Equities flare up as WPI inflation cools

Key benchmark indices on Wednesday flared up after the government data showed that inflation based on the wholesale price index (WPI) eased to five-month low at 6.16 per cent in December 2013.

Easing inflation has provided legroom for the Reserve Bank of India (RBI) to cut interest rates in its next policy meet this month-end in order to bolster growth.

Also, firmness in Asian and European stocks also boosted investor sentiment in D-Street.
The market breadth, indicating the overall health of the market, was positive. Both the premia indices of the BSE and the NSE closed at their highest level in more than five-weeks.

During the day's trade, bank stocks gained after data showed inflation based on the wholesale price index (WPI) eased in December 2013. Among PSU bank stocks, Bank of India was up 4.09 per cent at the closing this day, while Bank of Baroda gained 3.59 per cent, Canara Bank (up 3.27 per cent), Punjab National Bank (up 2.54 per cent), Union Bank of India (up 2.37 per cent) and State Bank of India (up 1.02 per cent) edged higher.  
Among private sector banks, YES Bank rose 1.95 per cent on good Q3 result, while ICICI Bank (up 2.0 per cent) and HDFC Bank (up 1.22 per cent), also gained. Another private sector lender Axis Bank, which unveils Q3 results on Thursday, rose 0.21 percent.  Capital goods stocks gained on renewed buying.

Kotak Securities’ Dipen Shah said, “Markets ended the day with more than 1.0 percent gains. The WPI data came in much lower than estimates and this supported the banking stocks, which ended sharply higher.  With the economic data already in, focus will shift to the quarterly results and the RBI policy meeting towards the end of the month....”

The popular BSE Sensex rose 256.61 points or 1.22 percent to 21,289.49, its highest closing level from December 9, 2013. The index rose 269.85 points at the day's high in late trade and gained 58.58 points at the day's low in opening trade.

The CNX Nifty at NSE rose 79.05 points or 1.27 per cent to 6,320.90, its highest closing level since December 10, 2013. The index hit a high of 6,325.20 and a low of 6,265.30 in intraday trade.

From broader markets, the BSE Mid-Cap index rose 0.18 per cent to 6,581.70 points and the BSE Small-Cap index rose 0.30 per cent to 6600.88 points. Both these indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive with 1,415 stocks on BSE gained, while  1,328 scrips declined and a total of 183 shares were unchanged. The total turnover on BSE amounted to Rs 1,865 crore, higher than Rs 1,685.79 crore on Tuesday.

In the currency markets this day, the partially convertible rupee closed at 61.54/55 per dollar, little change in contrast to 61.55/56 on Monday.

European stocks scaled up speculation the global economy is strengthening with key indices in France, Germany and UK rose 0.29 to 0.88 per cent.