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Indian Shares End Firm Ahead Of RBI Meet

Indian shares rose modestly on Monday, as a marginal drop in wholesale price inflation and lower commodity prices spurred hopes that more policy easing is in the pipeline. Global cues were mixed, with most Asian markets falling on concerns over Europe's sovereign debt crisis and the slowing global growth, while European shares gained ground after recent steep losses.

The benchmark 30-share Sensex ended the day up 56 points or 0.33 percent at 17,151, with 15 of its components advancing. The broader Nifty index rose by 19 points or 0.36 percent to 5,226, while the BSE mid-cap and small-cap indexes ended up 0.8 percent and 0.6 percent, respectively.

India's headline inflation eased slightly to 6.89 percent in March from 6.95 percent in the previous month, helped by a softening in prices of manufactured goods, fruits and protein-based items, government data released today showed, reinforcing expectations the central bank will cut interest rates for the first time in three years in its policy meeting tomorrow.

Many economists expect the RBI to cut the repo rate by at least 25 basis points, as it walks a tightrope to find balance between faltering economic growth and inflation.

Rate-sensitive auto, banking and realty stocks led the gainers on increasing hopes of a rate cut tomorrow. State-run lender SBI rallied 2.4 percent, private sector rival ICICI Bank added a percent, property developer DLF rose 0.8 percent and automakers such as Hero MotoCorp, Bajaj Auto and Maruti Suzuki ended up between 0.4 percent and 1.4 percent.

Shares of Tata Motors jumped 3.9 percent after the nation's largest automaker reported a 26 percent increase in its global sales in March compared to the year ago period. Tata Steel, Larsen & Toubro and ITC were among the other prominent gainers in the Sensex pack, with gains 1-2 percent.

Among those that fell, HDFC Bank edged down 0.1 percent ahead of its results due out on Wednesday, while Reliance Industries shed 0.4 percent ahead of its earnings results on Friday. Telecom major Bharti Airtel paced the declines, losing 1.7 percent, while Infosys fell 1.4 percent, adding to Friday's losses after issuing a weaker-than-expected revenue growth outlook for the first quarter and full year FY13.

Drug maker Sun Pharma lost 1.2 percent, FMCG giant Hindustan Unilever shed 0.7 percent, utility vehicles manufacturer Mahindra & Mahindra declined 0.6 percent and state-run oil explorer ONGC ended half a percent lower.

IVRCL fell 2.6 percent after Subhash Chandra-led Essel Group said it has no immediate plans to increase stake in the company. Hotel Leela lost 1.7 percent on a ET report that lenders including IOB, Syndicate Bank and BOI have backed out of a corporate debt restructuring.

Aviation stocks were in the limelight as oil retailers cut jet fuel prices and reports said the government will likely decide on a proposal to allow foreign carriers to invest in domestic airlines this week. Kingfisher rose 1.5 percent, Jet Airways gained nearly 2 percent and SpiceJet climbed 3.4 percent.

Parsvnath Developers soared 7.2 percent after saying that it has given an exclusive mandate to Jones Lang LaSalle India to handle selling a 1.18 acre of prime commercial land near Connaught Place in New Delhi.

Elsewhere, stocks ended mostly lower across Asia, as worries over Spain's financial health and signs of slowing U.S. economic momentum added to concerns over the global economic outlook.

Data showing slackening private domestic demand and fixed asset investment in China, the world's second-largest economy, and the Bank of Korea's decision to cut its growth estimate for the year amid volatile oil prices and renewed worries about the euro zone debt crisis also sapped appetite for riskier assets

Commodities extended losses and the euro dropped below $1.30 for the first time in two months as caution prevailed ahead of tomorrow's auction of Spanish Treasury bills and the sale of two-year and 10-year bonds on Thursday.

European shares were mixed in early trading, with banks coming under selling pressure amid reports that several of them could be downgraded in the coming weeks.

by RTT Staff Writer

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