Sensex snaps 5-day fall, gains 88 pts on declining inflation
The BSE benchmark today snapped a five-day losing streak by closing 88 points higher as hopes of a rate cut by RBI as early as January 2013 got a boost with headline inflation declining to 7.24 per cent in November.
After losing 258 points in past five sessions, the Sensex bounced back from two-week lows today to end at 19,317.25, registering a gain of 87.99 points or 0.46 per cent.
After remaining listless in early trade, the 30-share index assumed direction after data showed inflation declined to 7.24 per cent in November from 7.45 per cent in October.
Market participants were expecting 7.6 per cent number for November 2012 data, traders said.
"WPI inflation now looks on track to fall below 7 per cent by next March, opening up space for RBI to trim policy rates...policy rate now looks set to be reduced in January," said BNP Paribas, Chief Asia Economist Richard Iley.
After rebound in recent IIP data and an uptick in retail-level inflation, hopes of a rate cut in December 18 RBI meeting had dimmed.
Buying ativity was led by SBI, ICICI Bank, Tata Motors, L&T, Sterlite and Hindalco. Gains in RIL, TCS and ITC also helped Sensex cement gains amid volatile phases of trades.
Investors were also enthused by Finance Minister P Chidambaram's comment that government will take some more steps in the next few weeks to revive the economy and boost investment sentiments.
Similarly, the wide-based 50-issue Nifty of the NSE also
recovered by 28.10 points or 0.48 per cent at 5,879.60.
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