RBI liquidity easing hopes underpin Sensex to day’s high; Banks lead the rally

Stock markets in India are exhibiting sanguine trends in Thursday afternoon trades with the frontline equity indices touching day’s high levels on hopes of an imminent interest rate cut by India’s central bank heightened after the February IIP numbers. The benchmark equity indices held steady despite government data indicating India's industrial output rose at a much slower than expected 4.1% in February from a year earlier. After few moments of status quo, the benchmark gauges moved northwards as markets factored in expectations of start of a monetary easing cycle with Reserve Bank of India (RBI)’s Annual Monetary and Credit Policy meet on April 17. After raising the policy rate 13 times since March 2010, the central bank has kept the repo rate unchanged since October 2011. The interest rate sensitive banking sector stocks led the rally from the front with hefty gains of close to two percent. While investors were also seen piling up positions in the Capital Goods and defensive-FMCG pockets which surged around one and half a percent. Though, there appeared across the board buying interest, defensive Healthcare pockete remained only chink in the armor with around a quarter percent cut. Meanwhile, stocks from the Aviation sector like Kingfisher, Spice Jet and Jet Airways, after an early rally, got thrashed in the afternoon session as reports showed that the Cabinet did not took up the issue of FDI in Aviation sector in their meeting. The Cabinet only okayed Air India’s restructuring plan while it is likely to consider the issue of FDI in Aviation in their meeting next week. On the global front, the Asian markets largely exhibited optimistic trends as sentiments were influenced by overnight upmove on Wall Street on the back of encouraging start of the earnings season. The European markets too traded on a positive note ahead of an Italian debt sale that will show whether concerns over Spain are spreading to other debt-laden euro zone nations.

Moreover, the broader markets traded on an optimistic note with smart gains of around a percent, trading in tandem with their larger peers. The bourses traded on weak volumes of over Rs 0.5 lakh crore while the market breadth on BSE was in favor of declines in the ratio of 1682:810 while 115 scrips remained unchanged.

The BSE Sensex is currently trading at 17,366.08 up by 166.68 points or 0.97% after trading as high as 17,395.15 and as low as 17,276.87. There were 24 stocks advancing against 6 declines on the index.

The broader indices were trading on a strong note; the BSE Mid cap index surged 1.12% and Small cap soared 1.14%.

On the BSE sectoral space, Bankex up 1.72%, FMCG up 1.42%, Capital Goods up 1.40%, Auto up 1.36% and Consumer Durables up 1.31% were the major gainers, while Healthcare down 0.28% was the only laggard in the space.

Maruti up 2.53%, Hero Moto up 2.44%, SBI up 2.25%, Hindalco up 2.21% and BHEL up 2.21% were the major gainers on the Sensex, while Sun Pharma down 1.37%, ONGC down 0.59%, Infosys down 0.36%, Wipro down 0.34% and Jindal Steel down 0.28% were the major losers in the index.

Meanwhile, India has imposed anti dumping duty on imports of phosphoric acid from Israel and Taiwan. The duty has been imposed for a period of five years and will be levied on all grades and concentrations of the acid, except for use in agriculture and fertiliser, as per the Department of Revenue.

Phosphoric acid is a chemical used in industrial applications as well as in medicines. It is also used in beverages, seed processing, sugar juice clarification, sugar refining and food phosphate manufacturing. However its cheap imports in India have raised concerns amongst Indian manufacturers. Gujarat Alkalies and Chemicals, Baroda, had filed a petition seeking anti-dumping duty on the chemical.

Earlier, the Revenue Department had imposed a provisional anti-dumping duty for six months. However based on the final findings of the Directorate General of Anti-Dumping and Allied Duties, the revenue department has imposed a definitive anti-dumping duty for five years.

Typically a country initiates anti-dumping probes to check if their domestic industries are being hurt because of a surge in cheap, or below-normal-cost, imports. If found correct, the government goes ahead and imposes duties on them which makes them expensive and hence discourages their imports. These are different from safeguard duties that are levied in a uniform manner. Anti-dumping duties vary from product-to-product and country-to-country.

The S&P CNX Nifty is currently trading at 5,284.15, higher by 57.30 points or 1.10% after trading as high as 5,290.60 and as low as 5,246.75. There were 43 stocks advancing against 7 declines on the index.

The top gainers on the Nifty were Axis Bank up 3.33%, Maruti up 2.75%, SBI up 2.62%, IDFC up 2.60% and Hindalco up 2.54%.

Dr Reddy’s down 2.01%, Cairn down 1.95%, Sun Pharma down 1.39%, Wipro down 0.53% and Infosys down 0.51% were the major losers on the index.

In the Asian space, Shanghai Composite jumped 1.74%, Hang Seng climbed 0.84%, Jakarta Composite added 0.13%, Nikkei 225 rose 0.19%, Straits Times surged 0.91% and Taiwan Weighted up by 0.08%.

On the flipside Seoul Composite declined 0.39% was the only lagged among the Asian pack.

Stock markets in Malaysia remained closed on Wednesday on account of a nationwide holiday for Installation of the Yang Di-Pertuan Agong. The South Korean markets too remained shut on account of Assembly Members Election Day.

The European markets were trading in green as France’s CAC 40 advanced 0.25%, Germany’s DAX gained 0.40% and Britain’s FTSE 100 rose 0.15%.