Mumbai: Indian equity benchmarks have maintained their uptrend led by buying across sectors, except banks, up over 1 per cent. Heavyweights like Reliance Industries, Infosys, Bharti Airtel, NTPC and L&T were the leaders, rising between 2 per cent and 3 per cent.
The 30-share BSE Sensex jumped 201 points to 17,140.45 and the 50-share NSE Nifty rose 59 points to 5,156.95.
The Reserve Bank of India (RBI) has hiked repo rate by 25 basis points to 8.5 per cent in today's credit policy, which was on expected lines. Apart from the rate hike, RBI also deregulated interest rates on savings bank accounts, which was negative for the banks.
"Currently, banks pay interest rate of 4 per cent on the savings bank accounts. Post this deregulation, the interest rates on Savings bank accounts bound to move up. This can have quite serious implications on the profitability of the banking system. We have attempted to summarize in this report the underlying implications with this deregulation of interest rates on Savings bank accounts," says Jagannadham Thunuguntla of SMC Global Securities.
HDFC Bank, SBI, Axis Bank and PNB were down 3.5-4.5 per cent.
However, M&M and Sterlite Industries were the top gainers, rising over 4 per cent. HDFC, Cairn India, Tata Steel, Sun Pharma and Maruti jumped 2.5-3.5 per cent. Wipro, TCS, ITC and ONGC gained 0.5-1.5 per cent.
On the global front, European markets were mixed in trade ahead of EU Summit on Wednesday.
At 13:20 hours IST : Sensex regains losses; L&T, RIL, Infosys, Bharti lead
Amidst choppy trade, the 30-share BSE Sensex touched 17,000 level aided by buying in technology, FMCG, select healthcare, auto and metal stocks. L&T, Bharti, NTPC and Reliance Industries too were on buyers' radar. However, sell-off in banking stocks post deregulation of saving rates by RBI in its policy has capped the upside. The 30-share BSE Sensex jumped 118 points to 17,057 and the 50-share NSE Nifty gained 33 points at 5,132. European markets too turned positive after initial fall.
The Reserve Bank of India hiked repo rate (at which banks borrow money from RBI) by 25 basis points to 8.5 per cent while keeping reverse repo rate and CRR unchanged. The street was expecting the same but the negative point for the bank was deregulation of saving rates.
RK Bakshi, executive director of Bank of Baroda says that this policy could be a landmark for the banking industry with regard to the savings rate deregulation and formation of working group for credit pricing.
With respect to cost of funds and its impact on profits, he says that that depends on how much the rate is hiked by. According the latest policy, investment up to Rs one lakh will return with same interest rate. “I don’t think up to Rs one lakh, even with the present 4 per cent rate of interest paid on daily balance basis, there is much scope to increase rate,” Bakshi says.
Major largecaps like Reliance Industries, Bharti Airtel, NTPC, L&T and Infosys gained 2-3 per cent. TCS, HDFC, ITC and Wipro were up 0.8-1.5 per cent.
However, HDFC Bank and Axis Bank were biggest losers, falling 4-5 per cent. PSU banks like SBI and PNB fell 3.4 per cent each. ICICI Bank, which recovered from day's low, declined just 0.2 per cent. The Bank Nifty fell 2 per cent.
Sesa Goa has remained under pressure ahead of second quarter numbers, losing nearly 2 per cent. BHEL lost 1 per cent.
At 11:36 hours IST : Sensex turns volatile after RBI policy; Bank Nifty down 2 pc
The 50-share NSE Nifty turned extremely volatile after the announcement of RBI policy. The Reserve Bank of India has hiked the repo rate -- at which banks borrow money from RBI - by 25 basis points to 8.5 per cent, which was on expected lines while reverse repo rate and cash reserve ratio remained unchanged. For the further rate hike, the central bank says, the likelihood of rate action in December policy is relatively low. However, the negative point for the banks was deregulation of saving rates - the Bank Nifty fell 2 per cent. RBI says, each bank will offer uniform rate on savings upto Rs 1 lakh. The 30-share BSE Sensex fell 7.5 points to 16931.75 and the 50-share NSE Nifty lost 2 points to 5,096.
In the financial space, HDFC Bank plunged 4 per cent. SBI, PNB and Axis Bank fell 2-2.8 per cent. ICICI Bank declined 1.4 per cent.
RBI has revised FY12 GDP growth projection downwards to 7.6 per cent from 8 per cent and kept March-end inflation projection unchanged at 7 per cent. It has maintained FY12 credit growth projection at 18 per cent.
Among others, ONGC, Coal India, BHEL, Bajaj Auto and Kotak Mahindra Bank were down 0.5-1 per cent.
However, the buying in Infosys (up 2 per cent), Bharti Airtel, L&T (up 1.6 per cent on short covering), Reliance Industries, TCS, NTPC, HUL, Maruti and ITC was supporting the market. Metal stocks too were trading higher.
About two shares gained for every share falling on National Stock Exchange.
At 10:39 hours IST : Nifty holds 5100 amid choppy trade; Infosys, ICICI Bank up
Indian equity benchmarks maintained their early trade gains ahead of RBI policy, led by support from heavyweights like Infosys, ICICI Bank, L&T, Bharti, Reliance Industries and SBI. The 30-share BSE Sensex gained 68 points at 17,007 and the 50-share NSE Nifty rose 19 points to 5,117.55.
Siddharth Bhamre of Angel Broking expects to see a strong pullback towards second half of the day. This pullback he says could take Nifty to 5,180-5,200 levels.
Experts have been expecting another 25 basis points hike in key rates. Portfolio manager, PN Vijay says RBI may be all soft today, but only in their words and not in action.
"RBI will turn less hawkish in their statement but in their actions, they will go ahead with a 25 basis point rate hike, because of the stubborn inflation," says Vijay.
Largecaps like Infosys, Cairn India, Sterlite Industries and ACC moved up 2 per cent each. Bharti Airtel, ICICI Bank and L&T were up 1 per cent each.
TCS, NTPC, SBI, HUL, Sun Pharma and Tata Steel were trading 0.3-0.7 per cent higher.
However, BHEL, HDFC Bank, Coal India, Tata Motors and DLF fell 0.5-1 per cent. Reliance Industries and ONGC were marginally lower.
At 9:20 hours IST : Sensex trades with moderate gains ahead of RBI policy
The 30-share BSE Sensex opened with a 100 point gap up following positive US cues, but erased a lot of those gains due to a sell-off in capital goods and FMCG stocks. Technology, metal and banking stocks were quite supportive. There was a bit of volatility in the market ahead of RBI policy on Tuesday. The 30-share BSE Sensex was trading at 17,002.62, up 63.34 points and the 50-share NSE Nifty rose 19 points to 5,117.30.
Infosys, HCL Tech, IDFC, ICICI Bank, Sterlite, Cairn, Hindalco, Tata Motors, Kotak Mahindra Bank and TCS were on buyers' radar.
However, Sesa Goa (ahead of numbers) lost over 1.5 per cent. L&T fell another 1 per cent after weak outlook given in last week.
JSPL, Hero Motocorp, Coal India and BHEL too were under pressure.
Results Reaction
- Titan Industries and Delta Corp fell 4-5 per cent
- VIP Industries slipped 3 per cent
- Tata Coffee gained 1.5 per cent
- Union Bank declined 1.8 per cent
Exide Industries was down 1.6 per cent.
However, DB Realty gained 1 per cent on stake sale buzz.
GIPCO shot up 7 per cent. KRBL and Kohinoor Foods were up 1.5-3 per cent as there were reports that government may impose some import duty on rice.
Global cues
Asian markets were mixed in trade. Shanghai and Hang Seng rose 0.4 per cent and 0.65 per cent, respectively. Straits Times and Taiwan went up marginally. However, Nikkei and Kospi were moderately lower.
Global markets gained ahead of crucial EU Summit tomorrow. Commodities surged on back of strong Chinese data.
The US equity markets gained for third straight day, rising 4 per cent in last 3 days. The S&P 500 ended above 1250 line first time in more than two months.
Economic data from Europe was mixed, but China reported increased manufacturing activity.
Market believes that European governments are moving closer to containing the region’s debt crisis.
The Dow Jones Industrial Average ended up 105 points at 11,913. NASDAQ Composite was up 62 points at 2,699 and S&P 500 Index ended up 16 points at 1,254.
NASDAQ outperformed on back of M&A news in the sector.
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