Post session - Quick review

Indian equity markets despite a highly choppy session of trade managed to negotiate a green close ahead of the RBI’s annual monetary policy review on April 17, 2012.  India's headline inflation which eased marginally in March, reinforced expectations that the Reserve Bank of India (RBI) would cut interest rate for the first time in three years on Tuesday to revive economic growth, prompting  investors to go for buying.

The wholesale price index (WPI), India's main inflation indicator, rose on an annual 6.89 percent in March, higher than 6.70 percent rise estimated by analysts. Wholesale prices rose 6.95 percent in February. Bulls, which were rooting for a 25-basis point cut in a key policy rate on Tuesday, led to the spike in the rate sensitive’s that triggered across the bard rally.

But pessimists remained unsure if RBI was in a position to start cutting rates as the government is yet to act on fiscal tightening. The camp is largely betting on a sharp reduction in the cash reserve ratio (CRR) of banks to ease the money shortage in the system. However, even stocks of Capital Goods and Consumer Durable counters supported the up move of the bourses.

Bourses managed to start the week on a cheerful note in despite pessimistic global setting as investor’s preferred bargain hunting in select blue chip stocks after previous week’s drubbing. However, lack of support from global peers left its impact on the bourses. The 30 share barometer index of Bombay Stock Exchange (BSE)-Sensex- after dilly dallying sub 17100 and over 17150 ranges though settled near the high point of the day, with profit of over 50 points, but still shied away from the 17150 crucial level. Meanwhile, the 50-share Nifty index-after gaining 15 points settled sub 5250 bastion. On the other hand, broader indices piped the frontline indices to emerge victorious.

Rising concerns about Europe, where bond yields in Spain and Italy - two of the bigger economies- have been rising and a slowdown in China, where the economy grew at the slowest in nearly three years, were some of the global headwinds which kept lingering in the mind of the already vigilant investor’s, which besides leading to the appalling close of regional counterparts also became the factors for drubbing in European markets.

Back home, bourses extended gains led by further upside in index heavyweights Reliance Industries and ICICI Bank. State Bank of India and Larsen & Toubro too advanced further. However, further decline in Infosys on declaring lower than expected guidance for the first quarter took a toll of the Information Technology counters. Stocks from Technology, Oil & Gas counters also lost steam in the firmly positioned trade. Nevertheless, the market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1552:1211 while 140 scrips remained unchanged. (Provisional)

The BSE Sensex gained 76.97 points or 0.45% and settled at 17,171.48. The index touched a high and a low of 17,173.06 and 17,010.16 respectively. 18 stocks advanced against 12 declining ones on the index (Provisional)

The BSE Mid-cap index gain 0.95% while Small-cap index was up 0.62%. (Provisional)

On the BSE Sectoral front, Bankex up 1.44%, Auto up 1.36%, Capital Goods up 1.25%, Realty up 1.20% and FMCG up 1.15% were the top gainers while TECk down 0.56%, IT down 0.42%, Oil & Gas down 0.28% and Health Care down 0.06% were the top losers.

There top gainers on the Sensex were Tata Motors up 4.25%, SBI up 2.77%, ITC up 2.46%, L&T up 1.80% and Maruti Suzuki up 1.42% while, Bharti Airtel down 1.69%, Sun Pharma down 1.38%, Infosys down 1.26%, HUL down 0.73% and HDFC down 0.56% were the top losers in the index. (Provisional)

Meanwhile, Coming in a tad higher than expected, the headline inflation rose by 6.89% in March from a year earlier, mainly driven by higher food prices. However, manufacturing inflation, which is the key number that the RBI will look at before taking a stance on monetary policy, has come in much lower than expected hence fuelling expectations of a rate cut.

According to the data released by the government, headline inflation as measured by the wholesale price index (WPI) in the month of March grew by a 6.89% as compared to 6.95% for the previous month and 9.68% during the corresponding month of the previous year. The inflation rate for January too was revised upwards to 6.89% as compared to 6.55% (Provisional). 

The 'All Commodities' index (Base 2004-05=100) for the month of March rose by 0.9% to 159.8 from 158.4 for the previous month. The major dampener was the inflation in food items which was 9.94% in March, as against 6.07% in February.

Manufacturing inflation moderated to 4.87%, from 5.75%. As stated earlier, this is the number that the RBI will be looking at before announcing its monetary policy. Since this has shown a declining trend, a rate cut seems eminent.  The RBI is widely expected to cut its main lending rate - the repo rate - by 25 basis points to 8.25% when it reviews policy tomorrow.

Year-on-year, among manufactured items, iron grew dearer by 17.18% and edible oil prices rose by 9.78%. Inflation in tobacco products and basic metals was 8.22% and 9.51% respectively.  Non-food primary articles, which include fibres and oilseeds, was however lower at (-) 1.20% in March. In February, it was (-) 2.56%. Inflation in the fuel and power segment was 10.41% on an annual basis. The rate of price rise was 12.83% in the previous month.

Experts are of the view that inflationary pressure, driven by prices of food articles will keep the pressure on the government to remove supply side bottlenecks.

India VIX, a gauge for market’s short term expectation of volatility lost 2.28% at 22.23 from its previous close of 22.75 on Friday. (Provisional)

The S&P CNX Nifty gain 22.00 points or 0.42% to settle at 5,229.45. The index touched high and low of 5,231.40 and 5,183.50 respectively. 30 stocks advanced against 20 declining ones on the index. (Provisional)

The top gainers on the Nifty were Tata Motors up 4.20%, JP Associates up 3.04%, Axis Bank up 2.91%, PNB up 2.47% and SBI up 2.47%.On the other hand, Ambuja Cement down 2.27%, Bharti Airtel down 1.78%, ACC down 1.49%, Infosys down 1.48% and Sun Pharma down 1.18% were the top losers. (Provisional)

The European markets were trading on a mix note, with France's CAC 40 up 0.84%, Germany's DAX up 0.74% and Britain’s FTSE 100 down 0.33%.

After witnessing strong rally in previous session, Asian counters resumed its south bound journey on Monday. Barring Straits Times, all the Asian equity indices ended the trade in the negative terrain as a surge in Spanish government bond yields renewed concerns about the euro zone's sovereign debt crisis and undermined investor confidence in riskier assets. Moreover, concerns about Europe outweighed an announcement by the People’s Bank of China over the weekend to double the yuan’s trading range against the dollar on a given day to 1 percent from 0.5 percent, pushing currencies such as the yen and the dollar higher, and hurting commodity prices.

Meanwhile, Japanese Nikkei share average fell 1.7 percent as investors cut their exposure to risky assets in response to fresh concerns over the euro zone debt crisis after Spanish bond yields soared. However, Chinese shares ended flat with a downward bias on Monday as weakness in overseas markets and growing worries about a domestic slowdown weighed, although hopes for policy loosening helped trim losses.