Markets regain strength; February inflation accelerates to 6.84%

Following a positive start and subsequent retreat, Indian equity markets regained some strength in the late morning session amid stock specific buying. Meanwhile, Wholesale Price Index (WPI)-based inflation for February came in at 6.84%, higher than 6.62% recorded in the previous month. The increase in inflation has raised some doubts about, whether RBI will go for any aggressive policy rate cut on March 19. Investors were expecting a 25 basis points cut on policy rate given that the apex bank has praised the recent budget as responsible one for its fiscal consolidation efforts. However, the inflation number at 6.84% is much lower than 7.56% recorded during February last year. In currency markets, Indian rupee extended losses against greenback amid increasing dollar demand from importers. On sectoral front, capital goods, metal, information technology and bank stocks recovered their lost ground after a setback. Consumer durables stocks were mostly trading weak. On the global front, Asian markets extended losses on Thursday as regional factors 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. Back home, the market breadth favoring negative trend; there were 960 shares on the gaining side against 1,396 shares on the losing side while 118 shares remain unchanged.

The BSE Sensex is currently trading at 19,445.26, up by 82.71 points or 0.43% after trading in a range of 19,454.84 and 19,179.33. There were 18 stocks advancing against 11 declines and one remains unchanged on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.14% and Small cap index was down by 0.31%.

The top gaining sectoral indices on the BSE were, Bankex up by 1.11%, Realty up by 0.58%, Oil & Gas up by 0.57%, PSU up by 0.53% and FMCG up by 0.46%, while Consumer Durables down by 1.64%, Auto down by 0.30% and Heath Care down by 0.17% were top losers on the BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.42%, Maruti Suzuki up by 1.92%, SBI up by 1.69%, ICICI Bank up by 1.48% and ONGC up by 1.18%.

On the flip side, Gail India down by 2.35%, Bajaj Auto down by 1.61%, Tata Motors down by 1.20%, Bharti Airtel down by 1.15% and Jindal Steel down by 1.06% were top losers on the Sensex.

Meanwhile, to push the development projects and poverty abolition programmes in India, the World Bank committed for continuing its level of annual assistance of $ 3-5 billion to India for the next four years. Jim Yong Kim, who is on a three-day visit to India after taking over as the World Bank’s President in July last year has said that the bank will complement its enhanced financial lending with technical assistance and knowledge services to help India for improving the India’s development programmes. 

Kim said that the World Bank Group's mission of ending global poverty will require it to step up support for India, as around 400 million poor people live in India. He also said that it was an historic opportunity to accelerate the reduction of poverty in India.

Regarding the economic growth, he said that India has higher potential of growth over 6 percent for the coming years and we have seen signs of the economy having bottomed out. He said that for the current fiscal the GDP is estimated to grow by 5 percent, while the growth rate is likely to improve to 6.1-6.7 percent in 2013-14.  

India has become the biggest client of World Bank as it lent around $ 26 billion to India between 2009 and 2013. The support between this period includes $ 12 billion from the International Bank for Reconstruction and Development (IBRD); $ 8.3 billion from the International Development Association (IDA); and a further $ 5.2 billion in investments from the International Finance Corporation (IFC). While, India had requested additional financing to ensure credit growth in the economy and continued access to infrastructure financing. 

The CNX Nifty is currently trading at 5,874.90 up by 23.70 points or 0.41% after trading in a range of 5,876.05 and 5,791.75. There were 31 stocks advancing against 18 declines and one remains unchanged on the index.

The top gainers of the Nifty were Hindustan Unilever up by 2.65%, Maruti Suzuki up by 2.06%, SBI up by 1.84%, ICICI Bank up by 1.66% and Ranbaxy up by 1.64%.

On the flip side, GAIL down by 2.16%, Bajaj Auto down by 1.87%, Bharti Airtel down by 1.13%, Tata Motors down by 1.11% and Cairn down by 1.04% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite down by 0.11%, Hang Seng declined 0.56%, Jakarta Composite tumbled 1.33%, KLSE Composite dipped 0.26%, Straits Times slipped 0.23%, KOSPI Composite dropped 0.05% and Taiwan Weighted was down by 0.55%.

On the other hand, Nikkei 225 was up 1.28% was the only gainer.