Persistent buying activity led the Indian markets to rise steadily during the previous two hours of trade. Currently, buying activity is being witnessed in stocks across the board led by those from the capital goods, auto, FMCG and metal sectors. Stocks from the oil & gas and IT spaces are amongst the top underperformers at the moment.
The BSE-Sensex is currently trading higher by about 390 points (up 2.2%), while the NSE-Nifty is trading higher by about 120 points (up 2.3%). Stocks from the mid and smallcap spaces are also trading firm with the BSE Midcap and BSE Small cap indices trading higher by 2.9% and 3.5% respectively. The rupee is trading at 45.45 to the US dollar.
According to the latest available data, headline inflation eased slightly with the wholesale price index (WPI), rising 8.2% in January from a year earlier. The Index rose 8.4% earlier in December, compared to the prior period. India is still suffering from the highest inflation levels from among major Asian economies, and this is despite RBIs hawkish stance. Food prices in the WPI index jumped 15.7% in January compared with 13.6% rise in December. The central bank is however, likely to continue its stance, as price levels are still above the comfort zone. It has revised its projections for inflation at the end of March 2011 to 7% from 5.5% earlier. But, with 2 months to go, the RBI is still way off its target.
Auto stocks are currently trading firm led by TVS Motor, Tata Motors, Escorts and Ashok Leyland. Over the weekend, Bajaj Auto's Chairman Rahul Bajaj had stated that the company may consider reentering the scooter segment which it had exited completely last year. This is on the back of the market seeming to have revived over the past few years led by gearless scooters. In the year till date i.e. during the period between April 2010 and January 2011, the Indian scooter market has witnessed a growth of about 47% per cent to volumes of about 1.7 m units. The rationale for Mr. Rahul Bajaj's statement is that the scooter segment reviving and Bajaj Auto would be able to get a reasonable market share and also would help the company keep the profitability level quite firm. However, the company's current Managing Director, Mr. Rajiv Bajaj has stated that at present the company's focus area remains motorcycles.