Nifty hovers near 5200; March inflation data above forecast
DATE: 16/04/2012
The 50-share Nifty index was witnessing a choppy session due to lack of supportive cues from global peers and as traders remained on the sidelines ahead of the Reserve Bank of India's policy review meet.
According to analysts, the RBI is likely to cut rates by 25 basis points while keeping CRR unchanged.
Meanwhile, rate sensitive sectors are likely to witness some more action on hopes of a rate cut after WPI inflation in March eased to 6.89 per cent vs 6.95 per cent in February.
"India's wholesale price index (WPI) rose a faster-than-expected 6.89 percent in March from a year earlier, mainly driven by higher food prices, government data showed on Monday," said a Reuters report.
Analysts on average had expected an annual rise of 6.70 percent, a Reuters poll showed. Wholesale prices rose 6.95 percent in February.
"In the forthcoming annual monetary policy review, the RBI is likely to cut repo rate by 25bps while keeping CRR unchanged. Our expectation is based on the assessment that investment activity is in deep slump and demand-led inflationary pressures have receded meaningfully (in our re-arranged WPI basket, it has dipped to historical average levels).
At the same time, with falling inflation, real interest rates have risen meaningfully since December and call rates are hovering around 50bps above repo rate. In sum, monetary conditions have tightened even as growth has slowed and inflation has eased. Accordingly, we expect the central bank to initiate rate cut cycle with 25bps, although the policy tone is likely to remain hawkish," said Edelweiss report.
At 11:45 am; the Sensex was at 17088.51, down 6 points or 0.04 per cent. It touched intraday high of 17109.37 and low of 17010.16.
The National Stock Exchange's Nifty was at 5205.40, down 2.05 points or 0.04 per cent. It touched a high of 5214.10 and low of 5183.50 in trade so far.
"On hourly charts, momentum in RSI (14) and MACD (12/26/9) is weak and would be supportive for further weakness towards the support at 5170 and even the recent low of 5136 in the coming 1-2 sessions. On the higher side, 5250 and Friday's high of 5307 will act as immediate resistance levels.
Overall, index is poised to test the 200-day EMA which it has been holding for last 2 months. Also fall from February highs appears to be corrective in nature.
Hence we expect prices to consolidate above 5136 in the short-term and trade positive towards 5400 levels eventually. Inability to find support could aggravate the selling in coming days negating the expected recovery,"
Amongst the sectoral indices, BSE Realty Index was up 1.13 per cent, BSE Bankex gained 0.73 per cent and BSE FMCG Index was up 0.71 per cent. BSE IT Index moved 0.66 per cent lower and BSE Oil&gas Index slipped 0.54 per cent.
Maruti Suzuki (1.93%), State Bank of India (1.86%), DLF (1.57%), BHEL (1.51%) and ITC (0.97%) were the major Sensex gainers.
Infosys Technologies (-1.36%), Bharti Airtel (-1.19%), Hindalco Industries (-0.96%), Reliance Industries (-0.93%) and NTPC (-0.93%) were amongst the index losers.
Market breadth was positive on the BSE with 1392 gainers against 965 losers.
According to analysts, the RBI is likely to cut rates by 25 basis points while keeping CRR unchanged.
Meanwhile, rate sensitive sectors are likely to witness some more action on hopes of a rate cut after WPI inflation in March eased to 6.89 per cent vs 6.95 per cent in February.
"India's wholesale price index (WPI) rose a faster-than-expected 6.89 percent in March from a year earlier, mainly driven by higher food prices, government data showed on Monday," said a Reuters report.
Analysts on average had expected an annual rise of 6.70 percent, a Reuters poll showed. Wholesale prices rose 6.95 percent in February.
"In the forthcoming annual monetary policy review, the RBI is likely to cut repo rate by 25bps while keeping CRR unchanged. Our expectation is based on the assessment that investment activity is in deep slump and demand-led inflationary pressures have receded meaningfully (in our re-arranged WPI basket, it has dipped to historical average levels).
At the same time, with falling inflation, real interest rates have risen meaningfully since December and call rates are hovering around 50bps above repo rate. In sum, monetary conditions have tightened even as growth has slowed and inflation has eased. Accordingly, we expect the central bank to initiate rate cut cycle with 25bps, although the policy tone is likely to remain hawkish," said Edelweiss report.
At 11:45 am; the Sensex was at 17088.51, down 6 points or 0.04 per cent. It touched intraday high of 17109.37 and low of 17010.16.
The National Stock Exchange's Nifty was at 5205.40, down 2.05 points or 0.04 per cent. It touched a high of 5214.10 and low of 5183.50 in trade so far.
"On hourly charts, momentum in RSI (14) and MACD (12/26/9) is weak and would be supportive for further weakness towards the support at 5170 and even the recent low of 5136 in the coming 1-2 sessions. On the higher side, 5250 and Friday's high of 5307 will act as immediate resistance levels.
Overall, index is poised to test the 200-day EMA which it has been holding for last 2 months. Also fall from February highs appears to be corrective in nature.
Hence we expect prices to consolidate above 5136 in the short-term and trade positive towards 5400 levels eventually. Inability to find support could aggravate the selling in coming days negating the expected recovery,"
Amongst the sectoral indices, BSE Realty Index was up 1.13 per cent, BSE Bankex gained 0.73 per cent and BSE FMCG Index was up 0.71 per cent. BSE IT Index moved 0.66 per cent lower and BSE Oil&gas Index slipped 0.54 per cent.
Maruti Suzuki (1.93%), State Bank of India (1.86%), DLF (1.57%), BHEL (1.51%) and ITC (0.97%) were the major Sensex gainers.
Infosys Technologies (-1.36%), Bharti Airtel (-1.19%), Hindalco Industries (-0.96%), Reliance Industries (-0.93%) and NTPC (-0.93%) were amongst the index losers.
Market breadth was positive on the BSE with 1392 gainers against 965 losers.
POWERED BY: THE ECONOMIC NEWS
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