Bank Nifty, Auto indices hit record highs ahead of CPI data

Banking and automobiles are trading higher on hopes that easing consumer inflation would help pave the way for lower interest rates.

Shares of rate sensitive sectors such as banking and automobiles are trading higher on hopes that easing consumer inflation, data for which is due later today, would help pave the way for lower interest rates.

Generating positive cues for the markets, a Reuters’ survey has estimated the consumer inflation rate for the month of October to cool down to 5.8% from 6.4% in the previous month due to a sharp fall in food and oil prices.

Bajaj Auto, Tata Motors, Hero Motocorp and Maruti Suzuki from auto sector are trading higher between 1-2.5% on the National Stock Exchange. NSE CNX Auto index hit a record high of 8315.70 up by 1.6%.

 

SBI, HDFC Bank, ICICI Bank, Yes Bank, Kotak Mahindra Bank, Union Bank of India, Canara Bank, Indusind Bank  and Axis Bank from banking are trading firm with gains between 1-2% each. Bank Nifty hit a record high of 17,617.60 up by 1.2%. 

Consumer price inflation (CPI) to moderate to 5.7 per cent in January 2016, lower than the Reserve Bank of India’s (RBI’s) target of 6 per cent, UBS said in a report.

“We expect monetary policy to lag inflation moderation and the Reserve Bank of India (RBI) to keep policies relatively tight until FY16. Ten-year and short-term market interest rates should react much earlier and more sharply,” the report says.

 

Wholesale price inflation (WPI) which is due to be released later during the week is expected to fall further since last month which was qauoting at 2.3% resulting in a further cut in the interest rates by RBI.