Indian markets trade higher in morning deals on Tuesday

Extending their previous session’s rally, Indian equity indices are trading with traction in Tuesday’s morning deals on the back of buying in rate sensitives like Banking, Infra and Auto counters on hopes of rate cut in RBI’s policy review meet in May after Planning Commission Deputy Chairman Montek Singh Ahluwalia exuded confidence that the price situation would improve further in the coming months. Buying in infra sector too boosted the sentiments after Finance Minister P Chidambaram said that the government will set up independent regulators for coal and road sectors in four months. Additionally, stocks related to power sector were trading jubilantly after the Central Electricity Regulatory Commission (CERC), the electricity regulator directed five state governments to compensate Tata Power for the losses it incurred from importing coal for its 4,000 mw Mundra ultra mega power project (UMPP).

However, investors shrugged off weak global cues as the US markets tumbled overnight on renewed economic worries; all the major indices were down by around two percent for the day on disappointing economic data from overseas while, most of the Asian equity indices were trading in the red at this point of time after China’s economic recovery stumbled unexpectedly in the first three months of 2013. The world's second-biggest economy grew 7.7% in the first quarter from a year ago, slower than the 7.9% hit in the fourth quarter of 2012.

Back home, on the sectoral front, capital goods witnessed the maximum gain in trade followed by banking and power while, software, technology and metal remained the top losers on the BSE sectoral space. The broader indices too were trading in green while, the market breadth on the BSE was positive; there were 908 shares on the gaining side against 604 shares on the losing side while 90 shares remain unchanged.

The BSE Sensex opened at 18,356.32; about 1 point lower compared to its previous closing of 18,357.80, and has touched a high and a low of 18,553.91 and 18,325.73 respectively.

The index is currently trading at 18,530.34, up by 172.54 points or 0.94%. There were 25 stocks advancing against 5 declines on the index.

The overall market breadth has made a strong start with 57.90% stocks advancing against 37.73% declines. The broader indices were trading in-line with benchmarks; the BSE Mid cap and Small cap indices were up by 0.37% and 0.31% respectively. 

The top gaining sectoral indices on the BSE were, Capital Goods up by 1.54%, Bankex up by 1.44%, Power up by 1.39%, Auto up by 1.02% and PSU up by 0.92% while, IT down by 0.51%, Teck down by 0.29%, Metal down by 0.15% and Consumer Durables down by 0.07% were the only losers on the sectoral index.

The top gainers on the Sensex were Tata Power up by 3.08%, Maruti Suzuki up by 2.71%, HDFC up by 2.45%, L&T up by 2.34% and Hero MotoCorp up by 2.25%.

On the flip side, Sterlite Industries was down by 1.28%, Infosys was down by 1.13%, TCS was down by 0.70%, Hindalco Industries was down by 0.11% and Tata Motors was down by 0.06% were the only losers on the Sensex.

Meanwhile, in a big relief, the annual rate of inflation, based on monthly WPI, eased to a 40-month low at 5.96% (Provisional) for the month of March, 2013 (over March, 2012) as compared to 6.84% (Provisional) for the previous month and 7.69% during the corresponding month of the previous year. Build up inflation in the financial year so far, too has increased and stood at 5.96% compared to a buildup of 7.69% in the corresponding period of the previous year. However, the January inflation figures have been revised upward to 7.31% from 6.62%.

However, manufactured products, which carry weight of 64.97% in the index, rose by 0.1% to 148.4 (Provisional) from 148.2 (Provisional) for the previous month. The index for 'Food Products' group declined by 0.5% to 164.9 (Provisional) from 165.7 (Provisional) for the previous month. 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 zinc concentrate, iron ore, crude petroleum and copper ore.

The index of Primary Articles, having weight of 20.12% too rose by 0.4% to 223.6 (Provisional) from 222.7 (Provisional) for the previous month. The index for 'Non-Food Articles' group rose by 0.6% to 206.9 (Provisional) from 205.60 (Provisional) for the previous month, while the index for 'Minerals' group rose by 2.1% to 357.4 (Provisional) from 350.1 (Provisional) for the previous month.

There was a wide expectation that the inflation might have edged higher in March, given the index snapped the four month’s decelerating trend in the previous month. But the surprise slowdown in numbers has further strengthened the case for rate cut in RBI’s May 3 Policy Review as these figures now fall within the RBI’s comfort level. Reiterating that India's inflation still remains high, RBI governor Duvvuri Subbarao said that the inflation numbers should come down to a 4-6% range, in order to facilitate monetary easing.

Meanwhile, the consistent fall in core inflation, or inflation that excludes volatile food and fuel prices, too provides the central bank with some room to cut policy rates by 25 basis points in its Policy review in May. The Reserve Bank of India (RBI), has so far responded to a slight easing in headline inflation in recent months with two 25 basis point cuts this year to bring the benchmark repo rate to 7.50%.

The CNX Nifty opened at 5,562.45; about 5 points lower as compared to its previous closing of 5,568.40, and has touched a high and a low of 5,629.05 and 5,555.85 respectively.

The index is currently trading at 5,623.85, up by 55.45 points or 1.00%. There were 40 stocks advancing against 10 declines on the index.

The top gainers of the Nifty were Tata Power up by 3.25%, Maruti Suzuki up by 2.92%, HDFC up by 2.54%, IndusInd Bank up by 2.41% and L&T up by 2.28%.

On the flip side, Cairn down by 1.12%, NMDC down by 1.05%, Infosys down by 1.04%, Ambuja Cements down by 0.68% and Lupin down by 0.59%, were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 12.03 points or 0.55% to 2,169.91, Hang Seng dropped 124.52 points or 0.57% to 21,648.15, KLSE Composite slipped 4.75 points or 0.28% to 1,693.02, Nikkei 225 decreased 4.70 points or 0.04% to 13,270.96 and Taiwan Weighted was down by 6.04 points or 0.08% to 7,757.49.

On the flip side, Jakarta Composite rose 14.31 points or 0.29% to 4,908.90, Straits Times added 6.98 points or 0.21% to 3,291.35 and KOSPI Composite was down by 4.06 points or 0.21% to 1,924.51.