 "Markets rebound on rate cut hopes")
Benchmark indices finished the session on a strong note led by financials after soft inflation and industrial output data raised hopes of interest rate cut. Expectation regarding further monetary stimulus in China boosted the sentiments of the market participants.
Provisionally, the Sensex surged 385 points to end at 27,265 and the Nifty gained 111 points to close at 8,238.
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(updated at 3.30 PM)Benchmark indices are trading higher amid volatile trading session supported by strong buying among financials, auto and capital goods segment.
At 14:10PM, the 30-share Sensex was up 324 points at 27,201 and the 50-share Nifty was up 103 points at 8,230.
Among broader markets, BSE Midcap and Smallcap indices are up 1-2%. Market breadth in BSE is positive with 1,553 advances against 983 declines.
On the macro-economic front, the retail inflation softened further to a four-month low of 4.87% in April compared to 5.25% in March.
In contrast, factory output growth slowed to a five-month low of 2.1 per cent in March as against 5 per cent registered in February which could push the Reserve Bank of India (RBI) to slash key interest rates.
On the currency front, the rupee is lingering at 64.2 per dollar, though the traders reckoned the RBI spent an addition $500 million the previous day.
The Reserve Bank of India's limited intervention during the rupee's slide to 20-month lows against the dollar shows it welcomes a weaker currency and wants to save ammunition in case volatility worsens once US interest rates rise, according to dealers.
Further, foreign portfolio investors (FPIs) sold shares worth a net Rs 1329.43 crore yesterday, as per provisional data as per provisional data released by the stock exchanges.
ASIAN MARKETS
Asian shares advanced on Wednesday despite another set of disappointing Chinese economic reports, as investors instead focused on hopes of further stimulus from Beijing to prevent a sharper slowdown in the world's second-largest economy.
MSCI's broadest index of Asia-Pacific shares outside Japan was off session highs but still up 0.3 percent.
China's factory output rose a less-than-expected 5.9 percent in April compared with the same period last year, boosting bets the government will have to step up its efforts to shore up the sputtering economy in order to meet its gross domestic product target. Fixed-asset investment and retail sales also fell short of expectations.
SECTORS & STOCKS
BSE Bankex has surged over 2.5%. Sectors like Auto, Capital Goods, Healthcare, Oil & Gas, Consumer Durables and Power have gained between 1-2%. However, BSE Metal and Realty indices are trading marginally lower.
Rate-sensitive stocks have witnessed fresh buying after retail inflation softened further to a four-month low of 4.87 per cent in April compared to 5.25 per cent in March giving rise to hopes of a rate cut by Reserve Bank of India.
Banking shares are trading higher by up to 3% after the Consumer Price Index (CPI)-based inflation fell to a four-month low in April and is likely to increase the clamour for the Reserve Bank of India (RBI) to cut interest rates in its next monetary policy.
Union Bank of India, Oriental Bank of Commerce, UCO Bank, Bank of India, Bank of Baroda, IDBI Bank, Syndicate Bank and Andhra Bank were up more than 3% each, while Axis Bank, State Bank of India (SBI), ICICI Bank, Yes Bank, Canara Bank and Punjab National Bank up 2%-3% on the National Stock Exchange (NSE).
L&T has gained over 1.5%. According to media reports, L&T has signed a technology transfer agreement with South Korea based Hyundai Heavy Industries to build LNG carriers. BHEL has declined over 4%.
According to its release to BSE, BHEL has surpassed the capacity addition target, set by the government for utility projects, by 19%, accelerating its project execution momentum as part of its six point agenda for dynamic growth. The stock is up 1%.
From the auto segment, M&M, Hero Moto and Tata Motors have gained between 1-3%. The company has gained on reports of the carmaker's plans to launch a new variant of its sports utility vehicle XUV500.
Maruti Suzuki has produced a cumulative 1.5 crore units in the three decades it has been selling cars in India. The stock is trading flat.
Shares of Gas Authorities of India Limited (GAIL India) has jumped nearly 4% on reports that GAIL India is in talks to acquire Dabhol's 5 million tonne per annum regasification terminal.
Lupin has gained nearly 1% ahead of quarterly results. Further, the company has been included in the MSCI India Index.
On the losing side, NTPC is the top Sensex loser, down almost 3%. The cabinet on Wednesday cleared a proposal for 10 per cent disinvestment in Indian Oil Corp and 5% in NTPC, which may fetch the government close to Rs 8,500 crore at the current prices.
Shares of Hindalco have dropped over 2.5% to Rs 134 on the BSE in an otherwise firm market after the quarterly earnings of its subsidiary Novelis missed expectations as the adjusted EBITDA for the fourth quarter of fiscal 2015 quoted at $201 million compared to the $250 million reported for the corresponding period last year.