Sensex, Nifty turn green as April IIP lifts rate cut hopes

After a dismal start, the markets are trading in the green post the IIP data for the month of April which came in flat at 0.1 percent in April compared to a year ago.

Both the Sensex and the Nifty are up 0.25 percent. The BSE Sensex is trading at 16,709, up 41 points while the Nifty is up 11 points to 5,065. The rise in markets could be attributed to expectations that the RBI may cut key policy rates in its meeting on 18th June. Market analyst are expecting the RBI to cut repo rate or the cash reserve ratio by 50 basis points. In the hope of a rate cut, the Bankex index rose the most, up 1%. It was followed by Consumer Durables, Realty, Capital Goods and Auto.

Among sectoral indices, eight are trading in the green led by bankex, consumer durables and realty. The capital goods index is up 0.75 percent led by gains in Pipavav Defence (2.4 percent). L&T (1 percent) and BHEL (0.25 percent) have gained marginally.

In their last meeting, the RBI had said that there would be less room to cut rates but know looking at the weak growth, experts feel that there is room for growth. Even State Bank of India (SBI ) chairman, Pratip Chaudhuri, expects the RBI to cut CRR by 100 basis points. (CRR is the proportion of deposits that a bank must keep with the RBI reserves.)

Stock specific news :

•Pipavav Defence and Offshore Engineering Company gained 1.5 percent after the company said it has decided to enter into a strategic partnership with European naval defence company DCNS.

•Sterlite Industries gained 1.4 percent on reports Vedanta Aluminium has acquired 24.5% stake in Larsen and Toubro-promoted Raykal Aluminium, that holds certain bauxite mining licences in Odisha, for Rs 200.70 crore.

•Jindal SAW gained 0.61 percent reports the company has won a $198 million contract from Iraq to build and operate a factory for manufacturing oil and gas pipelines in the south.