Markets surge as Dec WPI eases to 5-month low

Markets surged over 1% led by rate sensitive shares after December WPI which eased to a 5-month low raised hopes that the Reserve Bank of India would maintain status quo on key policy rates for the second straight month at its policy review meet end-January.

The 30-share Sensex ended up 257 points or 1.2% at 21,289 and the 50-share Nifty ended up 79 points or 1.3% at 6,321.

The wholesale inflation declined to a five-month low in December on lower vegetable prices.

WPI-based inflation in December stood at 6.16% from 7.52% a month ago, data released by Ministry of Commerce and Industry showed today.

This is the first time since May that headline inflation has declined from the previous month. In November, the WPI inflation was at a 14-month high.

The Indian rupee appreciated against the US dollar after December WPI eased to a 5-month low. The rupee was traded at 61.50 compared to its previous close of Rs 61.52 to the US dollar.

Asian shares firmed after a World Bank report said that the global economy is estimated to expand to 3.2% in 2014 compared with 2.4% in 2013 because of growth picking up in developing countries and high-income economies.

Shares in Japan firmed up after the yen eased against the US dollar. The benchmark index Nikkei was the top gainer in the region up 2.5%. Hang Seng and Straits Times ended up 0.5-0.6% each while Shanghai COmposite ended down 0.2%.

European shares firmed up on Wednesday following a World Bank report which forecasted growth in global economy in 2014. The CAC-40, DAX and FTSE-100 were up 0.3-0.8% each.

Capital Goods index was the top gainer among the sectoral indices on the BSE  which gained 2% followed by Bankex, Metal, Realty and Auto shares.

Rate sensitive shares firmed up on hopes that the RBI would keep key policy rates on hold after December WPI eased to 5-month low.

In the financial space ICICI Bank, HDFC Bank, HDFC and SBI ended up 1-2.6% each.

Among capital goods shares, Larsen & Toubro ended up nearly 3% while BHEL gained 2%.

In the auto pack, Tata Motors, M&M, Hero MotoCorp, Maruti Suzuki and Bajaj Auto ended up 1-1.5% each.

DLF was up 1.7% in the realty segment and IndiaBulls Real Estate ended up 2.6%.

Among the index heavyweights, Reliance Industries ended up 0.5% and ITC gained 1.3%.

IT majors firmed up ahead of Q3 earnings from TCS tomorrow. TCS ended up 1.1%, Infosys edged up 0.6% and Wipro closed 1.1% higher.

Shares of Coal India ended nearly 2% up at Rs 295 after the board late Tuesday approved a special dividend for the current financial year, which would fetch Rs 16485.71 crore to government exchequer and help meet its disinvestment target of Rs 40,000 crore.

Among other shares, Shares of Aarti Industries ended up 4.5% at Rs 101 after the company said that the Gujarat Pollution Control Board has allowed to re-start manufacturing activities at Vapi plant.

Shares of DEN Networks gained 1.1% to end at Rs 154 after a block deal on the Bombay Stock Exchange in early trades today.

A block deal of 400,000 shares was recorded on the Bombay Stock Exchange at a price of Rs 153.05 per equity share.

Shares of Liberty Shoes ended down 5% at Rs 148 on profit booking after the stock witnessed sharp gains since end-December on expectation of robust third quarter earnings. The stock gained over 8% from Rs 143 levels since December 30,2013 ahead of its third quarter earnings annoucement.

In the broader market, the BSE Mid-cap index ended up 0.2% and the Small-cap index gained 0.3%.

Market breadth was strong with 1,375 gainers and 1,294 losers on the BSE.