Nifty to rise as long as the index stays above 8,100
We had mentioned in Tuesday’s closing report that although the indices witnessed a setback on Tuesday the chances of recovery of NSE’s CNX Nifty is high, as long as it stays above 8,000. The Nifty had an upbeat opening Wednesday, which was pulled up further to hit the day’s high. However, around 10.23am the index suddenly started collapsing and moved into the red. Later, it moved back into the green but stayed near yesterday’s close. At around 12.51pm, the 50-stock benchmark gained momentum and reached near the day’s high. The index closed in the green covering up more than half of Tuesday’s loss.
The S&P BSE Sensex opened at 27,024 while Nifty opened at 8,182. Sensex moved to the low of 26,750 from the high of 27,300 while Nifty moved from the high of 8,255 to the low of 8,090. Sensex closed at 27,251 (up 374 points or 1.39%) and Nifty closed at 8,235 (up 109 points or 1.34%). Bank Nifty traded in the green for the entire session. It opened at 17,779 and moved from the low of 17,650 to the high of 18,128 and closed at 18,097 (up 469 points or 2.66%). NSE recorded a higher volume of 81.08 crore shares. India VIX rose 0.68% to close at 20.6850.
Easing of consumer price index (CPI) to a four-month low in April has created an anticipation of interest rate cut by Reserve Bank of India (RBI). Consumer price index (CPI)-based retail inflation eased to a four-month low of 4.87% in April from a revised 5.25% in March as prices of food items, vegetables and fruits turned cheaper. The government on Thursday will unveil data on inflation based on the wholesale price index (WPI) for April 2015.
Eight Indian companies, Bharat Forge, Bharti Infratel, Container Corp of India, Eicher Motors, Lupin, Marico, Shree Cement and UPL have been included in the MSCI India Index. Meanwhile, HSBC downgraded Indian stocks to "underweight" from "overweight", citing slowing earnings growth, little room for rate cuts and potential negative impact from an unusual weather due to El Nino.
Rating agency Moody's said monsoon and global financial volatility will pose additional risks to India's growth this year, but the GDP is likely to average around 7.5% over the next 18-24 months due to improvement in business environment induced by reforms.
The union cabinet on Wednesday cleared a proposal for 10% disinvestment in Indian Oil Corp and 5% in NTPC, which may fetch the government close to Rs13,500 crore at the current prices. The Cabinet also approved the new Benami Transaction (Prohibition) Bill, which aims at curbing the generation of domestic black money.
The government allowed developers to exit highway projects two years after they are completed, a move that will unlock investments worth Rs4,500 crore and provide renewed thrust to the sector, hopes the government.
The government also approved a new urea policy aiming to increase domestic production by two million tonnes and reduce its subsidy bill by over Rs4,800 crore annually, but decided not to raise retail prices.
Coming back to stock markets, United Spirits (10.56%) was the top gainer in ‘A’ group on the BSE. It closed at Rs3,600.40 on the BSE. Sobha Developers (5.50%) was the top loser in ‘A” group on the BSE. The stock closed at Rs385.05. It has posted weak March 2015 result.
Axis Bank (4.95%) was the top gainer in the Sensex 30 pack while Hindalco (2.91%) was the top loser.
On Tuesday, US indices closed flat with negative bias.
Except for Shanghai Composite (0.58%) and Hang Seng (0.58%) all the other Asian indices closed in the green. Jakarta Composite (0.78%) was the top gainer.
Value-added industrial output in China rose 5.9% in April from a year earlier, accelerating from 5.6% growth in March, data from the National Bureau of Statistics showed today. Industrial output also increased 0.57% in April from March, when output rose 0.25% from February.
European indices were trading in the green. US Futures were trading marginally higher. The Bank of England cut its growth forecasts for the UK economy today but signalled it remains on course to lift its benchmark interest rate from its historic low in the middle of next year. The BOE said in its quarterly inflation report that it expects the UK economy will expand 2.5% in 2015 and 2.6% in 2016, compared with its February forecasts for growth of 2.9% this year and next.