Markets firm up led by banks

Bank shares gained on hopes of a rate cut by the central bank after lower July inflation

Markets have rebounded in noon trade on Tuesday, amid firm global cues, led by bank shares on hopes that the central bank would ease key policy rates after government data showed inflation in July slipped to 6.87% from 7.25% in the previous month.

The 30-share Sensex was up 65 points at 17,699 and the 50-share Nifty advanced 22 points to 5,369.

The WPI inflation for the month of July came in at 6.87% lower than the street expectation of 7.24%. The fuel group inflation came in at 5.98% versus 10.27% during the previous month. Food article inflation lowered to 10.06% compared to 10.81%  and the primary article infaltion was at 10.39% versus 10.46% on a month on month basis.

The benchmark share indices were trading in a narrow range since early trades ahead of the inflation numbers.

Most Asian markets were trading with marginal gains. The Hang Seng, Nikkei, Shanghai Composite and Straits Times were all up 0.2-0.6% each.

European shares also opened higher on Tuesday ahead of economic data from the region and the US. Among the major indices in the region, the CAC-40, DAX and FTSE-100 were all up over 0.6% each in early trades.


Among the sectoral indices on the BSE, Bankex was the top gainer up 1.2% followed by Metal, Auto, Oil and Gas. However, Realty Index was marginally down on profit taking in realty shares after gains of over 2% yesterday.
Meanwhile, power related shares continued to remain weak with the Power Index down 0.3%.

In the banking pack, ICICI Bank and SBI were both up 1-2% each. In the Oil & Gas space, index heavyweight Reliance Industries was up 1% while PSU oil major ONGC was marginally up by 0.3%.

Among other gainers, Coal India and Tata Steel are among the top gainers on the Sensex, both the stocks are trading higher by 2% each on the back of better than expected first quarter earnings which were announced late Monday.

Tata Motors, Mahindra & Mahindra were the gainers in the auto segment up 1.2-2.2% each.

Sun Pharma is the top loser among the Sensex stocks, down 2% at Rs 668 on reports that a minority shareholder of Israel's Taro Pharma rejected the company’s revised offer price of $39.5 a share for a buyout.

Maruti Suzuki is marginally down on profit taking after the stock rose 1.6% on Monday.

Mortgage lender HDFC which surged nearly 4% yesterday also witnessed profit taking and was the second top Sensex loser, down 1.1% at Rs 707.

The broader markets continued to remain lacklustre and both the BSE mid-cap and small-cap indices were marginally up 0.3% each.

The overall breadth was strong with 1,280 stocks advancing and 1,170 stocks declined.