Nifty rebounds above 5,900 on strong IIP; IT stocks lead

The BSE Sensex was steady on Wednesday, up over 70 points, after October factory output data surged to the highest in several months on the back of a favourable base effect. Industrial production soared by 8.2 per cent in October from a year earlier. Analysts had expected a rise of 4.5 per cent in October output.

Manufacturing, which constitutes about 76 percent of industrial production, rose by 9.6 percent from a year earlier.

At 11.10 a.m., the Sensex traded 72 points or 0.37 per cent higher at 19,459 while the broader Nifty advanced 17 points to 5,916. The rupee traded higher against the dollar at 54.18.

"The positive data is a reason for some cheer though there is a strong base effect in play and it will be difficult to sustain this rate going forward," Abheek Barua of HDFC Bank told NDTV Profit.

The rebound in industrial production may give the Reserve Bank some cushion in its fight against inflation, which has continued to be sticky. The central bank is unlikely to take a call on cutting rates on December 18, analysts said. In that sense, the rise in factory output may be a dampener for rate sensitive stocks.

IT stocks witnessed a strong recovery after days of selloff. The BSE IT index traded with over 1 per cent gains and outperformed all other groups of stocks on the BSE.

IT stocks have come under selling pressure after New Jersey-based Cognizant regulatory filing indicated slower growth in 2013. Infosys, India's second biggest outsourcer may miss its annual sales guidance according to multiple brokerages, weighing down on sentiments in IT stocks.

HCL Tech traded 1.85 per cent higher. TCS and Wipro gained 1-1.5 per cent. Infosys advanced 0.7 per cent.  


(With inputs from Reuters)