Mumbai, April 16: The BSE Sensex gained over 56 points at 17,151 today as investors bought equities amid expectations of rate cut by RBI at the annual credit policy announcement tomorrow, with banking and realty stocks making gains, as inflation eased marginally.

Auto, capital goods and FMCG were also in demand on hopes that the Reserve Bank will cut repo rates at which it lends to banks by 0.25 per cent, signalling an end to the tight money policy stance to revive growth.

RBI raised lending rate 13 times between March 2010 and October 2011 to tame inflation, which eased marginally to 6.89 per cent last month, from 6.95 per cent in February. It was 9.68 per cent in March last year.

Besides, sustained foreign capital inflows and higher cues from European markets boosted investor sentiment.

The BSE 30-stock index, Sensex, opened the day lower at 17,047.87 and declined further to 17,010.16. Later, it recovered to 17,173.06 before settling at 17,150.95 up 56.44 points or 0.33 per cent from Friday’s close.

The NSE 50-stock index Nifty moved up 18.75 points or 0.36 per cent to close at 5,226.20. In Europe, key markets in France (CAC), Germany (DAX), were up, while while UK’s FTSE was down.

Shanu Goel, Research Analyst at Bonanza Portfolio said, “Market is expected to be highly volatile tomorrow as RBI’s annual policy meeting will determine the short term trend of the market, which is expecting at least 25 bps (0.25 per cent) cut in the rates. Any adverse or positive surprises on that account will lead to volatile session.”

Positive trend in European markets led markets to close the day on positive note, she said.

Asian markets closed lower with key indices in China, Hong Kong, Japan, South Korea and Taiwan down by up to 1.74 per cent. Singapore was up marginally.

In all, 15 stocks advanced and 14 decline, while Wipro closed unchanged. Tata Motors shot up 3.91 per cent, followed by SBI (2.44 pc), ITC (2.07 pc), L&T (1.54 pc), Maruti Suzuki (1.41 pc), ICICI Bank (1.02 pc) and Tata Steel (0.97 pc) and Bhel (0.87 pc). However, Bharti Airtel fell 1.74 pc, Infosys (1.41 pc), Sun Pharma by (1.20 pc) and HUL (0.68 pc).

Among sectoral indices, the BSE-Auto rose 1.31 pc, Bankex - 1.22 pc, Capital Goods - 1.10 pc, Realty - 1 pc and FMCG - 0.97 pc. The total market breadth at the BSE turned positive, as 1,551 stocks gaining ground, while 1,223 finished with losses.

The total turnover dropped sharply to Rs 1,799.55 crore from Rs 2,961.77 crore on Friday. (PTI)

New Delhi, April 16:  India’s inflation declined marginally to 6.89 per cent in March as compared to 6.95 per cent in the previous month, helped by softening in prices of manufactured products, giving rise to the hope for first rate cut by the central bank in three years when it announces annual monetary policy on Tuesday.

However, the monthly wholesale price index data released by the Ministry of commerce and industry on Monday showed that inflationary pressure continued in the system.

Food inflation soared to 9.94 per cent in March mainly due to a sharp increase in prices of vegetables and milk.

Finance Minister Pranab Mukherjee said rise in the prices of food items were disturbing and the government would take necessary steps to address the supply-side bottlenecks to ease the prices.

“Food inflation in the month of March has increased which is a disturbing factor. Supply side constraints have substantially affected food inflation. We will be addressing that,” Mukherjee said, reacting on the monthly figures.

The finance minister said the government would have been more comfortable had the inflation declined to the level of 6.5 per cent.

Prices of vegetables surged by 30.57 percent year-on-year in the month under review, milk became costlier by 15.29 per cent, pulses became dearer by 10.05 per cent and prices of egg, meat and fish rose by 17.71 per cent.

However, onion, fruits, wheat, fibres and non-food articles became cheaper during the last month of 2011-12 when compared to the price of these items in the corresponding month of previous year.

Meanwhile, the government revised upward the January inflation data to 6.89 per cent as compared 6.55 per cent announced earlier.

Build-up inflation in 2011-12 was 6.89 per cent as compared to a build up of 9.68 per cent in the previous year.

Manufactured products, which have almost 65 per cent weight in the Wholesale Price Index (WPI), showed moderation in prices. Inflation in manufactured products moderated to 4.87 per cent in March as compared to 5.75 per cent in the previous month.

Industrial output grew by lower than expected 4.1 per cent in February, according to official data released last week.

Continued inflationary pressure and lower than expected growth have added to the dilemma of the central bank. It is widely expected that the Reserve Bank of India would lower policy rates by 0.25 percent on Tuesday in its monetary policy for 2012-13. The RBI has not cut rates in the last three years.

Industry associations have been pitching for rate cut to stimulate growth. “FICCI believes that the stage is now set for a rate reversal by the RBI by at least 50 basis points, beginning tomorrow,” the Federation of Indian Chambers of Commerce and Industry (FICCI) said in a statement.

“Such a move is also consistent with RBI’s stance that policy rates have peaked off and will be headed lower from here on,” it said.

Sandip Somany, president, PHD Chamber, said re-emergence of food inflation may trigger the downside risks to economic growth vis-à-vis global economic slowdown. “Hence, drastic policy actions needed to resume the comfortable growth trajectory,” Somany said.

In the macroeconomic and monetary developments document released a day before the annual monetary policy statement for 2012-13, the RBI said India’s economic growth is likely to improve marginally in the current financial year from the projected growth of 6.9 per cent in 2011-12 but inflation will remain sticky due to high oil prices, impact of hike in taxes, wages and large suppressed inflation.

“With significant upside risks to inflation, monetary policy needs to keep them anchored, while shifting the balance of policy to arrest the deceleration in growth momentum,” the central bank said. (IANS)

Hold SBI, says Rajesh Agarwal

Agarwal told CNBC-TV18, “In the short-term much depends on what tomorrow’s Reserve Bank of India (RBI) policy would be although we all believe that there would be a 25 bps cut but that again depends on Mr Governor. But as far as SBI is concerned, we think it is on a strong fundamental footing, one of the largest PSU banks, last quarter NIMs were 4.05% which was the best in the industry and the management is confident of maintaining that kind of NIMs and I think one should continue holding the stock for a target of maybe Rs 2,400-2,450 in the next three-six months.” He further added, “Despite the fact that if no CRR cut is done tomorrow there might be some short-term blips in the stock but any fall to the range of Rs 2,100 or so should be a good entry point. So I would suggest buy on dips and keep on adding to the old portfolio. SBI is a good stock.”

Buy JSW Steel on dips, says Rajesh Agarwal

Agarwal told CNBC-TV18, “One should continue holding JSW Steel. Our price target for this stock in the next six-nine months is around Rs 900. If you look at the valuations, it is trading at a P/E of around 10 times its earnings, which we think is quite reasonable considering the kind of mines, the kind of projects this company has. Although the overhang of the mining ban and all is going to continue for some more time in the near future and any positive or negative newsflow from that front is going to give the direction for the stock price but that is for the short-term.” He further added, “We believe that any fall to the range of around Rs 680-700 would be a good price to accumulate and with a price target of Rs 900 in next six-nine months. So I would suggest a buy on dips kind of strategy on the stock.”

Bank of Baroda can test Rs 816: IIFL

Murlidharan told CNBC-TV18, “Apart from SBI, Kotak Mahindra Bank, I have been looking into Bank of Baroda. I feel that’s the best script and that can actually outperform these because SBI we are seeing it fluctuate last couple of days. In Kotak Mahindra Bank there is cash based buying which is happening.” He further added, “I really feel the momentum still might come in and may be possible after the event but specifically if it’s an event I feel Bank of Baroda is one script I guess Rs 792 is what it is trading at, the stop loss can be Rs 784 and we are expecting close to Rs 816 on that.”

Buy RIL around Rs 700: Nooresh Merani

Merani told CNBC-TV18, “If you look at Reliance Industries (RIL) around a year back or so it was in a range of Rs 900 to Rs 1,100. This has shifted to Rs 900 to Rs 700 so roughly the floor would be around Rs 680 levels on the downside and upside anywhere between Rs 850-900. So I would suggest buying around Rs 700 levels and whenever it starts rising above Rs 850-900 one should start reducing the position into the stock.” He further added, “ICICI Bank tends to give more beta part and it has been holding on to that Rs 840-850 levels for the last three weeks. So I have a defined stop loss at Rs 840 levels and buying at Rs 855-860 gives me a good risk reward in case of a positive announcement.”

Remain invested in DCB: Nooresh Merani

Merani told CNBC-TV18, “Recently DCB gave a breakout around Rs 47 levels, so I would keep a stoploss just wee bit below it around Rs 46 and continue to hold on. I would expect a move to Rs 55 in the short-term. So I would suggest a short-term hold on the stock and as a short-term hold means you can hold on for another couple of week or more for this move to Rs 53-55.”

Mcleod Russell has target of Rs 303: Anu Jain

Jain told CNBC-TV18, “This market is more now where you play the breakouts and the breakdowns rather than the ones which are trading in the zone. So I feel Mcleod Russell is looking good for a breakout. It’s at about Rs 280-275, closed positive on Friday. If you want to see the major supports these are close to Rs 258, so that’s very low but the breakout that it’s given I think it looks difficult that it will breach those Rs 272-273 levels.” She further added, “It’s poised for about Rs 303 and if it crosses those levels of Rs 282 it’s going to make another good move of 3-4% maybe possibly today or tomorrow. So a 2% move on Friday looks poised for another 5%. I think keeping about any dips for opening down today should be bought into with a stoploss closer to Rs 272 and a target closer to Rs 303.”

Videocon Industries may slip to Rs 165: Anu Jain

Jain told CNBC-TV18, “Videocon Industries has been taking support around those Rs 171 levels. But the way it’s poised and closed on Friday, no major breakdown, but still it’s looking very good to breakdown right up to about at least Rs 165 intraday and probably Rs 157 if the market goes down this will be sharply down. So this is a very close stop loss closer to Rs 172-173 and I think you are poised intraday to Rs 165 and probably if the downtrend continues to about Rs 157.” She further added, “I think ITC is still looking good. So from where it’s closed, it’s looking good for about Rs 252 odd. Obviously the move is going to be slow and steady. It’s never been one of those which has moved drastically. But any dip or these levels are good to even now add ITC for those Rs 252-253 levels.”