Indian Shares Rally On Inflation Data

(RTTNews) - Indian shares rallied on Wednesday after official data showed India's headline inflation eased to a five-month low of 6.16 percent in December from a 14-month high of 7.52 percent in November, driven largely by softening in vegetable prices.

Going by the WPI data and retail inflation numbers released earlier this week, the Reserve Bank of India is widely expected to refrain from raising its policy rates in its upcoming monetary policy meet on January 28. Most economists expect the central bank to move towards interest rate cuts in March if the trend continues.

With upbeat global markets supporting upside momentum, both the BSE Sensex and broader Nifty index rallied sharply to finish at their highest levels thus far in 2014. The S&P BSE Sensex climbed 256.61 points or 1.22 percent to 21,289.49, while the CNX Nifty index finished at 6,320.90, up 79.05 points or 1.27 percent from its previous close.

Rate-sensitive stocks led the rally, with SBI, Bajaj Auto, HDFC Bank, Tata Motors, Maruti Suzuki, Mahindra & Mahindra, Hero MotoCorp, ICICI Bank, PNB, HDFC and Bank of Baroda rising 1-4 percent.

Coal India rose 2.2 percent after the state-run miner declared an interim dividend of Rs 29 per share amounting to Rs 18,317 crore, which includes Rs 16,485 crore to the government.

Reliance Industries pared early gains to end 0.1 percent higher amid reports the energy giant is looking at buying Petronas' 11 percent stake in one of Venezuela's biggest petroleum projects.

State-run oil companies ONGC, HPCL and IOC rose between 0.4 percent and 2 percent as Brent crude prices dropped towards $106 a barrel on the prospects of a rise in Iranian oil exports.

Jet Airways gained 2.2 percent after it launched a daily ATR 72-500 flight between Vadodara and Pune via Indore.

Yes Bank added 1.9 percent after its quarterly profit grew 21 percent from a year earlier amid lower provisions and increased earnings from non-interest income.

ITI shares soared 6.7 percent after the Cabinet Committee on Economic Affairs extended until September a proposal for the continuation of reservation quota for the company on procurement orders by state-owned BSNL and MTNL.

Manappuram Finance jumped 5 percent and Muthoot Finance rose 1.2 percent after ICRA revised the outlook on the outstanding long-term ratings of the gold financing firms.

Ranbaxy Laboratories fell 2.3 percent, extending recent losses, after the U.S. Food and Drug Administration raised concerns about manufacturing practices at its active pharmaceutical ingredient manufacturing plant in Toansa, Punjab.

Liberty Shoes plunged over 6 percent on profit taking after recent sharp gains. Sharon Bio-Medicine tumbled 4 percent after its board approved a stock split and a bonus issue.

The Asian markets rebounded from the previous session's sell-off amid optimism the global economy is strengthening. U.S. retail sales topped estimates and the World Bank issued a positive outlook for the global economy, giving investors a reason to be optimistic. European stocks also gained ground, lifting the regional benchmark index up for a fourth consecutive session.

The World Bank raised its global growth forecasts, but warned of rising global interest rates and potential volatility in capital flows as the Federal Reserve starts cutting its monthly bond-buying program by $10bn a month from January.