Sensex gains 185 points; auto stocks shine
A benchmark index of Indian equities markets Tuesday gained 185 points or 0.72 percent after the Reserve Bank of India (RBI), as expected, left key interest rates unchanged in its third bi-monthly monetary policy review for the 2014-15 fiscal.
The market in the early trade lost around 160.8 points to come back with a gain of 205.16 points in intra-day trade.
Healthy buying was observed in automobile, metal, consumer durables, healthcare, realty and bank scrips. However, capital goods sector came under sustained selling pressure.
The 30-scrip Sensitive Index (Sensex) of the S and P Bombay Stock Exchange (BSE), which opened at 25,817.84 points, closed trade at 25,908.01 points, up 184.85 points or 0.72 percent from the previous day's close at 25,723.16 points.
The Sensex touched a high of 25,928.32 points and a low of 25,562.36 points intra-day.
Markets seemed to have factored in the RBI move as analysts had predicted that the key interest rates would remain on hold.
"We were expecting an early signal from the RBI of softening in interest rates, now that India's economic growth is on the cusp of a recovery," said Debopam Chaudhuri, chief economist, ZyFin Research.
"However, the central bank seems cautious about inflationary conditions still and has taken cognizance of its target of six percent retail inflation by 2016. It, therefore, chose to give no such signal."
The repo rate, or the interest that banks pay when they borrow money from the RBI to meet their short-term fund requirements, has been left unchanged at 8 percent.
The reverse repo rate, or the interest that the RBI pays to commercial banks when they park their surplus short-term funds with the central bank, has been adjusted to 7 percent.
The Cash Reserve Ratio (CRR) is left unchanged at 4 percent. The marginal standing facility rate and the Bank Rate has also been kept unchanged at 9 percent.
The statutory liquidity ratio (SLR), the mandatory amount of bonds lenders must keep with the RBI, was cut by 0.5 percent to 22.00 percent of their net demand and time liabilities (NDTL) with effect from Aug 9, 2014.
In the day's trade, the S and P BSE auto index increased by 328.61 points, metal index gained 172.37 point, consumer durables index was up 84.88 points, healthcare index rose by 70.59 points, realty index climbed 50.15 points and bank index was higher by 48.52 points.
However, capital goods index was down 21.80 points.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) closed the trade 62.90 points or 0.82 percent up at 7,746.55 points.
The major Sensex gainers were: Mahindra and Mahindra, up 3.83 percent at Rs.1,229.95; ONGC, up 3.18 percent at Rs.405; Bajaj Auto, up 2.71 percent at Rs.2,150; Hindalco Inds, up 2.68 percent at Rs.195.35; and Tata Motors, up 2.20 percent at Rs.456.65.
The losers were: Hero MotoCorp, down 0.86 percent at Rs.2,584.20; Bharti Airtel, down 0.62 percent at Rs.374.50; NTPC, down 0.42 percent at Rs.140.85; ICICI Bank, down 0.39 percent at 1,485.50; and BHEL, down 0.37 percent at Rs.228.05.
Among the Asian markets, Japan's Nikkei fell 1.00 percent, and Hong Kong's Heng Seng was 0.20 percent points lower. China's Shanghai Composite Index, however, was 0.15 percent higher.
In Europe, London's FTSE 100 was up 0.34 percent, Germany's DAX Index gained 0.47 percent, and France's CAC 40 was 0.53 percent higher.
(Posted on 05-08-2014)