Markets End Higher, Lower Inflation Spurs Rate Cut Hopes

The Indian markets remained quite firm for most of the trading session today, and closed on a positive note. The Sensex and Nifty closed up by almost 0.55% each. The announcement of the July WPI number at 6.87%, lower than the street expectation of 7.25%, lifted the market's sentiments. Most of the sectoral indices barring a few closed in gains. Oil & Gas, Bankex, Metals and Auto closed higher by 1.27%, 1.08% and 0.83% respectively, while Realty, Pharma and FMCG ended down by 0.73%, 0.34% and 0.07% respectively.

Earlier today, the Asian markets closed in the positive territory. The Hang Seng, Nikkei as well as the Shanghai were up by 1.04%, 0.50 and 0.30% respectively. Investors were seen purchasing stocks that were oversold previously, as hopes for a fresh global stimulus continued to be the underlying sentiment.

The European markets continued to trade with optimism, with the FTSE, CAC and DAX trading higher by 0.52%, 0.49% and 0.80% respectively. Weak earning numbers and lukewarm growth figures in the region have raised hopes of further stimulus measures from the region's policymakers. Data showed that the GDP in the Euro zone shrank by 0.2% in the second quarter as compared to that in the previous 3 months, and by 0.4% as compared with that a year earlier.

Dow Jones Futures is currently trading 26 points or 0.20% up at 13163, indicating a positive sentiment in the US markets.

Tata Motors remained the leading index gainer, up by 2.85% to Rs 234.40. Other stocks like Coal India, GAIL India, L&T, ONGC, RIL, Tata Motors and Tata Steel all closed higher by over 1.5%, while Sterlite Industries, Sun Pharma and Hindalco were down by 1.27%, 2.21% and 0.91% respectively.

Post its results announcement, Suzlon Energy fell by 3% as the company reported lower-than-expected numbers for the Jun 2012 quarter. The company reported a net loss of Rs 850 crore versus a profit of Rs 62 crore reported in the same period last year.

The market breadth, which indicates the overall health of the market, was positive for today. Out of the 3263 stocks traded on the BSE, 1608 advanced, 1516 declined and 139 remained unchanged.

We expect that the markets will remain positive on Thursday, Aug 16. The lower Wholesale Price Index (WPI) inflation numbers for Jul 2012 has brought some hope of a rate cut among investors, which has lifted the sentiments.

Here's wishing all our readers a very happy Independence Day in advance.