Sensex, Nifty inches up ahead of RBI; midcaps outdo largecaps

After starting the week with strong gains, the Sensex today opened almost flat at 17,207 points, gaining close to 64 points and the Nifty 18 points at 5,224 points, ahead of the the RBI’s first quarter review of monetary policy today.

The RBI has maintained in its macro review that although the monetary conditions have eased in 2012-13, there continues to be a slack in the Indian economy as inflation persists and leaves little space for monetary policy.

The rupee gained marginally against the dollar to 55.46 from Monday’s close of55.58.

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The Asian markets held steady on Tuesday as investors await for cues from the US Federal Reserve and the European Central Bank on extending support to their respective economies. The ECB may even resort to printing more currency, if need be, to save the collapsing euro, media reports said.

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Domestically, the central bank, in its macro report, has again dashed corporates’ hopes of a rate cut in today’s monetary policy review, reiterating its call for government steps to kick in fiscal consolidation through long-term measures. In all likelihood, companies have also got adjusted to the RBI’s hawkish stance on inflation and have more or less tempered their call for rate cut. Banks, however, expect a reduction in their cash reserve ratio, which is the proportion of cash they keep with the RBI.

The Bank index continues to take the lead with ICICI Bank and HDFC Bank maintaining its momentum. Among the frontline Wipro, TCS and Cipla gained more than 1 percent while Infosys and IDFC lost by half a percent.

There were gainers in the midcap band, including Firstsource Solutions gaining almost 7 percent ahead of its numbers. Hexaware Technologies, PTC India and JK Tyres were among the strong gainers in the midcap space.

Stocks in news

Deccan Chronicle After hitting a new low on Monday, post insolvency reports Deccan Chronicle gained almost 5 percent following media reports that the company has informed stock exchanges that it has pledged 14.5 percent more of its shares with Religare Finvest.

Ciplagained nearly 2 percent ahead of its quarterly earnings

Coal India gained marginally ahead of the board meeting to discuss the fuel supply acts with power companies

Bharti Airtelis down almost 2 percent after media reports that the company might issue a round of equity shares to the public.

United Spirits gained nearly 2 percent.