Domestic bourses extend northward journey

Mirroring other Asian peers, domestic bourses extended northward journey in afternoon trade on continued buying by funds and retail investors as traders digested worries about strong inflation and tightening central bank policy. Sentiments got boost 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 group. Most of the sectoral indices were trading firm and Auto was the top gainer on BSE, up by around 4% followed by Industrials and Consumer Durables indices, trading up around 3%. Apart from blue chips, broader indices too equally participated in the rally with both mid and small cap indices trading up by over 2.50% each. On the global front, all Asian equity benchmarks were trading in green as the investor sentiments got bolstered in relief after Federal Reserve Chairman, Jerome Powell affirmed that the central bank is not considering a 75 basis-point move and that it might raise rates by a 75 basis-point at each of its next two meetings.

The BSE Sensex is currently trading at 53657.61, up by 727.30 points or 1.37% after trading in a range of 53131.69 and 53695.91. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 2.49%, while Small cap index was up by 2.51%.

The top gaining sectoral indices on the BSE were Auto up by 3.83%, Industrials up by 3.52%, Consumer Durables up by 3.17%, Energy up by 2.85% and FMCG was up by 2.78%, while Telecom was down by 0.55% were the only losing index on BSE.

The top gainers on the Sensex were Titan Co up by 4.84%, Sun Pharma up by 4.18%, Mahindra & Mahindra up by 3.49%, Larsen & Toubro up by 3.32% and Hindustan Unilever was up by 3.32%. On the flip side, NTPC down by 1.82%, Bharti Airtel down by 1.06% and ICICI Bank was down by 0.42% were the top losers.

Meanwhile, finance ministry has said that measures taken by the RBI and government will squeeze the duration of high inflation fuelled by global factors. It said retail inflation has been trending above Reserve Bank's upper tolerance level of 6 per cent for the past three months. While inflation is expected to be elevated in 2022-23, mitigating action taken by the government and RBI may reduce its duration. 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.

The ministry stated that RBI in an off-cycle announcement earlier this month hiked the key repo rate -- at which it lends short term money to banks -- by 0.40 per cent to 4.40 per cent to tame inflation. This was the first rate hike since August 2018 and the sharpest in 11 years. Further, it said, since aggregate demand is recovering only gradually, the risk of sustained high inflation is low. Seen over a longer time horizon, it said inflation in India's economy has not been as much a challenge as is sensed from month-to-month changes.

Notwithstanding the presence of inflationary headwinds, it said the capex-driven fiscal path of the government, as laid down in budget 2022-23, will help the economy post a near 8 per cent growth in real GDP for the current year, it said. With regard to forex reserve, it said the reserve was at a comfortable level of $597.7 billion, providing an import cover of about 11 months for financing investment and consumption in the country. It added that the reserves have been steadily declining under pressure from outflow of foreign portfolio investments responding to monetary tightening by central banks in advanced economies.

The CNX Nifty is currently trading at 16039.80, up by 231.80 points or 1.47% after trading in a range of 15886.60 and 16056.55. There were 46 stocks advancing against 4 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 10.41%, Titan Co up by 4.71%, Sun Pharma up by 4.14%, Eicher Motors up by 3.63% and Mahindra & Mahindra was up by 3.45%. On the flip side, NTPC down by 1.72%, Bharti Airtel down by 1.11%, Hindalco down by 0.95% and ICICI Bank was down by 0.49% were the top losers.

All Asian markets were trading higher; Hang Seng increased 404.32 points or 2.09% to 19,784.66, Jakarta Composite soared 7.04 points or 0.11% to 6,606.88, Nikkei 225 surged 678.93 points or 2.64% to 26,427.65, Shanghai Composite gained 20.89 points or 0.68% to 3,075.88, Straits Times advanced 35.48 points or 1.12% to 3,200.66, KOSPI rose 54.16 points or 2.12% to 2,604.24 and Taiwan Weighted was up by 215.86 points or 1.38% to 15,832.54.