Benchmark indices are set to close higher for the fourth straight session with the Nifty touching life-time high and the Sensex gaining over 1% boosted by strong buying in financials, banks and metal stocks.
At 2:42 PM,the 30-share Sensex was up 470 points at 28,732 and the 50-share Nifty was up 130 points at 8,682 after hitting a record high of 8,684.
In the broader market, both the BSE Midcap and Smallcap indices have underperformed than the front-liners with gains of around 0.5% each. Market breadth in BSE is positive with 1,439 advances against 1,420 declines.
Among global cues, the International Monetary Fund (IMF) has slightly cut projections for India’s economic growth to 6.3% for 2015-16 against 6.4% made in October last year, while retaining the forecast for the current financial year at 5.6%. In its World Economic Outlook Update, IMF pegged the country’s growth rate at 6.5% for 2016-17.
IMF predicted the world economic growth at 3.5% in 2015 and 3.7% the next year. US was projected to grow 3.6% in 2015 and 3.3% the next year, higher by 0.5 percentage points and 0.3 percentage points compared to the October projections.US is the largest importers of India’s goods.
Further, foreign institutional investors were net buyers in Indian equities worth Rs 433.72 crore on Monday, as per provisional stock exchange data.
9 of the 12 sectoral indices of BSE are in green. BSE Metal index, up 2.6% is the lead gainer following better-than-expected fourth quarter Chinese GDP data. BSE Bankex has gained over 1%, BSE Oil & Gas index has gained around 0.8%.
Metal stocks have surged in today’s session after China’s economic growth was steady at 7.3% in the fourth quarter which is slightly better than market expectations. Sesa Sterlite and Tata Steel have gained around 4% each while Hindalco is up 3.1%.
Mortgage finance major, HDFC has gained around 6%. According to analysts housing finance companies (HFCs) have become more competitive than banks in a low interest rate environment given the reduction in cost of funds for banks will be lower than cost of fund reduction for HFCs.
Among bank shares, Axis Bank has gained over 3%, SBI has gained around 1.4%, ICICI Bank has gained 0.7% and HDFC Bank has gained 0.6%.
The Central Bank has revised guidelines on base rates. RBI has asked lenders to “ensure price differentiation that is consistent with its credit pricing policy”. This means in case a bank changes the spread while keeping the base rate unchanged, both new and old customers will get the benefit of lower interest rates.
Index heavyweights like ITC, up 2.5%, Infosys up 0.4% are also trading higher.
FMCG major, HUL has declined over 1%. According to media reports, the company will roll out its premium ice-cream Magnum in five more cities.
Among other shares, South Indian Bank has dipped 4% in otherwise firm market after the private sector lender has reported disappointing set of numbers for the third quarter ended December 31, 2014 (Q3FY15).
Among Asian markets, Japanese Nikkei has climbed 2.1%, posting its biggest one-day gain in a month, as markets took comfort from China data and on expectations that the European Central Bank will unveil stimulus measures. Meanwhile, Hong Kong shares rose after mainland indices rebounded on comments by China’s securities regulator that it was not trying to suppress that market’s rally. Hang Seng index gained around 0.9% while the Shanghai Composite index gained around 1.8%.
European markets have opened marginally higher and are expected to extend gains on hopes of stimulus measures by the European Central Bank. FTSE 100 and CAC 40 indices have gained around 0.3% each while DAX index is trading higher by 0.2%.