Sensex gains on rate cut hopes, Infosys down for 3rd day
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The BSE Sensex closed 56.44 points or 0.33% higher at 17,150.95 after range bound trade Monday. The broader Nifty index advanced 18.75 points to 5,226.
The Sensex moved in a 160 point band while the Nifty traded in a 50 point range today. Markets opened weak, tracking lower Asian stocks, and the Sensex came within 10 points of breaching the 17,000 mark. However, the benchmarks held on after the initial weakness and closed near the day's high.
Headline inflation in March grew at a slower pace of 6.89% against 6.95% in February but higher than estimates of 6.6%. However, analysts were optimistic that the central bank, which will announce its annual monetary policy tomorrow, will cut rates for the first time in over two years. That's because the core inflation, which is more pertinent to the RBI, slipped below 5% for the first time in many months.
Rate sensitive stocks saw buying interest in anticipation of a rate cut tomorrow. Banking (1.2%), auto (1.3%) and realty (1%) stocks were the biggest gainers among the 14-sectoral indices listed on the BSE.
Tata Motors (3.9%) was the top Nifty gainer today. The company reported over 50% rise in high margin Jaguar Land Rover sales in March on a yearly basis. Private lender Axis Bank (3%) and PSU lenders SBI (2.4%) and PNB (2.4%) were among the top Nifty gainers today.
Infosys (-1.6%), India's second largest IT exporter, ended lower for the third straight day. The stock had fallen 13% Friday after the company said it is likely to grow by 8-10% in 2012-13 against expectations of 12-15%.
"Markets are sensing that competitive threat from players like TCS and HCL Tech could take away some market share from Infosys. A re-rating in the stock does not look possible in the near term," Avinnash Gorakssakar, founder director of moneyinvestments.in told NDTV Profit today.
Other IT stocks recovered and closed higher. HCL Tech gained 1.8% though TCS and Wipro ended flat.
On the Nifty, Ambuja Cements (-2.3%) was the top loser, followed by Bharti (-2%) and ACC (-1.7%).
The market breadth was positive with 64% stocks rising on the broader BSE 500 index. Going forward, global cues will have a major say in the direction of Indian markets, analysts said.
Asian markets ended with deep cuts. Japan's Nikkei index (-1.7%) led the losses.
Rising concerns about Europe, where bond yields in Spain and Italy - two of the bigger economies- have been rising and a slowdown in China, where the economy grew at the slowest in nearly three years, weighed on investor sentiments. On Friday, the Dow Jones index fell 1.1%.
"The euphoria might be short lived with focus shifting to global factors again. Growth concerns are legitimate and will prompt RBI to act tomorrow... There might be some uptick in the next couple of sessions but after that markets are likely to trade in a range of 5,000-5,400," Rohit Midha, strategist at Atlas Capital Markets & Advisory Services said.