Markets extended morning gains bouyed by power and PSU shares. The S&P CNX Nifty was up 32 points, at 5,589 and the Benchmark Sensex advanced 107 points, at 18,610.
While markets have gained in the past two sessions, most of the brokerages continue to remain underweight on the Indian markets. Macquarie Equities in the research note said, “macro headwinds will continue for some more time. Inflation is unlikely to fall till September as Indian markets digest possible diesel price hikes and interest rates will rise by another 50 bps this year.”
GDP growth for the fourth quarter was at 7.8% below analyst expectations of 8.2%. Nomura added that investment cycle is yet to pick up and consumption also seems to be slowing down.
Power shares were leading the gains, the BSE Power Index was up 0.8%. JSW Energy surged 4.3%, NTPC advanced 2.3% and Siemens was up 1.6%.
Among individual stocks Maruti Suzuki advanced 0.9% after it reported vehicle sales of 104,073 units in May.
-------------------------Updated 09:30 hrs
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Markets edged higher in opening trades following gains in metal shares; however analysts said that the upside may be capped as growth slowdown concerns remain. The S&P CNX Nifty was up 11 points, at 5,574 and the Benchmark Sensex advanced 58 points, at 18,562.
Nifty has bounced on back of short covering and it may face resistance at 5600. Ridham Desai, Strategist and Head of India Equity Research said that the second half of FY12 will be much better than the first due to the base effect. “There will be mild acceleration in the next two to three quarters, which will get more pronounced in the second half. Also confidence on growth prospects is the biggest trigger for companies’ investment decision,” said Desai.
Analysts said that the markets may remain range bound for some time as GDP growth for the fourth quarter was at 7.8% below analyst expectations of 8.2%. Foreign Instructional Investors have turned net buyers Rs 1,911 crore in the past four sessions.
Across Asia markets were trading mixed. China’s manufacturing index slipped to 10-month low of 51.6 in May from 51.8 reported in April. China’s Shanghai Composite was off 0.4% and Hong Kong’s Hang Seng declined 0.1%. Japan’s Nikkei Stock Average was flat at 9,696.
Back in India metal shares were trading higher, the BSE metal index was up 0.9%. The top gainers were Welcorp, up 3%, SAIL advanced 1.9% and National Aluminium Corporation gained 1.4%.
The top gainers on the Sensex were Reliance Communication, up 2%, NTPC advanced 1.5% and Jindal Steel surged 1.3%. Only 6 components on the Sensex, DLF slipped 1.1%, JP Associates was down 0.6% and ICICI Bank declined 0.3%.
Broader markets were trading in the green. The midcap and smallcap indices were up 0.6% and 0.9%. Market breadth was positive, 1412 stocks advanced for 560 declining stocks.