Bourses shoot up to high point of the day on expected move of RBI

After starting the session on a cautious note, domestic barometer indices have now shot up in trade and are currently trading near their day’s high as investors cheered the dovish tone of RBI, which at the time of hiking key policy rates by 25 bps, said,” The likelihood of a rate action in the December mid-quarter review is relatively low. Beyond that, if the inflation trajectory conforms to projections, further rate hikes may not be warranted”. RBI in its guidance reported that the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It further expects it to moderate further in the first half of 2012-13. RBI in its second quarterly monetary policy review hiked the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 8.25% to 8.5% with immediate effect.  Consequential, reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, automatically stood adjusted to 7.5 per cent with immediate effect. However, the domestic barometer indices were also wandering in the early trade as investors were reluctant to extend the previous session's strong rally ahead of a crucial European leaders meeting on Wednesday aimed at drawing up a broad plan to contain the euro-zone debt crisis. On the global front, US stocks rose on Monday, as a flurry of merger activity and strong earnings from Caterpillar boosted investor sentiment and kept the three-week rally intact. The Dow Jones industrial average advanced 104.83 points, or 0.89 percent, to 11,913.62. The Standard & Poor's 500 Index rose 15.95 points, or 1.29 percent, to 1,254.20. Meanwhile, Asian shares swung between red and green. However, the US future indices were showing a downtick in the screen trade. Back home, stocks from Consumer Durable, Realty and Power remained the laggards. However, stocks from Information Technology, TECk and Bankex perked up the spirit of the bourses. The 30 scrip sensitive index capturing over a century reclaimed its 17 k level. Meanwhile, broadly followed 50 share index- Nifty- registering gains of over 25 points was trading above 5100 mark. The overall market breadth on BSE was in the favour of declines which piped advances in the ratio of 1141:927, while 103 shares remained unchanged.

The BSE Sensex is currently trading at the high point of the day at 17,045.71, up by 106.43 points 0.63%. The index has touched a high and low of 17,124.68 and 16,984.83 respectively.  There were 25 stocks advancing against 5 declining one’s on the index.

However, the broader indices continued to gyrate in the red zone; the BSE Mid cap and Small cap indices were down by 0.21% and 0.32% respectively.

The top gaining sectoral indices on the BSE were IT up by 1.16%, TECk up by 1.07%, Bankex up by 0.78%, CG up by 0.73% and Metal up by 0.43%.

On the flip side, CD down by 2.46%, Realty down by 0.12%, Power down by 0.07%, PSU down by 0.02% were the top losers on the index.

The top gainers on the Sensex were ICICI Bank up by 2.40%, Sterlite Industries up by 2.20%, SBI up by 2.19%, Infosys up by 2.07% and L&T up by 2.06%.

On the flip side, BHEL down by 0.99%, Coal India down by 0.82%, ONGC down by 0.45%, Cipla down by 0.22% and Bajaj Auto down by 0.04% .

Meanwhile, during the first nine months of the current financial year, country’s steel production grew by 5.3%, which is less compared to the world’s average growth of 8.2% and China’s 10.7% in the same period of time.  As per the World Steel Association's latest data, India’s production of steel stood at 53.9 million tonne in January-September 2011 compared to 51.1 million tonne in the same period last year.

On the other hand, steel production of China, which is also the largest steel producer and consumer of steel, stood at 525.7 million tonne in January-September compared to 474.9 million tonne in the same period of last year. The World Steel Association's report showed that China produced around 125 million tonne more steel in January-September 2011 compared to the same period of 2009. In contrast, during the same period, India could produce only 7 million tonne more steel compared to 2009.

China’s steel production is highest in world and it also helps to increase the world average production of steel. Its production also makes Asia’s production more than half of the world’s production, which stood at 1,133.8 million tonne in January-September 2011, and Asia’s production of steel was around 728.3 million tonne in the same period of time.      As per the data, China was followed by Japan, the United States which made India the fourth largest producer of steel. However, Russia and South Korea are closely trailing India. In January-September, Japan produced 81 million tonne steel, whereas United States produced around 64.6 million tonne. On the other hand, Russia and South Korea produced 51.8 million and 50.6 million tonne in January-September 2011.

Country’s steel output has increased significantly from crude steel production, which was less than 22 million tonne in 2000 to 70 million tonne in 2010. The government expects India’s steel market to reach around 180-200 million tonne by 2020 and around 500 million tonne by 2050.

The S&P CNX Nifty is currently trading at 5,133.75, higher by 35.40 points or 0.69%. There were 39 stocks advancing against 11 declines on the index.

The top gainers of the Nifty were Sterlite Industries up by 2.33%, ACC up by 2.09%, Cairn India up by 2.08%, Infosys up by 2.02% and ICICI Bank up by 1.92%

On the flip side, Sesa Goa down by 1.94%,  BHEL down by 1.08%, Coal India down by 0.72%, HDFC Bank down by 0.69% and TCS down by 0.55%.

Most of the Asian equity indices continue to trade with good gains; Shanghai Composite gained 1.51, Hang Seng gained 0.66%, Jakarta Composite gained 0.07% and Taiwan Weighted gained 0.23%.

While KLSE Composite down by 0.06%, Nikkei 225 down by 0.74%, Straits Times down by 0.10% and Seoul Composite down by 0.38% were the losers among the Asian pack.