Firm trades continue; WPI slips for 15 straight month

At 1: 35 pm, the S&P BSE Sensex was up 561 points at 23,547 and the Nifty50 was 180 points higher at 7,161

Markets continue to remain firm with Sensex and Nifty trading higher by 2.5% led by banks on hopes of banking sector reforms. Meanwhile, slip in the wholesale price index (WPI)-based inflation for the fifteenth straight month has further lifted the mood of the investors.

At 1: 35 pm, the S&P BSE Sensex was up 561 points at 23,547 and the Nifty50 was 180 points higher at 7,161.

In the broader market, the BSE Midcap and Smallcap indices were up 3.2%-3.5% each. Market breadth was positive with 1,802 gainers and 392 losers on the BSE.

ECONOMY

The wholesale price index (WPI)-based inflation fell for the 15th straight month in January, dropping 0.90% compared to 0.73% in December. Government data released on Monday showed that total build up in the inflation for the current financial year leading up to December was -0.23% as compared to a -1.66% fall in the corresponding period of the previous year.

 

Food articles inflation was at 6.02% compared to 8.17% last month. For manufactured products, which have a combined weightage of 65% in the WPI index, prices declined 1.17% year-on-year.

KEY STOCKS

Metal stocks are gaining across the board on the back of heavy volumes.  Tata Steel surged 12.5% after the company said it plans to invest about Rs 2,000-2,500 crore for development of infrastructure at Gopalpur in Odisha in the near term. Among others Hindalco was up 12%, Jindal Steel jumped 9% while JSW Steel was up nearly 4% and Vedanta surged over 11%.

The banking and financial pack is witnessing action after finance minister Arun Jaitely said the government would reduce its stake in public sector banks (PSBs) to 52 per cent.

Axis Bank surged 6% on report that it is planning to raise $500 million (approximately Rs 3,350 crore) through Tier-II capital bonds to shore up its capital base. Its peers ICICI Bank and HDFC Bank have all gained between 1% and 4% each.

Among PSU banks, Bank of Baroda witnessed a sharp rebound after the management said that all non-performing assets were accounted for in the third quarter and it could return to profitability next fiscal. Further, the management also said that it would require no further capital infusion. The stock zoomed over 21%. Among others, SBI was up nearly 7% while PNB jumped 5%, Canara Bank rose 6% while Bank of India jumped nearly 8%.

Sun Pharma gained 1% after higher ‘other income’, lower tax outgo, and improved performance of its US subsidiary Taro helped Sun Pharmaceutical post over three times growth in net profit in Q3FY16. Net profit rose to Rs 1,416 crore from Rs 395 crore in same period last year.

ITC climbed 0.6% as it is looking to invest Rs 800 crore in Odisha over the next few years to set up a hotel property and a food processing park in the state. The stock has jumped nearly 2%.

Shares of state-owned oil marketing companies (OMCs) – Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) –  have rallied by up to 10% on the BSE after these companies reported a strong set of numbers for the quarter ended December 31, 2015 (Q3FY16).

GLOBAL MARKETS

Japan’s Nikkei closed up 7.2%, erasing its 4.8% loss on Friday as investors purchased the beaten down stocks at attractive valuations.  Meanwhile, shares in China are trading lower with the benchmark Shanghai Composite down 0.6%. Data released showed that the Chinese imports contracted to 14.4% while the exports shrunk 6.6% in January.

European peers are mirroring the firm trend in Asian equities barring China with DAX 100, CAC40 and FTSE trading higher between 1.4%-2.5%.