected to notch up to 7.5 percent in 2016-17, overtaking China's GDP by more than 1 percent, driven by private consumption and increased industrial activity. It said that India remains a bright spot against the backdrop of a sluggish global economy. The global agency also said that with the revival of sentiment and pickup in industrial activity, a recovery of private investment is expected to further strengthen growth.

IMF said that in 2015, India's growth was 7.3 percent, which would increase to 7.5 percent in the next two years of 2016 and 2017, as forecast in October and noted that in India, monetary conditions remain consistent with achieving the inflation target of 5 percent in the first half of 2017, although an unfavourable monsoon and an expected public sector wage increase pose upside risks.

It also said that lower commodity prices, a range of supply side measures, and a relatively tight monetary stance have resulted in a faster-than-expected fall in inflation, making room for nominal interest rate cuts, but upside risks to inflation could necessitate a tightening of monetary policy.

The fund though has projected a decline in China's growth rate from 6.9 percent in 2015 to 6.5 percent in 2016 and 6.2 percent in 2017, but is more confident than it was in January that stimulus measures there will work. But short-term optimism could not mask enduring worries about China further out. It also suggested some remedies for the global economy like keep monetary policy loose, augment it with fiscal stimulus where possible, and add some pro-growth reforms to the mix.

The CNX Nifty is currently trading at 7837.05, up by 128.10 points or 1.66% after trading in a range of 7772.20 and 7842.95. There were 49 stocks advancing against 1 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 6.46% and ICICI Bank up by 4.79% and Ultratech Cement up by 4.20% and Hindalco up by 3.70% and Bharti Infratel up by 3.30%. On the flip side, GAIL India down by 0.86% was the only loser on NSE index.

Asian markets were trading in green, FTSE Bursa Malaysia KLCI was up by 0.33%, KOSPI Index up by 0.56%, Jakarta Composite up by 0.11%, Shanghai Composite up by 2.08%, Taiwan Weighted up by 1.19%, Nikkei 225 up by 2.48% and Hang Seng was up by 2.62%.