Benchmarks trade near day’s high; rate sensitives surge on rate cut hopes

Benchmarks extended their gains as investors continued piling up positions in rate sensitive counters despite high inflation data for the month of February. The Wholesale Price Index (WPI) for the month of February rose to 6.84 per cent versus 6.62 per cent in January. Shares of banking stocks got some relief after different Banks, reacting to the sting operation report, said that they conducts business with the highest level of compliance to legal and regulatory requirements. Some strength to the markets also came in after public sector oil marketing companies like BPCL, HPCL and IOC edged higher on report that diesel prices may be hiked by 40-50 paise per liter from March 15/16. However, petrol prices may be slashed by Rs 1 per liter.

Recovery in most of the Asian equity indices also supported the domestic bourses. Japanese Nikkei average advanced on Thursday after two days of losses, as real estate companies rebounded ahead of the confirmation of Bank of Japan leadership nominees by parliament. Chinese Shanghai was trading slightly higher despite concern that policy makers will expand efforts to cool the housing market. Positive opening in European futures too supported the up-trend.

Back home, on the sectoral front, banking witnessed the maximum gain in trade followed by realty and public sector undertaking, while consumer durables, auto and healthcare remained the top losers on the BSE sectoral space. The broader indices were trading slightly in the red while, the market breadth on the BSE was positive; there were 1,082 shares on the gaining side against 1391 shares on the losing side while 130 shares remain unchanged.

The BSE Sensex is currently trading at 19495.66, up by 133.11 points or 0.69% after trading in a range of 19520.11 and 19179.33. There were 19 stocks advancing against 11 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was flat and Small cap index was down by 0.27%.

The top gaining sectoral indices on the BSE were, Bankex up by 1.84%, Realty up by 0.97%, PSU up by 0.77%, Oil & Gas up by 0.71% and FMCG up by 0.67% while, Consumer Durables down by 1.88%, Auto down by 0.26% and Health Care down by 0.12% were the only losers on the BSE.

The top gainers on the Sensex were SBI up by 3.12%, Hindustan Unilever up by 2.53%, HDFC Bank up by 2.06%, Maruti Suzuki up by 2.05% and ICICI Bank up by 1.81%.

On the flip side, Gail India down by 2.25%, Bajaj Auto down by 1.40%, Bharti Airtel down by 1.18%, Tata Motors down by 1.10% and Sun Pharma down by 0.58% were the top losers on the Sensex.

Meanwhile, expressing hope that the food inflation will decline in coming years, Finance Minister P Chidambaram said, the government is taking a number of steps to contain food inflation will yield results over a period of time. Although headline inflation and core inflation rates have come down, retail inflation (measured by the consumer price index) remained high at 10.91 per cent in February, mainly on account of rise in food prices.

As per finance minister, the reason for high food inflation is inadequate supply mechanism as we do not have an effective distribution channel or logistics chain. Food inflation can be tamed by improving the supply mechanisms. By adding further he said, ‘that is the reason we say the distribution channel and logistics chain have to be improved so that what is produced in the farm comes to the market.’

Disappointing the market expectations of rate-cut at RBI’s monetary policy review, annual rate of inflation, based on the consumer prices index (CPI), crept higher in the month of February at 10.91% - the fifth consecutive monthly rise. The price-rise was mainly on account of higher prices of vegetables, edible oil, cereals and protein-based items. The corresponding inflation rates for rural and urban areas for February came in at 11.01% and 10.84% respectively.

The CNX Nifty is currently trading at 5,890.85, up by 39.65 points or 0.68% after trading in a range of 5,900.05 and 5,791.75. There were 34 stocks advancing against 16 declines on the index.

The top gainers of the Nifty were SBI up by 3.07%, Hindustan Unilever up by 2.52%, HDFC Bank up by 2.06%, Maruti Suzuki up by 2.05% and PNB up by 1.96%.

On the flip side, Gail down by 2.19%, Bajaj-Auto down by 1.60%, Tata Motors down by 1.43%, Bharti Airtel down by 1.29% and Cairn down by 1.04% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng declined by 0.35%, Jakarta Composite tumbled 1.06%, KLSE Composite dipped 0.29%, Straits Times slipped 0.16% and Taiwan Weighted was down by 0.55%.

On the other hand, Shanghai Composite up by 0.12%, KOSPI Composite up by 0.11% and Nikkei 225 was up 1.16% was the only gainer.