Benchmarks trade firm in morning session

Indian equity benchmarks continued their firm trade in morning session on account of buying in frontline blue chip counters. The sentiments were upbeat as the finance ministry stated that measures taken by the RBI and government will squeeze the duration of high inflation fuelled by global factors. It also said evidence on consumption patterns further suggests that inflation in India has a lesser impact on low-income strata than on high-income groups. Traders overlooked data showing that India's retail inflation surged to an eight-year high of 7.79 percent in April, raising the prospect of another interest rate hike from the RBI in the next policy meeting in June. Besides, Industrial production growth remained subdued at 1.9 per cent in March compared to a year ago, mainly due to poor performance by the manufacturing sector which showed staggered impact of the third wave of the pandemic.

On the global front, Asian markets are trading in green, amid signs the recent equity market sell-off is overdone. The markets reacted positively to news that the U.S. Senate confirmed President Joe Biden's appointment of Jerome Powell to a second term as Federal Reserve Chair. Powell said that getting inflation under control could cause some economic pain but remains his top priority. A 50-bps rate hike could continue longer and the Fed isn't 'actively considering' a 75 basis-point move. Back home, Infrastructure industry stocks remained in focus as Union minister Nitin Gadkari said the government is committed to expanding the national highway network across the country with the aim of constructing 18,000 km of highways in 2022-23 at a record speed of 50 km per day.

The BSE Sensex is currently trading at 53362.64, up by 432.33 points or 0.82% after trading in a range of 53131.69 and 53625.25. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.93%, while Small cap index was up by 1.70%.

The top gaining sectoral indices on the BSE were Auto up by 2.74%, Industrials up by 2.71%, Capital Goods up by 1.96%, FMCG up by 1.84% and Consumer Durables up by 1.84%, while Telecom down by 1.16% was the lone losing index on BSE.

The top gainers on the Sensex were Titan Company up by 3.15%, Larsen & Toubro up by 2.60%, Sun Pharma up by 2.59%, Mahindra & Mahindra up by 2.53% and Hindustan Unilever up by 2.22%. On the flip side, Bharti Airtel down by 1.45%, NTPC down by 1.24%, ICICI Bank down by 0.61%, Power Grid Corporation down by 0.51% and Wipro down by 0.51% were the top losers.

Meanwhile, with headline inflation accelerating to an eight-year high of 7.79 per cent in April, ratings agency Crisil said price rise is getting broad-based, and the Reserve Bank is likely to respond with rate hikes of up to 1 percentage point in FY23. It mentioned ‘Inflation is set to become broad-based this fiscal, rising across food, fuel and core inflation....we expect the RBI to raise repo rates by another 0.75 per cent to 1 per cent in the rest of this fiscal.’

The RBI hiked its key rate by 0.40 per cent in a surprise move last week while keeping an accommodative stance. Crisil said it now expects the average consumer price inflation for FY23 to come at 6.3 per cent -- above the RBI's tolerance of 6 per cent -- as against 5.5 per cent recorded in FY22.

The agency made it clear that the rate hikes will be ineffective in bringing down food or fuel inflation, but can help check a generalisation in inflation by curbing the second-round effects. The government will need to pull its weight to control price rise, admitting that it is a tradeoff where reducing taxes and subsidies will lead to added fiscal pressure.

The CNX Nifty is currently trading at 15946.45, up by 138.45 points or 0.88% after trading in a range of 15886.60 and 16032.30. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 8.54%, Titan Co up by 2.96%, UPL up by 2.88%, Sun Pharma up by 2.70% and Bajaj Auto up by 2.59%. On the flip side, NTPC down by 1.58%, Bharti Airtel down by 1.28%, Hindalco down by 0.97%, Power Grid Corp down by 0.83% and Wipro down by 0.71% were the top losers.

Asian markets are trading in green; Nikkei 225 surged 640.33 points or 2.49% to 26,389.05, Taiwan Weighted strengthened 210.45 points or 1.35% to 15,827.13, Hang Seng increased 387.02 points or 2% to 19,767.36, Jakarta Composite soared 7.04 points or 0.11% to 6,606.88, KOSPI rose 46.79 points or 1.83% to 2,596.87, Straits Times advanced 34.67 points or 1.1% to 3,199.85 and Shanghai Composite gained 17.13 points or 0.56% to 3,072.12.