Markets surge on rate cut hopes

Rate sensitive shares, Infosys lead gains

Key share indices ended over 1% higher on Tuesday led by rate sensitive shares as the sluggish April IIP data re-inforced market expectations that the central bank could cut key policy rates and also lower the cash reserve ratio to boost growth.

The 30-share Sensex provisionally ended up 183 points or  1.1% at 16,851 and the 50-share Nifty ended up 58 points or  1.1% at 5,112.

 

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(Updated at 14:26hrs)

Markets have extended gains in the late noon deals on the back of sustained buying visible in the rate sensitive sector stocks. The Sensex is up 159 points at 16,822 and the 50-share Nifty has jumped 50 points to 5,103 levels.

Meanwhile, the finance minister, Pranab Mukherjee has said that IIP number for the month of April are disappointing. He emphasised that government is working towards drawing long term investment in the infrastructure development projects.

The European markets were trading flat, with investors nervous over reports of official preparations for a Greek exit from the euro zone and after details of the Spanish bank bailout plan renewed worries about the region's debt crisis. CAC and DAX indices were up 0.4% each. While, the FTSE100 was down 0.2% at 5,420.

The Asian markets closed the day lower. Nikei, Hang Seng and Shanghai ended lower by 0.4-1% each.

Back home, rate sensitive sector stocks are witnessing sustained amount of buying interest on hopes that the Reserve Bank of India (RBI) may cut policy rates after index for industrial production (IIP) for April grew lower than expected by just 0.1%.
 

Tata Motors, State Bank of India, Maruti Suzuki, Hero MotoCorp, Bajaj Auto, Mahindra & Mahindra, ICICI Bank, BHEL, and Larsen & Toubro from the rate sensitive pack are the top gainers among the Sensex stocks.

On the other hand, Dr Reddy's Lab, Wipro, Tata Power, HUL, Tata Steel and Sun Pharma are among the laggards.

BSE- bankex is the top gainer on the sectoral charts, up 1.3% or 11,462. Auto, capital goods, PSU, realty, metal, IT and oil & gas indices are also trading higher. At the same time, healthcare and power indices are trading lower.

Shares of aviation companies such as Jet Airways, SpiceJet and Kingfisher Airlines are trading higher by over 3% in otherwise weak market on hopes that state-run oil marketing companies may cut aviation turbine fuel (ATF) prices on lower crude oil prices.

DLF is trading higher by 2% at Rs 197, bouncing back over 3% from its intra-day low, after the real estate major's arm sold its entire stake in Adone Hotels and Hospitality for Rs 567 crore.

The broader markets are trading on a listless note. BSE mid-cap index is up 3 points at 5,979 and the small-cap index is down 9 points at 6,330.

The overall breadth is positive negative as 1,387 stocks are declining while 1,131 are advancing.