Markets react positively to favourable inflation data, lower crude prices.

Markets Up Markets ended higher as buying interest emerged in Oil & gas and banking shares following announcement of favourable  inflation numbers. Headline inflation for March, as measured by wholesale prices, was 5.96 per cent, the lowest reading in over three years. The March inflation data comes on the heels of a softening trend in the international price of crude, which eases pressure on the general price level in India.

The Indian basket of crude on April 12 (Friday) was $101.35, lower than last month’s average of $ 105.95.  

The BSE Sensex, after touching a low of 18,144 recovered to a high of 18,424. The index finally ended  at 18,357.80, up 115.24 points or 0.63%.

The NSE Nifty touched a low of 5500.30 before ending at 5,56840, up 40.15  points or 0.72%.

Will the RBI choose to lower the key rates in its next policy meet on May 3, is the moot question for the markets. RBI Governor  Subbarao may choose to be cautious with interest rates, but he may well loosen monetary policy through a cut in the cash reserve ratio. The liquidity deficit in the system has not eased in April and the governor may have no choice but to infuse more liquidity into the system.

It’s going to be a ‘wait & watch’ situation for the markets.