Markets continue northward journey on RBI optimism

Markets traded firm in afternoon session with 50-share Nifty inching above 6,100 levels on back of significant buying witnessed in rate-sensitive sectors such as banks, realty and automobiles.

Investor’s risk-appetite surged after the Reserve Bank of India’s governor said to take a note of easing inflation while formulating the monetary policy.

Wholesale Price Index (WPI) inflation for April 2013 moderated for the third straight month to 4.89%, below the comfort zone of the RBI, bolstering hopes of an interest rate cut by the central bank.  RBI’s comfort level for inflation is between 4% and 5%.

Mirroring the optimism, the Bombay Stock Exchange's 30-share index Sensex soared 430 points at 20,152 while the National Stock Exchange's 50-share gained 123 point at 6,126.  

Global shares gained with Japan’s Nikkei 225 Stock Average rising above 15,000 for the first time since January 2008 on hopes US Federal Reserve will continue with the stimulus in the near –term to support flagging growth in the world’s biggest economy.

Asian markets traded mixed with Hong Kong’s Hang Seng gaining 0.4% to 23,036, China’s Shanghai Composite added 0.3% to 2,224, Singapore’s Straits Times rose 0.2% to 3,442 while Japan’s Nikkei surged 2.2% to 15,096 today.

Meanwhile, European markets were mixed in opening deals. France’s CAC declined 0.1% to 3,959, UK’s FTSE shed 0.1% to 6,679 while Germany’s DAX was up 0.01% to 8,340.

Back home, all the key sectoral indices gained with banks, real-estate, autos, PSU leading the gains on the BSE.

The gainers on the Sensex included, HDFC and HDFC Bank rising 4.3% and 2.5% respectively, country’s two biggest lenders, SBI and ICICI Bank added nearly 3% each while Bajaj Auto gained 2.6% on the BSE.

The key notable movers were, Eicher Motors which is trading higher by 6.5% to Rs 3,474, extending its previous day’s 7% rally, after the company has made an upward revision in its sales estimate for the current calendar year on back of strong demand for Royal Enfield products.

State Bank of India, HDFC Bank and Punjab National Bank from banking, Indiabulls Real Estate, DLF and Unitech from realty and Tata Motors and Hero MotoCorp from auto sector are trading higher by over 2% each on the Bombay Stock Exchange.

DLF is trading higher by 2% at Rs 235 in opening trades on the National Stock Exchange after the company received strong response from institutional investors for its share sale programme.

The broader markets gained with mid-caps and small-caps rising nearly 1% on the BSE.

The market breadth was positive. Out of 1,729 stocks traded, 1,099 stocks gained compared to 561 declines on the BSE.