Nifty ends above 7400 for 1st time; BSE Metal surges 5%

Equity benchmarks ended at record closing highs on Tuesday after the RBI credit policy review indicated huge amount of liquidity coming into the system . Improving China's factory data too supported the market.

The 50-share NSE Nifty closed above 7400-mark for the first time ever, up 53.35 points to 7415.85 while the 30-share BSE Sensex jumped 173.74 points to 24858.59.

The policy measures of the Reserve Bank of India (RBI) have given a very clear indication that they are here to consider the differential rates of interest, says Deven Choksey, MD, KR Choksey Shares and Securities.

''The way they are talking about bringing the liquidity back into the system, it does suggest that in next three-six months we will see a larger amount of credit offtake taking place (that is what the market wanted from the regulator),'' he elaborates.

Anand Rathi maintains its view of 25-50 basis points cut in Q3FY15, followed by another 50-100 basis points reduction in CY15.

The central bank left repo rate and cash reserve ratio unchanged at 8 percent and 4 percent, respectively while it slashed statutory liquidity ratio by 50 basis points to 22.5 percent (releasing Rs 40,000 crore of liquidity locked up in government securities) and cut liquidity under export credit refinance to 32 percent from 50 percent.

The Reserve Bank says it remains committed to keeping the economy on a disinflationary course, taking CPI inflation to 8 percent by January 2015 and 6 percent by January 2016.

''If the economy stays on this course, further policy tightening will not be warranted. On the other hand, if disinflation, adjusting for base effects, is faster than currently anticipated, it will provide headroom for an easing of the policy stance,'' it adds.

In the banking space, private sector lender ICICI Bank was down 0.25 percent and Axis Bank declined 0.15 percent while HDFC Bank gained 0.56 percent.

Metals were the biggest gainers in today's trade with the BSE Metal Index rising 5 percent. A private survey showed that China's factory sector turned in its best performance in four months in May as export orders improved although activity still contracted.

Sesa Sterlite surged 6.5 percent and Coal India gained 5.3 percent. Tata Steel rallied 6.7 percent and SAIL was up 4 percent.

In case of Tata Steel and SAIL, sources told CNBC-TV18 that Odisha government has allowed mining in four Tata Steel and three SAIL iron ore mines. SAIL has received environment nod for its Chhattisgarh iron ore mine, say sources.

BSE Realty Index gained 3 percent after sources say that finance ministry is likely to announce tax breaks for Real Estate Investment Trust (REITs) in Budget. DLF surged nearly 5 percent.

Shares of ONGC, NTPC, Hero Motocorp, BHEL and Hindalco Industries climbed 3-4 percent. Index heavyweights Reliance Industries and HDFC were up 1-1.7 percent.

However, ITC, Hindustan Unilever, Dr Reddy's Labs, Gail and Wipro were down 1-3 percent.

In the broader space, sugar stocks like Bajaj Hindusthan, Shree Renuka and Balrampur Chini rallied 7-10 percent as news report indicate that the government is pushing ethanol blending in petrol from current 5 percent. The move will help to release arrears of cane growers in Uttar Pradesh.

BSE Midcap Index rose 0.6 percent and Smallcap gained 1.2 percent. Advancing shares beat declining ones by a ratio of 1873 to 1120 on the BSE.

03:50 pm Stock rotation
The NSE and BSE have decided to shift around 200 securities of companies such as Bharati Shipyard, Hindustan Motors and Essar Shipping to restricted trading segment from June 6 as part of surveillance measures.

Few other stocks which would be moved to trade-for-trade category or 'T' group on both the exchanges are Aditya Birla Money, B A G Films and Media, BPL Ltd, Digjam, Khaitan Electrical, Moser-Baer, Parrys Sugar Industries and Ramco Systems.

As per separate notices issued by both the bourses, BSE will transfer 213 stocks to the 'T Group', while NSE will move 117 scrips.

In the 'T' segment, no speculative trading is allowed and delivery of shares and payment of consideration amount are mandatory.

03:40 pm market closing
The market ended at record high as RBI's dovish stance in the bi-monthly credit policy review is taken as symbolic of good days ahead. The Sensex was up 173.74 points at 24858.59 and the Nifty closed at 7415.85, up 53.35 points. About 1873 shares have advanced, 1122 shares declined, and 112 shares are unchanged.

Steel stocks hogged all limelight today as China's factory sector turned in its best performance in four months in May. Export orders improved although activity still contracted, a private survey showed, adding to signs the economy may be stabilising. Metal index ended with 5 percent gains led by Tata Steel and Sesa Strelite.

Coal India, ONGC and BHEL were top gainers in the Sensex. Among the losers were Dr Reddy's Labs, GAIL,  HUL, ITC and Bharti Airtel.

03:30 pm Big sale
Low-fare airline SpiceJet announced a super sale, offering travel at fares starting as low as Rs 2,999 (all-inclusive one way fares).

Consumers can book tickets between June 3 and June 5 2014 for travel between July 6 , 2014 and  March 28 2015, the airline said on its website. Limited inventory is available on first-come-first-served basis and the sale is not applicable on bookings made for infants and groups, the airline said.

Sale is valid for bookings made on via and connecting flights only from select cities on SpiceJet's domestic network. The stock is up over 2 percent on the BSE.

03:20 pm Modi's challenge
Swathes of India's most populous state plunged into darkness for 12 hours a day last week as temperatures in Delhi hit their highest in 16 years, with the disruptions underlining the tough challenge a new government faces in keeping the lights on.

Two years after one of the world's biggest blackouts deprived at least 300 million people of power, India still suffers from frequent cuts that undermine efforts to revive the third-largest economy in Asia. One of his first steps in tackling the energy crunch has been to unite the portfolios of power, coal and renewable energy under a single minister, Piyush Goyal. But the power sector also shows the limits to what the central government can do, with key decisions devolved to the country's 29 states.

03:10 pm Corporate view on RBI policy:
As per expectation the RBI in its monetary policy today kept the CRR and Repo Rate and Marginal Standing Facility unchanged. However, it did cut the Statutory Liquidity Ratio by 50 basis points to 22.5 percent and Export credit refinance (ECR) was cut to 32 percent from 50 percent of eligible export credit.

Commenting on the ECR cut, VS Parthasarathy Chief Financial Officer, Mahindra and Mahindra says it will not have much of an impact on the auto industry per se. '' From export point of view, the overall usage to my mind is pretty low even today, because how many of us use 50 percent refinance is a moot question,'' he adds.

However, the policy overall seems to suggest that momentum in the economy should continue and the SLR cut tells us that if demand picks up then money is available in the market. It also acts as a deterrent to any rate increase since more money is available, says Parthasarathy.

02:55pm Real estate stocks in action
DLF rallied 4 percent after sources told CNBC-TV18 that finance ministry is likely to announce tax breaks for Real Estate Investment Trust (REITs) in Budget.
 
The ministry has asked Sebi to finalise guidelines for sops for REITs, say sources. It is learnt that the ministry is considering 1-time tax break at the time of creation of REIT and exemption of withholding tax, dividend distribution tax with respect to REITs.

02:50pm Market Update
The market gained some strength again with the Sensex gaining 150 points to 24834.63 and the Nifty rising 45.20 points to 7407.70.

Tata Steel extended gains to 6.4 percent and Sesa Sterlite jumped 6 percent.

02:45pm Aurobindo Pharma in focus
The stock fell 2 percent despite the company has received final approval from the US Food & Drug Administration (USFDA) to manufacture and market Divalproex sodium
extended-release tablets USP 250mg and 500mg, says the company in its filing.

Divalproex sodium extended-release tablets is the generic equivalent of AbbVie Inc's Depakote ER extended-release tablets and indicated for the treatment of acute manic or mixed episodes associated with bipolar disorder, with or without psychotic features.

The product has a market size of approximately USD 690 million for the twelve months ending March 2014 according to IMS.

02:40pm Venus Remedies up 2.5%
Venus Remedies has received European patent for novel antibiotic product VRP008 consisting of a carbapenem and a novel aminoglycoside (NCE entity).

"The product is designed for mixed multi-drug infections for pediatric, geriatric and adult immuno compromised patients where the risk of adverse events is high and very low amount of doses are required," says Venus in its filing.

Besides this, it also received European Union patent for its novel product Elores, Potentox, Vancoplus and Achnil.

02:35pm Sugar stocks in focus
Sugar stocks like Bajaj Hindusthan, Shree Renuka and Balrampur Chini rallied 6-10 percent as news reports indicate that the new government will push ethanol blending in petrol.

According to media report, the government is pushing ethanol blending in petrol from current 5 percent. The move will help to release arrears of cane growers in Uttar Pradesh. Investors are also pining hopes that the NDA government spearheaded by Narendra Modi will increase import duty on sugar to support local prices. It is learnt that Food, Petroleum, Agriculture and Road Ministers will meet soon to discuss ethanol blending.

02:30pm European shares decline
European shares dipped and the euro held near 3 1/2-month lows against the dollar ahead of euro zone inflation data that is expected to bolster the case for the European Central Bank to ease monetary policy later this week.

The pan-European FTSE Eurofirst 300 equity index was down 0.12 percent at 0810 GMT, with technology and telecommunications stocks among the worst performers.

Traders were cautions before the 0900 GMT release of euro zone flash inflation data for May and April unemployment numbers. Price rises in the currency bloc are expected to have held steady at 0.7 percent, below the ECB's target of just below 2 percent, reports Reuters.

02:20pm FII View
With a 12-month target of 8500 and a 24-month target of 10,000 on the Nifty, Morgan Stanley's Gokul Laroia might be one of the most bullish voices on India right now. Laroia, who is very positive on Indian equities, is very hopeful of pro-growth policymaking under the Narendra Modi government.

Speaking at the sidelines of the Morgan Stanley conference, Laroia says India and Indonesia are his top picks among the emerging market basket. "I think India is on the cusp of a secular bull run," he told CNBC-TV18.

He says a lot of dedicated money has come into India but the hedge fund community is not yet fully invested into the country. "We see a very large pool of underinvested capital in India," he says.

He expects the Indian economy to grow at 6-7 percent over the next couple of years.

02:10pm Expert view on RBI policy
According to Rashesh Shah Chairman & CEO Edelweiss Financial Services SLR cut by 0.5 percent to 22.5 percent seems to suggest that RBI is confident on inflation and rupee front. And it suggests that they are setting a stage for credit growth environment, says Shah.

According to him, lowering the amount of deposits banks are required to park in government securities will give banks extra room to expand credit growth.

02:00pm Equity benchmarks lost more than half of gains in afternoon trade weighed down by FMCG and banks stocks. The Sensex rose 60.27 points to 24745.12 and the Nifty advanced 14.45 points to 7376.95.

FMCG majors ITC and Hindustan Unilever fell 1.4 percent 1.6 percent, respectively. Dr Reddy's Labs topped the selling list, falling 2.5 percent.

Private sector lenders ICICI Bank and Axis Bank declined 0.3 percent each after the Reserve Bank of India kept repo rate and cash reserve ratio unchanged while it cut statutory liquidity ratio cut by 50 basis points to 22.5 percent. However, SBI and HDFC Bank gained marginally.

Mahindra & Mahindra, Bharti Airtel, Wipro and GAIL slipped around a percent. However, metals stocks continued to shine with the BSE Metal index gaining 3.6 percent. Sesa Sterlite, Tata Steel and Coal India rallied 3.5-6 percent.

2:00 pm Big arrest: Senior BJP leader Yashwant Sinha and 300 party workers and leaders were arrested on Monday for allegedly assaulting a Jharkhand State Electricity Board official over a power crisis issue in the state.

Incidentally, Sinha admitted before the media of "instructing" the party's women activists to tie-up JSEB's Hazaribagh branch General Manager Dhanesh Jha using a rope.

"Yes, I have asked them to tie hands of the GM as women are the worst sufferers for not getting power. Their children's education is also suffering," Sinha told. According to the police, Sinha and around 300 BJP activists including 50 women, locked office of JSEB, Hazaribagh unit, around 9 AM and staged a sit-in and did not let any employee enter the office.

1:50 pm Banks recapitalise? The formation of a Bank Investment Company (BIC) will make it easier for the government to recapitalise state-owned banks, feels Harsh Vardhan, Partner, Bain & Company.

The Finance Ministry is mulling a new Bill for a holding company structure for public sector banks. If the Bill is passed, the government can transfer all PSU bank equity into the holding company called BIC.

Vardhan was part of the PJ Nayak Committee on bank governance, that had recently released its recommendations.

Vardhan says BIC is primarily a vehicle to improve governance in PSU banks although the government can at an appropriate time decide whether it wants to list it.

1:40 pm Low FDI: India has slipped to its lowest position in over a decade in the foreign direct investment confidence index, which has been topped by the United States for the second year in a row, a study has showed.

The survey of 300 global executives by global consulting firm A T Kearney found that the US was ranked top destination in the world for foreign direct investment.

India was ranked second for three years in 2005, 2007 and 2012 and was placed on the third spot in 2010.

India attracted USD 25.5 billion in FDI inflows in 2012, down from USD 31.6 billion in 2011, according to 2014 A T Kearney Foreign Direct Investment Confidence Index.

1:30 pm Views on policy: The Reserve Bank of India's second bi-monthly monetary policy was in-line with expectations, says former PMEAC chairman C Rangarajan. The central bank on Tuesday kept the rates unchanged but slashed the statutory liquidity ratio (SLR) by 50 bps to 22.5 percent.

According to Rangarajan, by reducing SLR with the expansion in money supply, government may not be constraint. ''I think it is a signal from the point of view of long-term reforms but in the immediate situation I do not see this acting as a constraint on fiscal borrowing,'' he adds.

Experts believe the RBI did maintain a slightly dovish tone in its press statement today saying that if the economy stays on this course, further policy tightening will not be warranted. On the other hand, if disinflation, adjusting for base effects, is faster than currently anticipated, it will provide headroom for an easing of the policy stance.

1:20 pm Buzzing: MindTree gained as much as 5 percent intraday after it started quoting ex-bonus. The midcap software company announced the issue of bonus shares in the proportion of one bonus equity share of Rs 10 each, for every one fully paid-up equity share of Rs 10 each.

It has fixed June 4, 2014 as record date for the same.

In its note, MindTree says, "Shareholders who hold their shares in dematerialised form, bonus shares will be credited to their account no later than June 9, 2014. Thereafter, the company expects to receive the listing approvals no later than June 14 and reiterates that the bonus shares can be traded at any time after the listing approvals are received."

The Nifty is holding above 7400 as RBI Governor Raghuram Rajan unveils first monetary policy review under the NDA regime.  The Nifty is up 49.65 points at 7412.15 and the Sensex is up 160.09 points at 24844.94.

The RBI has kept key rates intact, but lowers SLR rate. It says if the economy stays on this course, further policy tightening will not be warranted. It maintains tough rhetoric on CPI inflation.

The rupee is flat and gilts is a tad down. Traders are saying PSU banks are likely buying dollars.

About 1663 shares have advanced, 1067 shares declined, and 125 shares are unchanged.

Massive buying is seen in metals, cement and power stocks. The government is considering revival of sugar industries and considering to push ethanol blending in petrol from current 5 percent.  The move to help release arrears of cane growers in Uttar Pradesh.

12:59pm MindTree trades ex-bonus
MindTree share price adjusted for bonus issue in the ratio of one equity share for one share held.

The company has fixed June 04 as the record date for the purpose of issue of bonus shares.

12:55pm Kajaria Ceramics up over 1%
Brokerage house UBS has raised Kajaria Ceramics' target price to Rs 650 apiece from Rs 530. It also upped its earnings forecast by 6 percent/10 percent for FY15/FY16.

12:50pm India slips to seventh spot on FDI confidence index
India has slipped to its lowest position in over a decade in the foreign direct investment confidence index, which has been topped by the United States for the second year in a row, a study has showed.

The survey of 300 global executives by global consulting firm A T Kearney found that the US was ranked top destination in the world for foreign direct investment.

India attracted USD 25.5 billion in FDI inflows in 2012, down from USD 31.6 billion in 2011, according to 2014 A T Kearney Foreign Direct Investment Confidence Index released on
Monday.

This is the lowest ranking for India since 2001. The US moved to the top position last year displacing China as Washington made progress towards sustainable and steady economic growth, reports PTI.

12:45pm Nikkei rises to fresh 2-month high
Japan's Nikkei share average closed at a fresh two-month high after investors took heart from upbeat US manufacturing data, while the weaker yen spurred buying in exporters and index-heavyweight stocks such as SoftBank Corp.

The Nikkei ended 0.7 percent higher at 15,034.25, the highest closing level since April 4, reports Reuters.

12:38pm Interview
Orbit Corporation's MD and CEO, Pujit Aggarwal feels the current financial year 2014-15 will be a better year than FY14. According to him, structural issues have impacted profitability in the quarter ended March 2014. "Rs 50-60 crore of hit taken in Q4 was due to reversal of project," he reasons.

The Mumbai-based real estate company posted a loss of Rs 83.5 crore in Q4FY14 as against loss of Rs 10.5 crore in same quarter last year and it reported negative revenue of Rs 23 crore during the quarter as against Rs 45.8 crore in last year.

Aggarwal says three projects in South Mumbai and 1 in suburbs have restarted. "Nepean Sea Road and Opera House projects will show revenue in Q1FY15, he adds.

12:30pm Zee Entertainment in focus
Shares of Zee Entertainment Enterprises gained 2.5 after the Reserve Bank of India allowed 100 percent investment by foreign institutional investors.

"Foreign institutional investors (FIIs) can now invest upto 100 percent (revised from earlier limit 49 percent) of the paid up capital of Zee Entertainment Enterprises under the portfolio investment scheme," says RBI in its circular.

FIIs held 48 percent stake in the company while promoter and promoter group's shareholding was 43 percent as of March 2013.

12:20pm Sugar stocks sweeten
Bajaj Hindusthan, Balrampur Chini, Dhampur Sugar, Shree Renuka Sugars and Triveni Engineering rallied 7-10 percent.

Media report suggests that revival of sugar industries by pushing ethanol blending in petrol and releasing arrears of cane growers in Uttar Pradesh have become priorities for the Narendra Modi government.

Two key BJP ministers from Maharashtra and three from Uttar Pradesh, both major sugar producers, are meeting food and consumer affairs minister Ram Vilas Paswan on Wednesday to tackle these issues, the report says.

12:15pm Economist view on RBI policy
Kunal Shah, Fund Manager - Fixed Income Investments, Kotak Mahindra Old Mutual Life Insurance says the governor is concerned about India's growth slowdown. "He is fine with current inflation trajectory. Cutting SLR shows he is worried about credit offtake, which is not picking up. Only negative is SLR cut has come amid rising government bond yield This shows we are somewhere at the end of the tightening cycle," he adds.

He further says, "If government along with RBI reduces supply pressure by handling subsidies, and taking short-term measures by releasing food grains in godowns, then RBI will be happy. The governor on his part would now look at easing liquidity crunch by keeping on reducing SLR to 20 percent in the long term."

12:10pm China data lifts metals
BSE Metal Index rallied nearly 4 percent after positive manufacturing data in a private survey in China, the world's biggest consumer and producer of the metal.

China's factory sector turned in its best performance in four months in May as export orders improved although activity still contracted, a private survey showed on Tuesday, adding to signs the economy may be stabilising, reports Reuters.

12:00pm The market gained strength in noon trade with the Nifty hitting the 7400 level supported by metals and oil & gas stocks. The index rose 41.85 points to 7404.35 and the Sensex advanced 135.99 points to 24820.84.

About 1515 shares have advanced, 1031 shares declined, and 130 shares are unchanged.

Sesa Sterlite rallied nearly 6 percent followed by Tata Steel, Coal India, Hero Motocorp, NTPC, Ambuja Cements and Grasim with 2.5-4.5 percent. However, Dr Reddy's Labs, ITC, M&M, HUL, Wipro, HCL Technologies, IndusInd Bank and GAIL declined.

RBI governor Raghuram Rajan kept repo rate and cash reserve ratio (CRR) unchanged at 8 percent and 4 percent respectively. However, he allowed for a SLR cut by 50 basis points from 23 percent to 22.5 percent of with effect from the fortnight beginning June 14, 2014.

11:50 am Gold spot: Gold prices edged lower for a fifth day in a row, marking their longest losing streak in seven months as investors stuck with equity markets after US stocks hit another record high. Caution ahead of the latest European Central Bank policy meeting and a rash of key US data due this week also kept gold bulls at bay.

The spot price of gold was down 0.6 percent at USD 1,243 an ounce. The session bottom of USD 1,240.69 marked a four-month low, with the previous level set on Feb 3.

11:40 am Key takeaways from RBI policy: Lead indicators point to continuing sluggishness in domestic economic activity in the first quarter of 2014-15. The outlook for agriculture is clouded by the meteorological department's forecasts of a delay in the onset of the south-west monsoon with a 60 per cent chance of the occurrence of El Nino.

The Reserve Bank remains committed to keeping the economy on a disinflationary course, taking CPI inflation to 8 percent by January 2015 and 6 percent by January 2016. If the economy stays on this course, further policy tightening will not be warranted. On the other hand, if disinflation, adjusting for base effects, is faster than currently anticipated, it will provide headroom for an easing of the policy stance.

11:30 am Market outlook: This is a once-in-a-lifetime for Indian investors to put their money into equities, feels Raamdeo Agrawal of Motilal Oswal Securities. The risk reward ratio is quite favourable right now, he said in an interview to CNBC-TV18. The downside risk is 10 percent, and the upside is 100 percent over the three-four years, according to Agrawal.

''There is no point in waiting, the time to invest is now,'' he said.

Agrawal is bullish on pharma and IT stocks. In stock specific bets, he is bullish on L&T and Hero Motocorp.

11:20 pm Buzzing: Shares of Bharti Airtel slipped over 2 percent intraday as decks are cleared to fasten its sale of tower assets in Africa. News reports indicate that the deal to sell African tower assets could be concluded in seven days. The deal is seen to be valued at USD 3 billion and will help in deleveraging its balance sheet.

According to the news report, Bharti has already shortlisted buyers from among four tower companies. It has reportedly received expression of interest from Helios, ATC, Eaton and IHS.

Bharti entered Africa with the USD 9 billion acquisition of Kuwaiti telecom group Zain's operations on the continent in 2010. It operates across 17 countries in Africa with a network of around 15,000 towers.

The market is sluggish just as the RBI announced its monetary policy review. The Sensex is up 16.53 points at 24701.38, and the Nifty is up 3.55 points at 7366.05. About 1412 shares have advanced, 931 shares declined, and 92 shares are unchanged.

The central bank has kept repo and CRR rate unchanged at 8 percent and 4 percent  respectively but cut statutory liquidity ratio (SLR) by 50 basis points. CNBC-TV18 poll showed 90 percent of market participants expected the RBI to maintain status quo in today's credit policy. Only 10 percent expected a 25 basis points cut.

Steel stocks are gaining after positive manufacturing data in a private survey in China, the world's biggest consumer and producer of the metal. China's factory sector turned in its best performance in four months in May as export orders improved although activity still contracted, a private survey showed on Tuesday, adding to signs the economy may be stabilising.

Coal India, Sesa Sterlite, Tata Steel and SBI are top gainers in the Sensex. Among the losers are Dr Reddy's Labs, ITC, HUL, Bharti Airtel and Wipro.

10:50am Cox & Kings to cut debt
Travel firm Cox & Kings has sold the camping division of its European subsidiary for Rs 892 crore of which 855 crore is payable in cash on completion of the deal. The management says that the funds from this deal will be used to reduce debt, which currently is around Rs 4,200 crore.

The Camping division provides outdoor family holidays at over 170 third party owned campsites across 12 European countries. Cox & Kings acquired the Camping Division as part of its acquisition of Holidaybreak in 2011.

10:40am Tata Motors sales dip
Tata Motors reported 24 percent decline in total vehicle sales to 37,525 units last month. It had sold 49,304 vehicles in May 2013.

Domestic passenger as well as commercial vehicle sales declined by 24 percent  to 34,334 units in May, down from 45,430 units a year earlier.

Sales of passenger vehicles in May 2014 stood at 9,230 units, down 17 percent , from 11,134 vehicles sold in the same month of last year.

In the commercial vehicles segment, domestic sales declined by 27 percent  to 25,104 units from 34,296 units in May last year, reports PTI.

10:35am Most active shares are Hindalco, Reliance Capital, Redington India, Adani Enterprises, Tata Steel, State Bank of India, Larsen & Toubro and Jindal Steel.

10:30am Zee Entertainment in focus
Shares of Zee Entertainment Enterprises gained 4 after the Reserve Bank of India allowed 100 percent investment by foreign institutional investors.

"Foreign institutional investors (FIIs) can now invest upto 100 percent (revised from earlier limit 49 percent) of the paid up capital of Zee Entertainment Enterprises under the portfolio investment scheme," says RBI in its circular.

FIIs held 48 percent stake in the company while promoter and promoter group's shareholding was 43 percent as of March 2013.

10:20am Sugar stocks gain 3-10%
Bajaj Hindusthan, Balrampur Chini, Dhampur Sugar, Shree Renuka Sugars and Triveni Engineering rallied 7-10 percent.

Media report suggests that revival of sugar industries by pushing ethanol blending in petrol and releasing arrears of cane growers in Uttar Pradesh have become priorities for the Narendra Modi government.

Two key BJP ministers from Maharashtra and three from Uttar Pradesh, both major sugar producers, are meeting food and consumer affairs minister Ram Vilas Paswan on Wednesday to tackle these issues, the report says.

10:10am FII View
With a 12-month target of 8500 and a 24-month target of 10,000 on the Nifty, Morgan Stanley's Gokul Laroia might be one of the most bullish voices on India right now. Laroia, who is very positive on Indian equities, is very hopeful of pro-growth policymaking under the Narendra Modi government.

Speaking at the sidelines of the Morgan Stanley conference, Laroia says India and Indonesia are his top picks among the emerging market basket. "I think India is on the cusp of a secular bull run," he told CNBC-TV18.

He says a lot of dedicated money has come into India but the hedge fund community is not yet fully invested into the country. "We see a very large pool of underinvested capital in India," he says.

He expects the Indian economy to grow at 6-7 percent over the next couple of years.

10:00am The market held early gains before the Reserve Bank of India announced its credit policy review at 11 am. Economists expect no change in policy rates.

Chetan Ahya of Morgan Stanley says hawkish comments on inflation data will be negative.

The Sensex rose 75.18 points to 24760.03 and the Nifty gained 16.75 points to 7379.25. Advancing shares outnumbered declining ones by a ratio of 1274 to 678 on the BSE.

Metals and mining stocks continued to see buying interest. Tata Steel rallied nearly 3 percent as sources told CNBC-TV18 that Odisha government has allowed four iron ore mines of Tata Steel to reopen. Sesa Sterlite and Coal India rallied 2 percent and 2.7 percent, respectively.
 
NTPC, L&T, ONGC and Hero Motocorp advanced 1-2 percent while ITC, Dr Reddy's Labs, HDFC Bank, Tata Motors, Bharti Airtel, HUL and M&M lost ground.

10:00 am New deals in the air: Premier Gulf carrier Qatar Airways said it was keen to acquire a stake in IndiGo 'if available', praising the Indian no-frill carrier for its efficiency in containing costs.

The statement came from the Qatari national carrier's CEO, Akbar Al Baker, when he was asked whether the Gulf airline was keen to pick up stake in the low-cost Indian carrier, which now has the largest market share among all its competitors.

''We are keen to invest in IndiGo, if it (stake) is available. It is the most successful Indian carrier, the most cost-efficiently run Indian carrier and the most progressive one. We, as you know, always like to associate ourselves with success,'' Al Baker said at the 70th annual general meeting of the International Air Transport Association (IATA). There was no word from IndiGo CEO Aditya Ghosh in response to the messages.

9:50 am Market outlook:  With a 12-month target of 8500 and a 24-month target of 10,000 on the Nifty, Morgan Stanley's Gokul Laroia might be one of the most bullish voices on India right now. Laroia, who is very positive on Indian equities, is very hopeful of pro-growth policymaking under the Narendra Modi government.

Speaking at the sidelines of the Morgan Stanley conference, Laroia says India and Indonesia are his top picks among the emerging market basket. "I think India is on the cusp of a secular bull run," he told CNBC-TV18's Latha Venkatesh.

He says a lot of dedicated money has come into India but the hedge fund community is not yet fully invested into the country. "We see a very large pool of underinvested capital in India," he says.

He expects the Indian economy to grow at 6-7 percent over the next couple of years.

9:40 am Buzzing: Shares of Zee Entertainment Enterprises are up over 6 percent intraday as RBI has increased its FDI limit.

Foreign institutional investors can now invest up to 100 percent of the paid up capital in Zee Entertainment Enterprises, an RBI notification said. Earlier investment limit for FIIs in the company was 49 percent.

"Foreign institutional investors (FIIs) can now invest up to 100 percent (revised from earlier limit 49 percent) of the paid up capital of Zee Entertainment Enterprises Limited under the portfolio investment scheme," the notification said.

As on March 2014, promoter shareholding in the company was 43.07 percent while FIIs held 47.94 percent shares, as per BSE data.

9:30 am Policy expectations: Raghuram Rajan may not welcome the Narendra Modi government with a rate cut. A CNBC-TV18 poll shows 90 percent of market participants expect the RBI to maintain status quo in today's credit policy.

Only 10 percent expect a 25 basis points cut. But the market is divided over the future policy changes. While 50 percent expect RBI to hold rates for the rest of the year, 20 percent expect a hike and another 30 percent expect a rate cut before the year ends.

On growth, the street is in consensus with RBI's FY15 guidance of 5-6 percent. Around 80 percent of the bankers and economists expect GDP growth at 5-5.5 percent and remaining 20 percent expects growth between 5.5-6 percent.

After the massive rally yesterday, the market opened on a flat ahead of RBI monetary policy review. The Sensex is up 64.51 points at 24749.36 and the Nifty is up 12.85 points at 7375.35. About 491 shares have advanced, 92 shares declined, and 18 shares are unchanged.

Hero MotoCorp, Tata Steel, NTPC are top gainers while Tata Motors, HUL and ITC are laggards.

The Indian rupee also opened flat at 59.16 per dollar as against previous day's closing value of 59.15 a dollar.

The dollar hovers at its highest in over three months against a basket of major currencies with the euro still in the doldrums. According to Ashutosh Raina of HDFC Bank, the general market consensus for the credit policy is a status quo considering the high CPI inflation."

"The aggressive intervention by RBI in the currency market has neutralised the impact of huge capital flows resulting in the rupee moving above 59/dollar level and settling there, with the fresh range moving to 58.50-59.50/dollar," he added.

In US, stocks closed narrowly mixed on the first trading day of June, but the Dow and S&P 500 squeezed out gains to finish at fresh highs.

According to the Nikkei newspaper government pension investment fund which is the world's biggest may be raising its domestic stock weighing to 20 percent from 12 percent currently. Comments from Bank of Japan chief Kuroda and finance minister also supported sentiment in Asia.

In commodities, Brent and Nymex crude prices fell weighed on by a stronger dollar and recent data showing rising OPEC oil production.

From precious metals space gold price is near its weakest since early 2014 as rallying stock markets diverted interest from safe-haven bullion.