Markets continue trading firm as May headline inflation eases to 4.70%

Indian equity markets continued trading strong in the late morning session on Friday amid sustained buying at several counters across various sectors. The Sensex regained its crucial psychological level of 19,000, while Nifty index of the National Stock Exchange was up by 77 points. Benchmarks rallied on the back of trend in the Asian region, which influenced the trading sentiment and on reassurance by Finance Minister P Chidambaram that more economic reforms are on the anvil. Meanwhile, declining for third straight month, India's main inflation gauge surprisingly slowed down further to 4.7% for the month of May, as compared to 4.89% for the previous month of April. However, in a big surprise, March inflation figures too were revised downwards to 5.65% from 5.96%. With this better than expected inflation numbers, investors were hopeful for RBI’s rate cut move, but a recent slump in the rupee is likely to prevent the RBI from lowering policy rates on June 17. In currency market, snapping earlier session’s losses, Indian rupee appreciated against greenback on the back of banks and exporters selling the US currency. On the sectoral front, all were trading in green, PSU and healthcare stocks are also moving higher, while information technology stocks remain quite subdued.

On the global front, Asian stocks rebounded on Friday as US economic data beat estimates and on bets the Federal Reserve will signal plans to keep record-low interest rates. Back home, the market breadth was favoring positive trend; there were 1,259 shares on the gaining side against 679 shares on the losing side, while 96 shares remain unchanged.

The BSE Sensex is currently trading at 19,065.82, up by 238.66 points or 1.27% after trading in a range of 19,088.16 and 18,952.09. There were 26 stocks advancing against 4 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.01% and Small cap index was up by 0.85%.

The top gaining sectoral indices on the BSE were, Consumer Durables up by 2.94%, Auto up by 2.38%, Realty up by 2.19%, Metal up by 1.78% and Capital Goods up by 1.58% while, there was no loser on the BSE sectoral space.

The top gainers on the Sensex were Tata Motors up by 4.06%, Maruti Suzuki up by 3.40%, Tata Steel up by 3.19%, Hindalco Inds up by 2.99% and Tata Power up by 2.82%. On the flip side, Wipro was down by 1.59%, Cipla was down by 1.04%, Hindustan Unilever was down by 0.23%  and TCS was down by 0.09% were the top losers on the Sensex.

Meanwhile, in a move to speed up the process of economic reforms and spur investments, the government is soon expected to decide on various key measures like gas and coal pricing and FDI cap in various sectors including defence. Finance Minister P Chidambaram said, the government will initially consider coal pricing and coal allocation to power plants, secondly gas pricing followed by FDI limit and on a number of steps that SEBI is contemplating based on Chandrasekhar Committee report which was submitted June 12.

By adding further, Chidambaram said that the government is also likely to give a push to 30-40 of the 250 private sector projects that can quickly take off the ground in an attempt to boost the economy’s growth. Besides, also asked banks to pass on rate cut implemented by the Reserve Bank to the tune of 1.30 percent for which he will be meeting chairmen of public sector banks. So far, banks have passed rate cut to the tune of 0.3 percent only.

Referring to rupee depreciation, Chidambaram said that there is no need to panic and authorities will take measures to ensure that there is no volatility. Countries with large CADs including South Africa, Brazil and Mexico have taken hits on their currencies. The rupee will find its level and hope that it will regain some of the losses suffered in the last few days, he added.

The CNX Nifty is currently trading at 5,776.75 up by 77.65 points or 1.36% after trading in a range of 5,780.40 and 5,739.40. There were 46 stocks advancing against 4 declines on the index.

The top gainers of the Nifty were Tata Motors up by 4.21%, Maruti up by 3.31%, Tata Steel up by 3.08%, IDFC up by 3.06% and Hindalco up by 3.00%. On the flip side, Cipla down by 1.12%, IndusInd Bank down by 0.95%, HUL down by 0.24% and Sun Pharma down by 0.22% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 0.38%, Hang Seng surged 0.90%, Jakarta Composite zoomed 3.00%, KLSE Composite increased 0.74%, Nikkei 225 soared 1.94%, Straits Times added 0.64% and KOSPI Composite was up by 0.35%.

On the flip side, Taiwan Weighted was down by 0.18%.