Markets end firm; CG, IT, pharma, metal stocks gain

30 May 2008

The markets have closed on a positive note amid mild volatility through the day in the favour of advances. Capital goods, technology, metal and pharma stocks maintained upside while power, oil, realty and auto stocks remained in the red. Markets ignored higher inflation numbers while reacted positively to the GDP numbers. Market breadth was in the favour of declines. Relaxation in ECB norms also played some role.

Inflation numbers have increased further; for the week ended May 17 it stood at 8.1% as against 7.82% in earlier week. It was bit higher than market estimation of 7.91%.

Gross Domestic Product (GDP) for the quarter ended March 2008 stood at 8.8% as against 9.7% in the same period of last financial year. In the same period, Farm sector growth dipped at 2.9% from 4.9%, manufacturing growth declined at 5.9% from 12.8% while construction growth jumped at 12.6% versus 12.2%. For FY08, GDP growth revised to 9% from 8.7% earlier and Farm sector growth at 4.5% versus 3.8%.

Relaxation in ECB norms also supported the markets, especially capital goods stocks, which increased foreign inflow in India. Yesterday the government increased ECB limit for core sectors to USD 100 million and doubled cap on FII investments in corporate bonds to USD 3 billion. USD 500 million cap per company under automatic route remained as it is. Government has upped cap on cost of 3-5 years ECBs to 200 bps above LIBOR and over 5 years ECBs to 350 bps above LIBOR.

The Sensex closed at 16,415.57, up 0.61% or 99.31 points after hitting an intraday high of 16,540.49 and low of 16,314.99. The Nifty has hit a high/low of 4908.85 and 4833.45, respectively, before ending the day at 4870.10, up 0.72% or 34.8 points.

Market breadth was in the favour of declines; about 1135 shares have advanced, 1805 shares declined, and 171 shares remained unchanged.