Despite a flat industrial output growth and an S&P rating downgrade of the economy, the Indian equity markets rallied on Tuesday.
The BSE Sensex ended the day at 16,862, up 194 points (1.2 per cent). The NSE Nifty was up 61 points (1.2 per cent) and ended the day at 5,115. The markets opened flat but continued to gain momentum throughout the trading session.
The Index of Industrial Production (IIP) growth for April stood at 0.1 per cent.
“A near-zero reading on IIP, along with the S&P downgrade warning has raised hopes that, the RBI will reduce interest rates to support growth. A reduction in crude price has also made the markets more hopeful. We believe that the May inflation data as well as the developments in Greece over the next few days will influence the RBI’s decision to some extent. On the other hand, the rupee depreciation and the progress of monsoon may make the RBI wary as far as reducing interest rates is concerned,” said Mr Dipen Shah, Head of Fundamental Research, Kotak Securities.
Among the sector indices on the BSE, the realty, banking, capital goods and auto sectors saw a near 2 per cent rise. Healthcare was the only sector which saw a decline (0.4 per cent).
Among the Sensex stocks, Maruti (up 3.5 per cent), Tata Motors (3.1 per cent), L&T (2.5 per cent), Sterlite Industries (2.5 per cent) and Hindalco (2.2 per cent) were the top five gainers. The top five laggards were Dr. Reddy (down 1.2 per cent), Wipro (1.2 per cent), HUL (0.6 per cent), Sun Pharma (0.2 per cent) and Tata Power (0.1 per cent).