Benchmarks remain firm; Hit 28-Month High

Indian equity markets continued firm trade hovering near the highest point of the day in the late afternoon session on account of buying in front line blue chip counters. The markets have hit a 28-month high point amidst a strong rally triggered by optimistic sentiments on hopes of rate cut, bolstered by comments from Reserve Bank of India’s official. RBI Governor Duvvuri Subbarao said that the slowest inflation since 2009 will be factored into monetary policy decisions next month. The street also took note of global rating agency Standard & Poor’s which said that India is projected to grow by 6% in the current fiscal while growth is expected to be steady in most of the Asia Pacific economies. It, however, cautioned that a weaker global risk appetite and a poor monsoon would pull down growth to around 5% in 2013-14 fiscal. Traders were seen piling position in Realty, Bankex and Auto stocks.

On the global front, the Asian markets were trading in green barring KLSE Composite while the European markets were trading on a mixed note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,100 and 20,100 levels respectively. The market breadth on BSE was positive in the ratio of 1069:607, while 82 scrips remain unchanged.

The BSE Sensex is currently trading at 20,173.76, up by 451.47 points or 2.29% after trading in a range of 20,174.95 and 19,798.18.

The broader indices were too trading firm; the BSE Mid cap and Small cap index were trading up by 1.43% and 0.91% respectively.

The gaining sectoral indices on the BSE were, Realty up by 3.88%, Bankex up by 3.41%, Auto up by 2.64%, Capital Goods up by 2.60% and PSU up by 2.11%, while there was no loser on the BSE sectoral space.

The top gainers on the Sensex were HDFC up by 4.76%, Mahindra & Mahindra up by 3.98%, SBI up by 3.75%, ICICI Bank up by 3.65% and L&T up by 3.57%, while Wipro down by 0.57% was the lone loser on the Sensex.

Meanwhile, with inflation falling to 3-year low in April, India Inc has raised the demand for further cut in interest rates by the Reserve Bank of India (RBI) to boost industrial production and revive the country’s economic growth.

Meanwhile, declining for the third straight month, inflation has returned to the comfort zone of the Reserve Bank for the first time since November 2009. The rate of inflation, based on monthly WPI, slowed down to its lowest since 2009 at 4.89% (Provisional) for the month of April, 2013 (over April, 2012) as compared to 5.96% (Provisional) for the previous month and 7.50% during the corresponding month of the previous year.   

FICCI President Naina Lal Kidwai said the softening in inflation have given more space to RBI to consider further rate cuts, which is important as the lending rates have not really come down despite a 1.25 per cent cut in repo rate between April 2012 and May 2013. While, ASSOCHAM Secretary General D S Rawat said that it is the time to boost investor sentiments and the policy makers have to ensure that the cost of finance to the end-user becomes competitive. Further, the Federation of Indian Export Organisations (FIEO) said that the RBI should revisit interest rate regime as high interest rate is affecting manufacturing and exports.

However, in order to boost growth amid some softening of inflation, the central bank earlier this month cut the key interest rate by 0.25 per cent. It is scheduled to announce its mid quarter policy review on June 17.

The CNX Nifty is currently trading at 6,132.75, up by 137.35 points or 2.29% after trading in a range of 6,134.65 and 6,018.85. There were 46 stocks advancing against 4 declines on the index.

The top gainers of the Nifty were PNB up by 7.01%, DLF up by 4.71%, HDFC up by 4.53%, Reliance Infrastructure up by 4.36% and IndusInd Bank up by 4.01%. On the flip side, Cairn India down by 0.35%, Ultratech Cement down 0.25%, Ambuja Cement down by 0.13% and HCL Tech down by 0.13% were the losers on the index.

Most of the Asian markets were trading in green; Hang Seng rose 0.50%, Jakarta Composite rose by 0.13%, Nikkei 225 surged 2.29%, Straits Times added 0.30%, Shanghai Composite gained 0.35% KOSPI Composite was trading in green by 0.12% and Taiwan Weighted was up by 0.81%. 

On the flip side, KLSE Composite down by 0.33% was the lone losers amongst Asian pack.

The European markets were trading on a mixed note; France’s CAC 40 was down 0.05%, Germany’s DAX gain 0.06% and United Kingdom’s FTSE 100 lost 0.16%.