Markets end higher as S&P reaffirms India rating

Markets bounced back in late afternoon session after a range-bound day of trades this Friday on back of buying witnessed in rate-sensitive sectors such as banks, real-esate among others. Capital goods index staged a recovery as well and erased morning losses.

The Sensex ended at 20,286 - up 39 points. Nifty ended up 17 points at 6,187.

Risk appetite improved after Standard & Poor's maintained their rating on India without downgrading it which was feared by market participants due to country's burgeoning current account defecit.

According to TV reports, S&P has affirmed BBB- rating on India. They have retained their negative outlook.

Further, they have said that there is a 1 in 3 chance of downgrading India in the next 12 months.

The ratings agency, however, said there was scope to upgrade the sovereign ratings if the government unleashes public and private investments to spur economic growth.

Meanwhile hopes of an interest rate cut by the Reserve Bank of India in its June 17 monetary policy further supported buying.

The Nikkei share average rose on Friday with investors snapping up reflationary plays such as real estate stocks on the dips -- posting a second week of gains supported by the benign effects of a weak yen.

Broader markets also recovered in late noon deals, gaining 0.1-0.3% each.

From the sectoral indices, BSE power index surged 3% at 1,789.

The realty index gained 2% on expectations that the RBI may further cut policy rates to perk up economic growth after the latest data showed a sharp fall in wholesale price inflation in April 2013.

Analyst at Bank of America Merrill Lynch expect the RBI to cut policy rates 25bp on June 17 and have preponed another 25bp rate cut to July 30 from October.

Capital goods staged a smart rebound and ended up 3% at 10,423. Earlier in the day, the index had touched a low of 10,461. However, weakness remained in the consumer durables, healthcare and metal indices.

IT stocks rose on a weak rupee.

The rupee today lost 0.07 paise to 54.84

against the dollar in early trade on the Interbank Foreign Exchange due to appreciation of the US currency against euro overseas.

Infosys added 0.8%at Rs 2,351.

TCS added 1%.

BHEL advanced 4%, followed by NTPC, ICICI Bank and Larsen & Toubro. Cipla was up 0.5% at Rs 425. Shareholders of Cipla Medpro South Africa have approved Cipla's cash offer to acquire 100% of Cipla Medpro through itself or through its nominated subsidiary.

Meanwhile, Bharti Airtel shed 2% at Rs 316. Sterlite dropped 1.3%. Market heavyweight, Reliance slipped 0.7%, followed by Hero MotoCorp and Sun Pharma.

Bank stocks fell on profit booking after recent gains triggered by expectations that the RBI may further cut policy rates. HDFC bank and SBI ended flat at Rs 719 and Rs 2425, respectively.

ITC posted 19.42 per cent rise in net profit at Rs 1,927.98 crore for the fourth quarter ended March 31, 2013.

The company had posted a net profit of Rs 1,614.36 crore in the same period of previous fiscal. Net sales of the company rose to Rs 8,180.30 crore for the fourth quarter ended March 31, 2013, compared to Rs 6,861.35 crore in the same period of previous fiscal, ITC Ltd said in a filing to the BSE.

The stock ended down 0.6% at Rs 335.

Shares of cement manufacturer ended firm after the Competition Appellate Tribunal (COMPAT) directed 11 cement producers to pay 10% of a Rs 6,307 crore penalty imposed on them by the Competition Commission of India (CCI) in June last year. ACC, Ultratech and Ambuja Cements gained 0.7-2% each.

“We have a positive view on the cement space and would recommend buying stocks on a decline even if the final judgement is adverse.

The cement companies will benefit from the bottoming out of the economy and a revival in the investment cycle, which is likely post the general elections scheduled for 2014. I expect the cement prices and demand to pick up going ahead. We like Grasim, UltraTech Cement, J K Cements besides ACC and Ambuja Cements,” says A. K. Prabhakar of Anand Rathi.

BSE market breadth was neutral. Out of 2,499 stocks traded 1,245 shares declined while 1,112 shares advanced.