Sensex spurts on rate cut hope...Metals, Banks rise

For the first time this week the main Indian stock indices showed some strength, with the NSE Nifty ending above the 5250 mark on optimism that the RBI will cut its key lending rate next week to revive growth. A weaker-than-forecast IIP print for February, coupled with a shocking downward revision in January's data sparked expectations of a rate cut by the RBI. A positive trend across global markets added fuel to the fire.

The main indices witnessed a higher opening on the back of overnight rally in the US and European markets. The Indian market remained firm throughout the session but the frontline indices were more or less rangebound. It was a buy on dip market today.

The BSE Sensex ended at 17,332, up 133 points or ~0.8% over the previous close. It had earlier touched a day’s low of 17,276 and a day’s high of 17,395. It opened at 17,276.



The NSE Nifty settled at 5,277, up 50 points or 0.9% over the previous close. It touched a day’s low of 5,247 and day’s high of 5,291.

The INDIA VIX on the NSE ended lower by 2.3% to close at 21.78. It hit days high of 22.29. It hit a low of 21.72.

Among the BSE sectoral indices, Metal index was up 2.2%, Banking index gained 1.7%, FMCG index rose 1.5% and Auto indeed added 1%. On the other hand, IT index lost 1.1% and Teck index fell 0.8%.

The BSE Mid-Cap index gained 0.8% and the BSE Small-Cap index rose 1%.

Out of the 50 stocks in the Sensex, the notable gainers were Jindal Steel, Sterlite, Maruti, Hindalco, SBI and Hero Motocorp.

Among the major losers included Infosys, ONGC, Wipro, DLF, TCS and Sun Pharma.

The market breadth was positive on the BSE, with 1712 stocks advancing and 1100 stocks declining.

Banking stocks led from the front amid growing expectations of a repo rate cut on April 17. Heavyweights like SBI, ICICI Bank and Axis Bank rose ahead of the RBI’s policy meeting next week.

Leading bankers are hoping that the RBI will lower interest rates in its forthcoming monetary policy review to help ease credit flow to micro, small and medium enterprises (MSMEs) as high cost of funds in the past two years has dented their competitiveness.

Finance Minister Pranab Mukherjee said that the Government and the RBI will take steps to revive growth.

"The revival in manufacturing in the last quarter of 2011-12 has not materialised as anticipated," the Finance Minister said.

He further said that uncertainty in the global economy coupled with monetary tightening in the past have impacted investment recovery.

The sentiment was hit partially after the Government scaled down its preliminary IIP estimate for January 2012 citing error in sugar output data from the Food Ministry.

The combined output of factories, mines and power utilities grew by 4.1% in February as against 1.1% in January, the Commerce Ministry said on Thursday.

The Government revised the industrial production growth for January 2012 to 1.1% from a provisional reading of 6.8%.

"Friday will be another big day with IT major Infosys declaring its Q4 earnings. Infosys has had tough time in recent quarters meeting market expectations. Its guidance for FY13 will be keenly watched.

In addition, WPI-based inflation is likely to have edged lower in March from February’s 6.95% print. Inflation data for March is scheduled to be released on Monday.

China’s GDP data, and US economic statistics will drive sentiment globally. Also keep an eye on earnings reports of Google and JP Morgan.

The key concern for India is the persistent selling by FIIs as the Government is yet to fully clarify on the controversial GAAR issue. The undercurrent will remain cautious as investors analyse India Inc.’s latest report card," says Amar Ambani, Head of Research, IIFL.

Most Asian markets finished with smart gains, with China leading the rally with a 1.8% gain in its main index.

China's economic growth will decelerate to 8.2% in 2012 while its GDP will expand by 8.6% in 2013, the World Bank said in its China Quarterly Update. In January, the World Bank had projected China's growth at 8.4%.

European markets too opened on a positive note but surrendered those gains following the release of industrial production data.

Industrial production in the eurozone surprisingly expanded in February, spurred by a marked increase in energy output, data released on Thursday showed.

Portugal stocks were down at start due to weakness in the banking space.

Italy saw borrowing costs rise as it sold three-year government bonds, news reports said.

US stock futures traded higher, with Wall Street investors waiting for weekly jobless claims, data on producer prices and February's trade balance. Google was scheduled to report earnings after the close of trade on Thursday.

Bill Dudley, the president of the New York Federal Reserve, is due to give a speech ahead of the market open.