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The markets have opened virtually unchanged despite lower-than-expected March consumer price inflation and encouraging growth forecast by the World Bank.
At 09:40am, the Sensex is at 29,053, up nine points, while the Nifty is exhibiting a slight divergence at 8,820, down 13 points. The broader market space is continuing its outperformance with gains of around half a percent each; the midcap index is at 11,189, higher by 62 points and the smallcap index is at 12,022, up 80 points.
The markets had opened this trading week on a strong footing, with the Sensex gaining 165 points and Nifty adding 53 points on Monday; the markets were shut on Tuesday on account of Dr. B R Ambedkar Jayanti.
Meanwhile, the World Bank has forecasted India's GDP growth rate at 8% by 2017 and said that a strong expansion in the country, coupled with favourable oil prices, would boost the economic growth in South Asia. Further, investors will also be awaiting March WPI data to be released later today.
Foreign institutional investors were net buyers to the tune of Rs 417 crore on Monday.
INFLATION PRINT
Consumer Price Index (CPI)-based inflation eased to 5.17 per cent in March, the lowest in three months, aided by lower food prices. For February, CPI inflation stood at 5.37 per cent, January 5.19 per cent and March 2014 8.25 percent.
Given the maco-economic data, analysts feel that the Reserve Bank of India (RBI) may cut rates in the June policy review. However, further rate cuts beyond June look difficult.
"We maintain our view of another 25 bps rate cut in the June monetary policy, with further rate cuts seemingly difficult. Price levels are likely to have stabilized and recent disinflationary impulses have possibly run their course. Lowering of inflation until July-August will be driven by base effect rather than sustained sequential decelerations," points out a report from Kotak Institutional Equities.
"Our CPI inflation trajectory, in line with the RBI’s estimates, hints at lower room for an aggressive rate-cutting cycle by the RBI, especially given the regulator’s preference to maintain real rate at 150-200 bps. Additionally, the existing negative output gap is likely to close as the economy starts to recover," it adds.
GLOBAL MARKETS
Asian markets were trading in narrow range after China's first quarter (January-March) GDP expanded by 7%. GDP growth in the previous quarter stood at 7.3%. Japan's benchmark Nikkei was trading flat while China's Shanghai Composite was trading 0.5% higher and Hang Seng was up 0.6%. Further, Singapore's Straits Times was up 0.3%.
US markets ended mixed on Tuesday with the Dow Jones and S&P 500 ending higher as rebound in crude oil prices led to a rally in energy stocks such as Exxon Mobil and Chevron.
Further, encouraging earnings from select corporates and higher March retail sales also boosted investment sentiment. The Dow Jones gained 60 points to end above 18,000 at 18,036.70, the broader S&P 500 ended marginally higher by 3 points at 2,095.84. However, the tech-laden Nasdaq Composite ended 11 points lower at 4,977.29.
SECTORS AND STOCKS
Sesa Sterlite is shining bright in early trades, jumping by 1.5% at Rs 203. And banking stocks are hogging the limelight, with ICICI Bank, SBI and HDFC Bank adding between 1% and 2% each.
Among the result candidates, ACC haS gained by 2% at Rs 1629 after the cement major reported operating EBITDA of Rs 609 crore, much higher than a year ago’s Rs 425 crore, despite weak demand that led to lower sales volumes during the quarter. ACC, a part of the Switzerland-based cement giant Holcim, posted a decline of 41% in its consolidated net profit at Rs 236.5 crore for the quarter ended March 2015, against Rs 399.8 crore in the corresponding quarter previous year.
DCB Bank has surged by 8% to Rs 124 on the BSE after it posted a 61% year-on-year (y-o-y) rise in net profit at Rs 63 crore for the fourth quarter (Q4) ended March 31, on the back of higher net interest income (NII). NII was up 30% for the quarter.
On the other stock-specific front, KNR Constructions galloped by 6% at Rs 467 the company said it has won three highway projects worth Rs 729.50 crore.
Deepak Fertilisers has strengthened by 2% at Rs 125 after the company on Monday sold over 12% stake in Mangalore Chemicals and Fertilisers (MCFL) for an estimated Rs 125.69 crore, through the open market route.
Ashoka Buildcon has strengthened by 2.9% at Rs 199 on the back of its QIP issue which opened on April 13, 2015 with a floor price of Rs 185.05 per share.
On the loser's side, auto stocks are taking it on the chin this morning. M&M has skid by 2.2% at Rs 1,222 and Tata Motors has slipped by 1.7% at Rs 546.
The market breath is strong. Out of 1798 stocks traded on the BSE, there are 1226 advancing stocks as against 519 dcelines.
