Expectations of a central bank interest rate cut sent share prices surging, with the 50-unit CNX Nifty hitting its highest level in more than 28 month high above the psychological 6,000 level in mid-morning trade. Recent data showing a significant fall in inflation has raised hopes of further reduction in interest rates by the Reserve Bank of India. The barometer index, the 30-share S&P BSE Sensex, was up 369.97 points or 1.88%, up close to 295 points from the day's low and off about 20 points from the day's high. The market breadth, indicating the overall health of the market, was strong. All the 13 sectoral indices on BSE were in the green. All the shares from the 30-share Sensex pack rose.
Index heavyweights ITC and Reliance Industries (RIL), both, extended intraday gains. Bank and realty stocks rose as the latest data showing a sharp fall in wholesale price inflation in April 2013 raised hopes that the RBI may further cut policy rates to perk up economic growth. Kotak Mahindra Bank hit record high. Housing finance major HDFC also scaled record high.
Gains in Asian stocks triggered a firm opening on the domestic bourses. The market extended initial gains to hit fresh intraday high in morning trade. The barometer index, the S&P BSE Sensex, regained the psychological 20,000 mark. The market surged to hit fresh intraday high in mid-morning trade.
The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Tuesday, 14 May 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 420.99 crore on Tuesday, 14 May 2013, as per provisional data from the stock exchanges.
At 11:20 IST, the S&P BSE Sensex was up 369.97 points or 1.88% to 20,092.26. The index jumped 391.28 points at the day's high of 20,113.57 in mid-morning trade, its highest level since 11 May 2013. The index gained 75.89 points at the day's low of 19,798.18 in opening trade.
The CNX Nifty was up 114.25 points or 1.91% to 6,109.65. The index hit a high of 6,116.20 in intraday trade, its highest level since 5 January 2011. The index hit a low of 6,018.85 in intraday trade.
The market breadth, indicating the overall health of the market, was quite strong. On BSE, 1,145 shares advanced and 428 shares declined. A total of 82 shares were unchanged.
All the shares from the 30-share Sensex pack rose. Hindalco Industries, Mahindra & Mahindra and Tata Motors rose 2.83% to 3.7%.
Index heavyweight Reliance Industries (RIL) gained 1.92% to Rs 813. The stock hit a high of Rs 814.15 and low of Rs 802.35 so far during the day.
Index heavyweight and cigarette major ITC rose 1.12% to Rs 339.65. The stock hit a high of Rs 340.95 and low of Rs 336 so far during the day. The stock had hit record high of Rs 355 in intraday trade during the special trading session held on Saturday, 11 May 2013. The Centre raised the excise duty on cigarettes by about 18% on all cigarettes except cigarettes of length not exceeding 65 mm in Union Budget 2013-14.
Bank stocks gained as the latest data showing a sharp fall in wholesale price inflation in April 2013 raised hopes that the RBI may further cut policy rates to perk up economic growth. A rate cut would boost credit offtake.
Shares of India's biggest commercial bank in terms of branch network, State Bank of India (SBI), gained 2.46%.
Among other PSU bank stocks, Bank of Baroda, Bank of India, Union Bank of India, Canara Bank, and Punjab National Bank rose by 1.44% to 3.55%.
ICICI Bank rose 2%. Axis Bank rose 1.45%.
Kotak Mahindra Bank rose 2.83% to Rs 747.50. The stock hit record high of Rs 748 in intraday trade today, 15 May 2013.
HDFC Bank gained 2.28% to Rs 704.85. The stock had hit record high of Rs 711.55 in intraday trade on Monday, 13 May 2013.
HDFC jumped 4.1% to Rs 904.60. The stock hit record high of Rs 905.60 in intraday trade today, 15 May 2013.
Realty stocks rose as the latest data showing a sharp fall in wholesale price inflation in April 2013 raised hopes that the RBI may further cut policy rates to perk up economic growth. Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance. HDIL, Unitech, D B Realty and Sobha Developers rose by 0.48% to 3.75%.
Realty major DLF rose 1.82% to Rs 234.50 after the company received strong investor response for its institutional placement programme. Investors bid for a total quantity of 14.81 crore DLF shares under the institutional placement programme through the stock exchanges mechanism held during a single day on Tuesday, 14 May 2013. The company will issue up to 8.1 crore shares to eligible qualified institutional buyers. The floor price for the qualified institutional placement was set at Rs 222 per equity share, with price band of Rs 222 to Rs 233 per share.
Meanwhile, the Reserve Bank of India Deputy Governor H.R. Khan on Tuesday said that the RBI has allowed companies building low-cost housing projects to raise overseas loans.
The focus of the market is on Q4 results. Bajaj Auto announces Q4 results tomorrow, 16 May 2013. ITC unveils Q4 results on Friday, 17 May 2013. Coal India unveils standalone FY 2013 results on 20 May 2013. L&T unveils Q4 results on 22 May 2013. Tata Steel, State Bank of India and Bharat Heavy Electricals (Bhel) unveil Q4 results on 23 May 2013. Coal India unveils consolidated FY 2013 results on 27 May 2013. Sun Pharma, GAIL (India) and Hindalco Industries unveil Q4 results on 28 May 2013. ONGC, NMDC and BPCL unveil Q4 results on 29 May 2013. M&M and Tata Power unveil Q4 results on 30 May 2013.
The annual rate of inflation, based on monthly wholesale price index (WPI), eased sharply to 4.89% in April 2013, from 5.96% in March 2013, data released by the government on Tuesday, 14 May 2013, showed. Core inflation or non-food manufacturing inflation declined further to 2.74% in April 2013 from 3.41% in March 2013.
Meanwhile, WPI inflation for February 2013 was revised upwards to 7.28% from 6.84% reported earlier.
The consumer price inflation fell below the 10% mark in April 2013. The combined consumer price inflation for rural and urban India eased to 9.39% in April 2013 from 10.39% in March 2013, data released by the government on Monday, 13 May 2013, showed.
Reserve Bank of India Governor D Subbarao on Tuesday, 14 May 2013, said that the central bank will take note of falling inflation when discussing potential interest rate cuts.
The RBI on 3 May 2013 cut its key policy rate viz. the repo rate by 25 basis points (bps) to 7.25% and kept the cash reserve ratio (CRR) for banks unchanged at 4% after a monetary policy review. RBI said that the balance of risks stemming from its assessment of the growth-inflation dynamic provides little space for further monetary easing. The central bank said that with upside risks to inflation still significant in the near term in view of sectoral demand supply imbalances, ongoing correction in administered prices and pressures stemming from MSP increases, monetary policy cannot afford to lower its guard against the possibility of resurgence of inflation pressures. The RBI said it will endeavour to condition the evolution of inflation to a level of 5% by March 2014, using all instruments at its command.
The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The government hopes to reduce the fiscal deficit to 3% by March 2017.
Asian shares rose on Wednesday, with Japan's Nikkei Average surging to a fresh 5-1/2 year high on the back of a weaker yen and strengthening expectations for earnings growth of Japanese firms. Key benchmark indices in Indonesia, Japan, China, South Korea, Hong Kong, Taiwan, and Singapore rose by 0.02% to 2.22%.
Trading in US index futures indicated a flat opening of US stocks on Wednesday, 15 May 2013. US stocks rallied to record highs on Tuesday, continuing an ascent driven by the Federal Reserve's easy monetary policy, though investors' focus has turned to when the Fed may start to rein in its bond-purchase programme.
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