Banks boost the market rally

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As markets continue to factor in positive election outcome, the momentum remains buoyant. Moreover, inflows from the institutional investors remained high during the day. Therefore, the Indian benchmark indices closed the day on a positive note. Stocks from the sectors such as capital goods, banking and power posted healthy gains today. Both indices, the BSE Small Cap and the BSE Mid Cap stood higher and were up by 1% and 0.6% respectively. The BSE-Sensex closed higher by 119 points and the NSE-Nifty was up by 40 points.

On the global front, barring few, most of the Asian indices closed the day on an optimistic note whereas most of the European indices opened the day on a weak note. The rupee was trading at Rs 60.19 to the dollar at the time of writing.

Banks drove the market rally today. Leading the pack of gainers were Bank of Maharashtra and Indian Overseas Bank that closed the day on a positive note. .

As per a leading financial daily, a news agency poll of economists suggests that the Reserve Bank of India (RBI) is unlikely to change its key policy rates from the current 8% in the forthcoming monetary policy scheduled 1st April 2014. After taking over the reins, Raghuram Rajan had hiked interest rates thrice in order to control inflation. This apparently had taken the markets by surprise. Given that the inflation has been trending down in recent periods and has touched the below 5% mark, it is expected that the RBI may maintain a status-quo on 1st April. This is the first time that the inflation has touched this low. In February, the wholesale price index had moved up to 4.7% as food and fuel prices did not surprise much. Consumer price inflation has come down to 8.1%. It is expected that the repo rates will remain unchanged at 8% levels at least by October and cash reserve ratio would be maintained at 4% until July 2015.

Barring few, real estate stocks closed the day today on a positive note. Housing Dev. Infra and Simplex Infra led the pack of gainers today.

As per an article in the Hindu Business Line, a research report by property consultant Knight Frank indicates that sales volumes of twenty five of India's largest real estate players have plunged by 43% over the past eight months. Sales volumes stood at 11.8 m square feet as compared to corresponding period's volumes of 21.85 m sq ft. While growth was seen in cities such as Bangalore and Chennai - which collectively reported a market share of 33% in Q4FY14, as compared to 16% in Q4 FY12 - a slowdown was seen in the northern market with the latter's share in sales volumes declining from 75% in Q4FY13 to a little more than half in the latest quarter. In the western region, sales volumes slowed down by a more than a third over these periods. The slowdown is reportedly on the back of delay in approvals, high cost of funds as well as the drying up of funds on the back of inventory buildups as reported by the company. Investors would do well to recall that not so long ago there were reports of huge buildup in inventories, crossing the usual stock levels of 12 months across the country. A key reason for the same is builders unwilling to cut prices despite the overall slowdown being seen in the economy.