Post session - Quick review

The Indian equity markets bouncing back from the lows of the day staged a scintillating rally on Thursday. There were rate cut hopes that led the markets higher for the day after three successive declines. Though, the main inflation gauge inched higher for the month of February on higher fuel costs but non-food manufacturing inflation or the core inflation slowed to 3.8 per cent in February from 4.1 percent a month ago, reinforcing expectations that the Reserve Bank of India (RBI) will deliver a rate cut in its March 19 policy meet, as the apex bank uses non-food manufacturing inflation to gauge demand-driven price pressure.

Earlier the markets made a flat and cautious start ahead of the inflation data release and amid sluggish Asian peers, the majority of which declined despite a positive retail sales data from US overnight. Though, the Japanese shares rose sharply to a fresh four-and-a-half-year high on expectations of aggressive BOJ stimulus measures and the Chinese markets ended in green despite property tightening measures. However, the domestic markets got the major thrust from a positive start followed by a surge in the European markets ahead of the Brussels Summit where EU leaders are expected to endorse plans for 'structural' assessments of national budgets and discuss a bailout for Cyprus.

Though, the domestic markets gained around a percent with major benchmarks reclaiming their crucial levels of 5900 (Nifty) and 19500 (Sensex) but in early trade a sudden panic gripped the markets taking them to the lows of the day with stocks of Axis Bank, ICICI Bank and HDFC Bank losing major ground following an expose by an online newspaper Cobrapost, stating that these banks allegedly indulged in money laundering. The sting operation by Cobrapost alleged that these money laundering services were being openly offered as a standard product across the country.  Initially there was additional pressure on banking stocks on the report that the Reserve Bank of India (RBI) suspects some banks are involved in KYC violations after that sting operation. However, later all the top private banks named, ordered high level inquiries into allegations by that Cobrapost sting. Afterwards markets started recovering and market participants even overlooked the WPI inflation data, which rose at a faster-than-expected 6.84 percent in February, against an annual rise of 6.62 percent in January, but traders focused on the core inflation data, which excludes volatile food and fuel prices slipped below the 4 percent mark, re-igniting hopes of at least 25 basis points cut in key policy rates. However, the RBI governor Duvvuri  Subbarao has reiterated  that India's inflation still remains high and stubborn, and must come down to a 4 to 6% range.

Back on the street, the day was of rate sensitive sectors banking and realty that moved higher by over two percent each. Closely followed the oil & gas sector, where the market heavyweight RIL gained over 2% on report that Petroleum Secretary Vivek Rae has decided to take one last shot at resolving the dispute between Reliance Industries (RIL) and the national auditor at the oil ministry level. On the same time PSU oil marketing companies moved higher by over one and half a percent on indication that diesel price may be hiked by 40-50 paisa a litre from March 15-16, while petrol prices will be cut in sync with falling international oil rates. The infra stocks too remained buzzing after the Supreme Court allowed delinking the two clearances as sought by the Ministry of Environment and Forest (MoEF). The volume turnover was on higher side and trade of over 2.7 lakh crore was reported for the day.

The market breadth on the BSE ended marginally in the favour of red; advances and declining stocks were in a ratio of 1424: 1444 while 116 scrips remained unchanged. (Provisional)

The BSE Sensex gained 209.00 points or 1.08% to settle at 19571.55. The index touched a high and a low of 19604.70 and 19179.33 respectively. 23 stocks advanced while 7 stocks declined on the index. (Provisional)

The BSE Mid cap index was rose by 0.54% and Small cap index lost 0.03%. (Provisional)

On the BSE Sectoral front, Realty was up by 2.24%, Bankex was up by 2.20%, Capital Goods was up by 1.53%, Oil & Gas was up by 1.41% and Power up by 0.90% were the top gainers, while Consumer Durables down by 1.95 was the only losers in the space. (Provisional)

The top gainers on the Sensex were Maruti Suzuki up by 3.90%, SBI up 3.43%, Tata Power up by 3.37%, HDFC Bank up by 2.66% and Hindustan Unilever up by 2.29%, while Gail India down by 2.21%, Bajaj Auto down by 2.03%, Bharti Airtel down by 1.02%, Sun Pharma down by 0.93% and Wipro down by 0.31% were the top losers on the index. (Provisional)

Meanwhile, in a big sign of disappointment, after falling to a multi-year low in January 2013, the annual rate of inflation, based on monthly WPI, again inched higher to 6.84% (Provisional) for the month of February, 2013 (over February, 2012) as compared to 6.62% (Provisional) for the previous month and 7.56% during the corresponding month of the previous year. Build up inflation in the financial year so far, too has increased and stood at 5.71% compared to a buildup of 6.56% in the corresponding period of the previous year. Meanwhile, the December inflation figures have been revised upward to 7.31% from 7.18%.

However, giving a solace and sign of recovery, manufactured products, which carry weight of 64.97% in the index, declined by 0.1% to 148.2 (Provisional) from 148.3 (Provisional) for the previous month. The index for 'Food Products' group declined by 0.1% to 165.7 (Provisional) from 165.9 (Provisional) for the previous month.

The major culprit of the inflation numbers moving higher was the index of Fuel & Power, which has weight of 14.91%, rose by 3.0% to 195.2 (Provisional) from 189.5 (Provisional) for the previous month due to higher prices of LPG, furnace oil, lubricants and high speed diesel.

The index of Primary Articles having weight of 20.12% too rose by 0.6% to 222.7 (Provisional) from 221.4 (Provisional) for the previous month. The index for 'Food Articles' group rose by 0.2% to 214.3 (Provisional) from 213.8 (Provisional) for the previous month, while the index for 'Non-Food Articles' group rose by 1.6% to 205.6 (Provisional) from 202.3 (Provisional) for the previous month. The index for 'Minerals' group rose by 0.9% to 350.1 (Provisional) from 347.0 (Provisional) for the previous month.

There was a wide expectation that the inflation might have cooled further in February, albeit modestly strengthening chances of a rate cut at the RBI policy meeting next week. But the surprise rise in numbers is likely to prevent the RBI from easing monetary policy in its meet on March 19. The RBI governor Duvvuri Subbarao has been reiterating that India's inflation still remains high and stubborn and must come down to a 4-6% range, now the rising numbers may limit the scope of rate cuts further.

India VIX, a gauge for markets short term expectation of volatility lost 9.50% at 14.66 from its previous close of 16.20 on Wednesday. (Provisional)

The CNX Nifty gained 59.45 points or 1.02% to settle at 5,910.65. The index touched high and low of 5,920.15 and 5,791.75 respectively. 38 stocks advanced against 12 declining ones and one stock remained unchanged on the index. (Provisional)

The top gainers on the Nifty were Maruti Suzuki up by 3.55%, SBI up by 3.47%, Ranbaxy up by 3.33%, Tata Power up by 3.16% and BPCL was up by 2.68%. On the other hand, Bajaj-Auto down by 2.22%, GAIL down by 2.03%, Bharti Airtel down by 1.23%, Sun Pharmaceuticals down by 0.88% and Hero MotoCorp down by 0.44% were the top losers. (Provisional)

Most of the European markets were trading in green with, Germany’s DAX up by 0.67%, the United Kingdom’s FTSE 100 up by 0.24% and France’s CAC 40 up by 0.52%.

Asian markets ended mixed on Thursday, as regional concerns outweighed the positive tone from another record Wall Street close, while the dollar index held near seven-month highs after strong retail sales bolstered the US economic outlook. Japan's Nikkei went home with strong gains as dollar climbed against the yen after Japan's parliament agreed the government's nominees to lead the Bank of Japan. Regional markets closed marginally higher fuelled by growing confidence in the global economy.