Stock Market: Bulls hit ground running; inflation in certain sloping downturn

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By S Jha

New Delhi, May 16: The Dalal Street trashed the Karnataka Assembly election verdict to open the gate for the bulls who took firm command on the bourses on Monday. Even while the US equity markets remain on the edge over the protracted negotiations over the debt ceiling, Indian indices came roaring in reaction to the inflation numbers.

Nifty during the day scaled the 18450 level to settle with gains of over 84 points. Bank Nifty scaled the 44000 level with the private banks leading the charge on the street. Wholesale price index came during the market hours to touch the 10 month level with a negative number.

The monetary policy meeting of the Reserve Bank of India is set to meet in the first week of the next month. The street is now expecting that the RBI will stay with the pause button even while some voices have begun being raised for Repo Rate cut. There is also anticipation that inflation now being lower than the projected 5.1 per cent level of the RBI, the Repo Rate may have peaked at 6.5 per cent, and the roadmap ahead is expected to go for the lower policy rates.

This was mirrored as the realty index gained strongly. The likes of Sobha, DLF, Godrej Properties, Prestige Estates gained strongly on the bourses on Monday. The earlier signs of nervousness that the markets will crack on the back of the rout of the Bharatiya Janata Party in Karnataka were also trashed by the bulls, who took the firm control of the market.

The foreign institutional investors continue to pour money in the cash market. They once more bought over Rs 1500 crores in the cash market, while being supported marginally by their domestic counterparts. With inflation trending down, the rate sensitives such as realty and banking scrips gained strongly on Monday.

The US market is awaiting the outcome of the meeting between President Joe Biden and the House Speaker amid hopes that the default will be averted and a debt ceiling deal will be inked.

Tata Motors led the show on the back of stellar quarterly result, with the automobile behemoth for the first time in several years announcing dividends after posting record profit. The two-wheeler companies continue to show good performance on the street, gaining smartly.