Benchmarks extend gains in morning deals

Indian equity benchmarks extended gains in morning deals, led by gains in Metal, Basic Materials, Energy and FMCG stocks. Sentiments remained up-beat as Sanjiv Bajaj, the newly-elected president of industry body CII, said the Reserve Bank’s decision to raise benchmark interest rates and the likelihood of a good monsoon will help in containing inflation. Market participants overlooked SBI Research in a report stated that amidst the continued rise in inflation, it is now almost certain that the Reserve Bank of India (RBI) will raise key policy rates in the June and August policy review meetings, thereby taking it to the pre-pandemic level of 5.15 per cent by August 2022, and added that even after the rate hikes, inflation will take time to moderate in India. Meanwhile, Prime Minister Narendra Modi held bilateral talks with his Nepalese counterpart Sher Bahadur Deuba in Lumbini during which they discussed ways to strengthen ongoing cooperation and develop new areas in the multifaceted bilateral partnership.

On the global front, Asian markets are trading in green despite data reinforcing investor fears the global economic recovery may be more fragile than expected, even as inflationary pressures remain high. Back home, Agriculture industry related stocks remained in watch with a private report that Wheat jumped by the exchange limit to near a record high after India’s move to restrict exports, exposing just how tight global supplies are during the war in Ukraine and threatening to drive up food prices even more.

The BSE Sensex is currently trading at 53585.82, up by 611.98 points or 1.16% after trading in a range of 53176.02 and 53592.56. There were 25 stocks advancing against 4 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.91%, while Small cap index was up by 1.09%.

The top gaining sectoral indices on the BSE were Metal up by 4.49%, Basic Materials up by 2.10%, Energy up by 1.95%, FMCG up by 1.49% and Oil & Gas up by 1.47%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Tata Steel up by 3.96%, Reliance Industries up by 2.76%, ITC up by 2.26%, HCL Technologies up by 2.17% and Hindustan Unilever up by 2.14%. On the flip side, Asian Paints down by 0.37%, Ultratech Cement down by 0.22%, Sun Pharma down by 0.11% and HDFC Bank down by 0.06% were the top losers.

Meanwhile, SBI Research in its latest report has said that amidst the continued rise in inflation, it is now almost certain that the Reserve Bank of India (RBI) will raise key policy rates in the June and August policy review meetings, thereby taking it to the pre-pandemic level of 5.15 per cent by August 2022, adding that even after the rate hikes, inflation will take time to moderate in India.

Inflation continues to be a bugbear and it looks unlikely that it will subside anytime soon. The latest inflation numbers reveal that while in the rural areas, the impact has been disproportionately higher on food prices, in urban areas it is disproportionately higher as far as fuel price impact and pass-through is concerned since the war in Ukraine began.

SBI Research did a dipstick study to understand the impact of the war on the inflation trajectory in both the rural and urban areas. Using February as the base case -- the beginning of the Ukraine and Russia conflict -- the study reveals that because of the war alone, food and beverages, and fuel and light & transport contributed 52 per cent of the increase in overall inflation.

It stated ‘If we also add the impact of input costs particularly on the FMCG sector, thus adding the contribution of personal care and effects, the total impact at all-India level comes to 59 per cent, purely because of war.’ However, it noted that the important challenge facing the central bank remains whether inflation will tread down meaningfully because of such rate hikes if war-related disruptions do not subside quickly

The CNX Nifty is currently trading at 16031.15, up by 188.85 points or 1.19% after trading in a range of 15900.80 and 16035.30. There were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 7.07%, JSW Steel up by 4.18%, Tata Steel up by 3.91%, Coal India up by 3.44% and ONGC up by 3.39%. On the flip side, Cipla down by 1.27%, HDFC Life Insurance down by 1.03%, Asian Paints down by 0.37%, Ultratech Cement down by 0.33% and Shree Cement down by 0.23% were the top losers.

Asian markets are trading in green; Nikkei 225 surged 94.20 points or 0.35% to 26,641.25, Taiwan Weighted strengthened 162.39 points or 1.02% to 16,063.43, Hang Seng increased 445.45 points or 2.23% to 20,395.66, Jakarta Composite soared 49.70 points or 0.75% to 6,647.69, KOSPI rose 19.64 points or 0.76% to 2,616.22, Straits Times advanced 12.57 points or 0.39% to 3,203.73 and Shanghai Composite gained 8.91 points or 0.29% to 3,082.66.