Sensex gains as rate cut hopes rise as inflation eases

MUMBAI Mon Apr 15, 2013 10:48pm IST

A trader looks at a screen at a stock brokerage firm in Mumbai March 7, 2008. REUTERS/Arko Datta/Files

A trader looks at a screen at a stock brokerage firm in Mumbai March 7, 2008.

Credit: Reuters/Arko Datta/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - The BSE Sensex rose on Monday, recovering from seven-month lows after slowing inflation and lower crude and gold prices led to hopes that the Reserve Bank of India will likely cut interest rates at its May review.

Lenders such as State Bank of India led gainers on hopes the Reserve Bank of India would now have room to ease monetary policy for a third time this year.

Investors also welcomed the sharp slump in gold and crude oil prices, which if sustained, would help ease narrow the current account deficit, a factor which has been cited by the central bank as a key variable in its monetary policy making.

"The commodity price movements played out in the market today. The lower WPI number has also raised rate cut hopes," said Sudip Bandyopadhyay, managing director and chief executive at Destimoney Securities.

"The market will continue to remain volatile. We will see counter specific and sector specific action."

The Sensex rose 0.63 percent, or 115.24 points, to 18,357.80 after earlier hitting its lowest intraday level since September 13.

The 50-share NSE index gained 0.72 percent, or 39.85 points, to 5,568.40.

Both indexes thus recovered from sharp falls on Friday, when the Sensex slumped 1.6 percent after software service exporter Infosys Ltd issued lower-than-expected revenue guidance, sparking a selloff in technology stocks.

Lenders gained after data showed wholesale price inflation cooled to 5.96 percent in March, lower than 6.84 percent in February.

The data raised expectations the RBI would cut interest rates, which would help loan growth and ease margin pressures, according to analysts.

Public sector banks could also benefit as they are big holders of government bonds, which could rally should the RBI eases monetary policy.

State Bank of India rose 3.1 percent, while Axis Bank (AXBK.NS) gained 2.4 percent. Shares in ITC Ltd (ITC.NS) ended up 2.41 percent.

Reliance Industries Ltd (RELI.NS) rose 2.4 percent ahead of its March quarter earnings on Tuesday, which is expected to show good profit growth.

Infosys LtdNS> rose 1.9 percent on value buying after slumping to its lowest closing low in a decade on Friday after it disappointed with a muted revenue guidance for the current fiscal year.

However, other IT stocks fell on caution ahead of earnings. Tata Consultancy Services (TCS.NS) fell 2.6 percent ahead of its results on Wednesday while HCL Technologies Ltd (HCLT.NS), which also reports on Wednesday, lost 1.4 percent down.

Gold loan providers slumped on fears that the sharp fall in gold prices will erode the value of the collateral and make some loans non-performing.

Muthoot Finance Ltd (MUTT.NS) fell 12.2 percent, while Manappuram Finance Ltd (MNFL.NS) slumped 9.8 percent.

Gold retailers also fell. Titan Industries Ltd (TITN.NS) was 4.1 percent lower.

(Additional reporting by Abhishek Vishnoi; Editing by Anand Basu)

FILED UNDER:

Religion and Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage