Benchmarks continue to trade with vigor; Nifty comfortably cruises past 5,750 level

Although not near day’s high point, benchmark equity indices continue to trade with vigor as market-participants continue to remain upbeat on local equities, after lower than expected WPI data bolstered rate cut hopes in RBI’s monetary policy review on June 17. Benchmark 30 and 50 share indexes, Sensex and Nifty, trading with gains of over a percent, are above the crucial 19,050 and 5,750 levels respectively. Meanwhile, broader indices too enticing traction are up around a percent. Besides positive macro-economic data, a positive start of European counterparts too underpinned the sentiment at D-Street. On the global front, taking some positive cues from Asian counterparts, European markets got off to a positive start after solid US data released overnight calmed fears over whether the world's biggest economy could withstand the winding down of the Federal Reserve's stimulus measures. Closer home, amidst across the board buying, only stocks from Consumer Durables, Auto and Realty counters were the prominent gainers on BSE sectoral front. The overall market breadth on BSE is in favour of advances, which have thumped declines in the ratio of 1310: 734; while 117 shares remain unchanged.

The BSE Sensex is currently trading at 19,084.65, up by 257.49 points or 1.37%, after trading in a range of 19,104.92 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 and Small cap index were trading up by 1.15% and 0.86% respectively.

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.98%, Auto up by 2.50%, Realty up by 2.38%, Metal up by 2.08% and Capital Goods up by 1.87%, while there were no losers on the sectoral space.

The top gainers on the Sensex were Tata Motors up by 4.19%, Hindalco Industries up by 3.72%, Maruti Suzuki up by 3.68%, Tata Steel up by 3.40% and Tata Power up by 3.33%.

On the flip side, Wipro down by 1.19%, Cipla down by 1.00%, Hindustan Unilever down by 0.23% and Sun Pharma down by 0.21% were the top losers on the Sensex.

Meanwhile, in a big surprise, the annual rate of inflation, based on monthly WPI, slowed down further to 4.70% (Provisional) for the month of May, 2013 (over May, 2012) as compared to 4.89% (Provisional) for the previous month and 7.55% during the corresponding month of the previous year. Build up inflation in the financial year so far, was 0.88% compared to a build-up of 1.80% in the corresponding period of the previous year. However in a pleasant surprise, March inflation figures were revised downward to 5.65% from 5.96%.

Manufactured products, which carry weight of 64.97% in the index, rose by 0.3% to 149.1 (Provisional) from 148.7 (Provisional) for the previous month. The index for 'Food Products' group rose by 0.8% to 167.1 (Provisional) from 165.8 (Provisional) for the previous month. The index of Fuel & Power, which has weight of 14.91%, declined by 1.3% to 192.0 (Provisional) from 194.6 (Provisional) for the previous month due to higher price of electricity (13%) as price of other items such as LPG (12%), coal (10%), aviation turbine fuel (6%) and petrol (5%) declined.

The index of Primary Articles, having weight of 20.12% too rose by 0.6% to 229.3 (Provisional) from 228.0 (Provisional) for the previous month. The index for 'Non-Food Articles' group declined by 0.6% to 208.5 (Provisional) from 209.7 (Provisional) for the previous month, while the index for 'Minerals' group declined by 2.4% to 346.5 (Provisional) from 355.0 (Provisional) for the previous month.

However, it remains to be noted the widening divergence between WPI and CPI remains the matter of concern. Annual rate of inflation, based on the consumer prices index (CPI), declining for third straight month grew above the expectation of sub 9% figure at 9.31% in May, as against 9.39% in April.

Meanwhile, the sharp downtick in March inflation figures, core wholesale price index, or inflation that excludes volatile food and fuel prices, which is estimated to have risen by 2.4% from a year earlier, easing from an annual 2.77% rise in April, also provides the central bank with some room to cut policy rates by 25 basis points in its Policy review on June 17. The Reserve Bank of India (RBI), so far, has obliged the street with rate cuts for three times, with the latest being the one on May 3. Drawing comfort from 3-year low inflation, RBI, in its ‘Monetary Policy Statement 2013-14’, reduced repo rate by 25 basis points from 7.5% to 7.25% with immediate effect, its lowest since May 2011.

The CNX Nifty is currently trading at 5,782.90, up by 83.80 points or 1.47% after trading in a range of 5,787.30 and 5,739.40. There were 45 stocks advancing against 5 declines on the index.

The top gainers of the Nifty were Tata Motors up by 4.21%, Hindalco Industries up by 3.98%, Maruti Suzuki up by 3.61%, Tata Steel up by 3.40% and IDFC up by 3.21%.

On the flip side, Cipla down by 0.92%, IndusInd Bank down by 0.27%, Sun Pharmaceuticals down by 0.25%, Hindustan Unilever down by 0.23% and HCL Technologies down by 0.05% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 0.35%, Hang Seng surged 0.98%, Jakarta Composite zoomed 3.07%, KLSE Composite increased 0.83%, Nikkei 225 soared 1.94%, Straits Times added 0.68% and KOSPI Composite was up by 0.35%. On the flip side, Taiwan Weighted was down by 0.18%.    

European markets got off to a positive start; with CAC 40 adding 0.28%, DAX rising 0.58% and FTSE 100 advancing 0.24%.