Markets extend gains as May WPI eases

Benchmark share are trading near day’s high led by rate sensitive shares after the announcement of low-than-expected May WPI at 4.7% rekindled hopes of rate cut by the central bank in the upcoming policy on June 17.

The headline inflation slowed for a fourth straight month in May to 4.7% from a year earlier, but a slump in the rupee is likely to prevent the RBI from lowering policy rates on Monday despite the economy slowing to a decade-low level.

May's reading was the lowest in more than three years. The wholesale price index, India's main inflation measure, rose an annual 4.89% in April. The reading for March was revised to 5.65% from 5.96%, data released by the Ministry of Commerce and Industry on Friday showed.

By 12:50, the Sensex was up 273 points at 19,103 and the Nifty advanced 90 points to 5,789. The Sensex and the Nifty touched an intra-day high of 19,113 levels and 5,790 mark, respectively.

On the global front, Japan's Nikkei average climbed 1.9 percent on Friday, rebounding from a slump in the previous session, as robust data eased concerns over whether the U.S. economy can withstand a pullback in stimulus by the Federal Reserve.

The Nikkei ended up 241.14 points at 12,686.52 after trading as high as 12,900.65, though it was still holding below the Ichimoku cloud in a bearish sign. For the week, it was down 1.5 percent, marking its fourth straight weekly loss, its longest such losing streak since October.

Back home, surrendering some of its early gains, the rupee was trading higher by 18 paise to 57.80 against the dollar on selling of the US currency by banks and exporters in view of its lower value in overseas market.

BSE Consumer Durable index has surged by over 3% followed by counters like Auto, Realty, Metal, Capital Goods, Banks, Oil & Gas and Power, all gaining between 2-3%. Infact, all the major BSE sectoral indices are trading in green zone.

From the auto space, Tata Motors has moved higher by over 4% after its UK-based subsidiary Jaguar Land Rover Limited (JLR) recorded a strong growth in retail sales in May 2013. Maruti Suzuki and Bajaj Auto have gained between 2-4%.

Index heavyweight Reliance Inds has gained by over 2%.

FMCG major ITC has gained by nearly 1% on expectation that sharp fall in food inflation would result in higher purchasing power of consumers.

Other notable gainers are Hindalco, Tata Steel, Tata Power, L&T, Sterlite, HDFC and Sterlite Inds.

The market breadth in BSE remains positive with 1,327 shares advancing and 737 shares declining.