FII inflow lifts sentiment; Sensex up 333 pts, Nifty above 7700

Moneycontrol Bureau

Equity benchmarks surged more than 1 percent on Monday, with the sentiment buoyed by consistent inflows of foreign money and recovery in European markets. Another reason for smart rally could be hopes of a rate cut in the upcoming RBI monetary policy meet that is scheduled to be held on April 5.

The 30-share BSE Sensex spiked 332.63 points or 1.33 percent to 25285.37 and the 50-share NSE Nifty rose 99.90 points or 1.31 percent to 7704.25. The broader markets also gained strength with the BSE Midcap and Smallcap indices rising 1.4 percent each.

Foreign institutional investors have bought more than Rs 1,700 crore worth of shares last Friday, when the Sensex rallied 275 points. So far in March, they made purchases of more than Rs 12,000 crore while domestic institutional investors sold nearly Rs 8,000 crore worth of shares.

Experts expect more FII inflows in near term. According to them, this rally could be on hopes of rate cut, especially after the government slashed retail savings rate, but likely 25 basis points cut is already priced in.

Neeraj Gambhir of Nomura India says rate cut could be even more than 25 basis points if the RBI feels that the downtrend in consumer inflation is sustainable, though the possibility of that is slim.

According to him, the market will be watching for the language of the RBI commentary in the credit policy.

On the global front, European markets also recovered after weak opening, tracking upside in oil prices. Germany's DAX gained nearly a percent followed by France's CAC and Britain's FTSE with 0.2 percent rise. Asian markets ended mixed with the China's Shanghai rising 2.2 percent.

Back home, banking & financials and FMCG stocks were the leaders in trade today. Nifty Bank and Nifty FMCG rallied nearly 2 percent.

HDFC, HDFC Bank, ICICI Bank, State Bank of India, Punjab National Bank, Bank of Baroda and Axis Bank gained 1.5-3 percent. HUL topped buying list on Sensex, up 4 percent while Hero Motocorp and BHEL declined over a percent.

ITC climbed 1.7 percent. Credit Suisse maintained its outperform rating on the stock, stating that it can rejoice as most states have not hiked value added tax on cigarettes in Budget.

Lupin extended fall today as well, hitting a fresh 52-week low of Rs 1,502.20 intraday. The stock was down 1.5 percent, in addition to 7 percent downside after the company received observations list on Goa facility from the US health regulator.

In broader space, Indiabulls Housing Finance gained 5.5 percent after Credit Suisse has upgraded the stock to outperform with a target price of Rs 800, citing an opportunity in recent correction.

IDBI Bank surged 4.5 percent as a media report suggested that the government has started process for dilution in the bank. VA Tech Wabag climbed nearly 5 percent on getting record orders worth Rs 5,000 crore in current financial year 2015-16.

The market breadth was positive as about 1489 shares advanced against 1166 declining shares on Bombay Stock Exchange.