Global cues, rate cut hopes boost markets

The benchmark indices ended higher on Tuesday, amid firm global cues, led by banks as lower inflation in July raised hopes of a rate cut by the central bank. Gains in index heavyweight Reliance Industries also boosted sentiment. The Sensex ended at 17,728, up 95 points and the 50-share Nifty jumped 32 points to close at 5,380.

The markets opened lower in early trades and remained range bound till the announcement of the inflation data.

The WPI inflation for the month of July came in at 6.87 per cent lower than the street expectation of 7.24 per cent. The fuel group inflation came in at 5.98 per cent versus 10.27 per cent during the previous month.

Food article inflation lowered to 10.06 per cent compared to 10.81 per cent  and the primary article inflation was at 10.39 per cent versus 10.46 per cent on a month on month basis.

Meanwhile, the European markets were trading higher as slightly better than expected performances by the German and French economies in the second quarter eased anxiety about wider euro zone data that are likely to show the bloc sliding back towards recession. The CAC, DAX and FTSE were trading higher by 0.5-0.8 per cent each.

The Asian markets ended higher on the back of bargain hunting. Hang Seng advanced 210 points to 20,292, Nikkei jumped 45 points to 8,929 and the Taiwan Weighted closed at 7,479, up 43 points.

Back home, banking stocks witnessed renewed buying interest on the back of July inflation data, reviving hopes that the central bank might cut the key rates in the next policy review. ICICI Bank, State Bank of India, Axis Bank, Bank of Baroda, IDBI Bank, Punjab National Bank and Kotak Mahindra Bank are among the top banking gainers from the heavyweight space.

Tata Steel was the top gainer among the Sensex stocks. It advanced nearly 3 per cent to close at Rs 406 after reporting a better-than-expected consolidated net profit of Rs 598 crore for the quarter ended June 30, 2012. Analysts, on an average, had expected net profit of Rs 530 crore for the quarter. Total income from operations grew 2.5 per cent at Rs 33,821 crore on y-o-y basis.

Tata Motors, Jindal Steel, ONGC, Gail India, index heavyweight Reliance Industries, Coal India, Mahindra & Mahindra, Larsen & Toubro, Hindustan Unilever and Infosys were also among the gainers, up 0.6-2.6 per cent each.

On the other hand, Sun Pharma was the top loser from the heavyweight space. The stock slipped 2.2 per cent to Rs 667 on reports that a minority shareholder of Israel's Taro Pharma rejected the company's revised offer price of $39.5 a share for a buyout.

HDFC, Sterlite Industries, Bajaj Auto, Hindalco, Hero MotoCorp, BHEL, Cipla, Maruti Suzuki and NTPC also ended weaker by 0.3-1.7 per cent each.

Led by gains in heavyweights such as GAIL, ONGC and RIL, the BSE oil & Gas index ended as the sectoral gainer. The index gained 1.3 per cent or 107 points to close at 8,471. Bankex, metal, PSU, auto, consumer durables and IT indices also advanced 0.4-1 per cent each.

At the same time, realty, healthcare and power indices ended lower in trades on Tuesday.

Among the individual stocks, Kingfisher Airlines rallied 6.5 per cent at Rs 9.50, extending its previous day's 20 per cent surge after the company said it is in talks with several investors to raise funds.

Indraprastha Gas Limited (IGL) advanced 3.5 per cent at Rs 266, extending its past two day's 7 per cent rally after the Supreme Court has refused to stay the order of the Delhi High Court in the case involving IGL and gas regulator.

Amara Raja Batteries soared 14 per cent to Rs 364 after reporting a robust 95 per cent year-on-year (yoy) jump in net profit at Rs 76 crore (Rs 760 million) for the quarter ended June 30, 2012 on back of higher sales. Total operational income grew 32 per cent at Rs 694 crore (Rs 6.94 billion) on y-o-y basis.

The broader markets ended on a flat note. The BSE mid-cap index ended higher by 0.3 per cent at 6,148 and the small-cap index advanced 0.25 per cent to end at 6,596.

The overall breadth was neutral as 1,412 stocks advanced while 1,385 declined.