Strong trade continues in markets; Nifty breaches 7,100 mark

Indian equity markets remained well entrenched in positive territory in the late morning session on Tuesday amid strong and sustained buying in several blue chip stocks. The Sensex climbed 313 points, while Nifty breached 7,100 mark. Sustained capital inflows by foreign funds at the domestic bourses and widespread buying by retail investors after exit polls showing the BJP-led NDA forming the government lifted the key indices to new highs. The BJP-led NDA is projected to win between 249 and 340 seats, according to six exit polls. It needs 272 seats for a simple majority. Over the last two sessions, FIIs have bought shares worth around Rs 2,500 crore. Domestic institutional investors, who have been net sellers in markets so far, also turned buyers on Monday, although the quantum of buying was very small at Rs 90 crore. Moreover, firm global cues coupled with the appreciation in rupee value against the dollar too added to the optimistic sentiments. However, the sluggish economic fundamentals are likely to cap any major gains in the shares over the next few sessions. Late Monday, India reported a contraction in its industrial output in March while its inflation accelerated in April, the latest indications that Indian economy is still struggling with signs of stagflation. On the global front, Asian shares surged, with the regional benchmark index on course for its biggest increase in more than six weeks, as investors weighed earnings and after US equity indexes climbed to records. Back home, broader indices too were trading higher by one and half a percent. With extensive buying, all the sectoral indices were trading in green with impressive gains. Ashoka Buildcon, Castrol India, Dr Reddys Lab, Bank of Baroda, IIFL and Punjab National Bank will be in focus on account of March quarter earnings announcement. The market breadth on BSE was positive, out of 2,174 stocks traded, 1,343 stocks advanced, while 717 stocks declined on the BSE. The BSE Sensex is currently trading at 23,864.35 up by 313.35 points or 1.33 % after trading in a range of 23921.91 and 23729.25. There were 27 stocks advancing against 3 stocks declining on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.65%, while Small cap index was up by 1.70%. The gaining sectoral indices on the BSE were Consumer Durables up by 3.95%, Power up by 3.65%, Realty up by 3.18%, PSU up by 3.14% and Capital Goods up by 2.58%, while there were no losers on the sectoral space. The top gainers on the Sensex were BHEL up by 8.77%, ONGC up by 4.51%, Gail India up by 4.19%, Tata Steel up by 3.99% and NTPC up by 3.87%. On the flip side, Dr Reddys Lab down by 1.44%, Bajaj Auto down by 0.43% and HDFC Bank down by 0.39%. Meanwhile, Driven by higher food prices, the provisional annual inflation rate based on all India general Consumer Price Index (CPI) (Combined) rose to three months high of 8.59% from 8.31% in March. According to the data, CPI numbers of March 2014 for Rural, Urban and Combined stood at 140.6, 137.2 and 139.1 respectively. The corresponding provisional inflation rates for rural and urban areas for April 2014 stood at 9.25% and 7.69% as compared to 8.89% and 7.51% respectively in the previous month. Food prices for consumers rose at 9.66% in last month from a year earlier, higher than March’s 9.10% rise.  The Provisional annual inflation rates of April 2014 for Rural and Urban in respect of ‘food and beverages’ stood at 10.45% and 8.24% for month under review compared to 9.95% and 7.47% respectively in March, 2014. Additionally, Provisional annual inflation rates (Combined) for Fuel and light; Clothing, bedding and footwear stood at 5.96% and 8.83% respectively for the month of April.  However, the core consumer price index (CPI) eased modestly to 7.80% in April from a year earlier and from a 7.82% in March. This is a bit of positive since core inflation for the past few months has remained below 8%, a level Reserve Bank of India’s (RBI) chief Raghuram Rajan deems uncomfortably high. However, latest reading adds to woes of policy maker, which will review its monetary policy next on June 3, 2014. India has been battling a prolonged spell of high inflation and low growth. While economic growth has almost halved to below 5% for the past two years, the worst slowdown for the South Asian nation since the 1980s, inflation too is not showing any signs of receding. The CNX Nifty is currently trading at 7,112.20 up by 97.95 points or 1.40% after trading in a range of 7,067.15 and 7,112.20. There were 47 stocks advancing against 3 declining on the index. The top gainers of the Nifty were BHEL up by 8.21%, DLF up by 4.96%, ONGC up by 4.59%, Gail up by 4.17% and Tata Steel up by 4.15%. On the flip side, Dr. Reddy's Laboratories down by 1.58%, Bajaj-Auto down by 0.51% and HDFC Bank down by 0.45% were the only losers on the index. Most  of Asian equity indices were trading in green; Hang Seng increased by 0.28%, Jakarta Composite rose by 0.27%, Nikkei 225 spurted by 2.12%,  Seoul Composite climbed 1.14% and  Taiwan Weighted was up by 0.04%. On the flip side, Shanghai Composite was down by 0.06%. Malaysia and Singapore markets remained shut for the trade today for Wesak Day holiday.