Relief Rally On D-Street; RBI To Roll Back Rates?

The Indian markets saw a good relief rally after being beaten down in the past trading sessions. Both the broader indices closed almost 3% higher, with Nifty very close to the 5k mark. Over the last one month, the indices were down almost 8%, and a big relief rally was expected by the streets. Further, speculations that the RBI may cut the rate in its monetary policy scheduled for June 18, 2012, fuelled positive sentiments that helped the markets to move northwards. All the sectoral indices closed the day in the green zone, with Auto being the major gainer, up by almost 4%. Others like Capital Goods, Power and Bankex closed higher by more than 3%.

The peer Asian markets closed the day with mixed results. Hang Seng and Nikkei closed higher by 1.43% and 1.81% respectively. The markets moved higher after Australia released its GDP data, which was twice the street's forecast. Shanghai closed the day marginally in the red, down 0.1%.

European markets are trading on a strong, positive note, with FTSE, CAC and DAX higher in the range of 1%-2%. Investors in the region are speculating on the European Central Bank's meeting, and expect a rate cut that will spur economic growth. The US too released its service industry data yesterday, which sustained their pace of growth and helped the world markets to inch higher.

Dow Jones Futures is currently trading up 91 points or 0.75% at 12217, indicating a positive sentiment in the US markets.

Back home, there were no losing stocks in the index today, with all of them trading higher in the green zone. Tata Motors was the leading gainer, up 5.71% to Rs 234.20. The stock was beaten down by more than 25% in the past one month on account of the lower margins in the JLR segment. Capital Goods heavyweights L&T and BHEL also traded higher by 4.77% and 2.43% respectively. L&T was up after the news that L&T IDPL has bid successfully for NHAI projects worth Rs 4800 crore. The FMCG stocks also closed the day higher, with ITC and HUL up 3.68% and 2.95% respectively. Other stocks like Cipla, HDFC and Infosys closed the day marginally in gains.

KEC International inched 1.67% higher to Rs 51.90 on news that the company has secured orders worth Rs 391 crore. Ashok Leyland closed 3.17% higher at Rs 26.05 after the announcement that the company has bagged orders for 50 vestibule buses worth USD 6 million from Bangladesh.

The market breadth, which indicates the overall health of the market, was positive for the day. Out of the 3196 stocks traded on the BSE, 2160 advanced, 913 declined and 123 remained unchanged.

We expect the markets to remain volatile tomorrow too.