Markets advanced more than 1% following firm global cues, sustained investment by foreign institutional investors and rally in Reliance Industries.
After grinding lower for three consecutive sessions, Nifty opened in the green and moved higher led by gains in heavyweight Larsen & Tourbo, ITC, Bharti Airtel and RIL. The index extended the gains in the afternoon session and was trading near day's high at 5,700, up 80 points and the Sensex was trading at 18,996, up 269 points.
Foreign Institutional Investors have pumped in $2.2 billion in Indian equities in the past seven trading sessions.
Food inflation for the week ended June 25 eased to seven week low, at 7.6% compared to 7.8% in the previous week which also supported the upbeat sentiment.
While the inflation has eased, there are expectations that some amount of weakness may persist in the market going forward because profitability may remain under pressure in the first quarter of FY12 due to surge in input costs, moderation in volume growth and rising competition.
CRISIL in a in a research note said, “EBITDA margins would decline by 200 basis points due to higher raw material prices and wages, but revenues are expected to grow by 23% based on aggregate analysis of companies selected from 23 industries.”
Among individual stocks Sun TV slipped 4%, to Rs 317 and Spice Jet declined 1%, to Rs 32 on news that textile minister Dayanidhi Maran resigned from the Union Cabinet. The Central Bureau of Investigation alleged that Maran coerced Aircel promoter to sell its stake to Malaysian based Maxis Communication in return of a favour. This is the second minister to resign this week after corporate affairs Minister Murli Deora put in his papers.
SKS Microfinance jumped 20%, to Rs 411 after Reserve Bank of India released a draft bill to develop and regulate microfinance industry. SKS Microfinance was in the radar earlier in the year for overcharging and using forceful practices to recover money from the lenders.
Reliance Industries added 1%, at Rs 862 after source from Oil Ministry said that next it will approve the $7.6 billion deal between RIL and BP Plc.
Markets across Asia eked out gains, shrugging off deposit and lending rate hike of 25 bps in China. The Shanghai Composite Index rose 0.2%, Hong Kong's Hang Seng Index added 0.7%, and Japan's Nikkei Stock Average edged down 0.1%.
Back in India Among the sectoral pack, BSE FMCG Index was the top gainer. Marico rallied 6%, ITC advanced 3% and Hindustan Unilever gained 1.9%.
From the broader markets midcap and the smallcap indices gained 1.1% each.
Market breadth was positive, 1875 stocks advanced for 953 stocks which declined.
