Benchmarks trade jubilantly as RBI cuts repo rate

Indian equity benchmarks have made a gap-up opening and are trading jubilantly in early deals on Thursday. Sentiments remained up-beat after the Reserve Bank of India (RBI) Governor Raghuram Rajan unexpectedly cut the benchmark repurchase rate by 25 basis points to 7.75% from 8%. Meanwhile, the cash reserve ratio (CRR) has been kept unchanged at 4% of net demand and time liabilities (NDTL) while the reverse repo rate stands adjusted to 6.75%. Some support also came in after United Nations (UN) in its report said that the Indian economy is likely to expand by 6.4 per cent this year, driving the economic growth in South Asia. The progress in implementing much-needed structural reforms was likely to boost the country’s economic performance in 2015. Meanwhile, Finance Ministry’s Chief Economic Adviser Arvind Subramanian said that prospects for the Indian economy look ‘very bright’ with the remarkable turnaround witnessed in recent months on the back of lower current account deficit and the slew of reforms unleashed by the new government.

On the global front, the US markets ended lower in last session following the release of a report from the Commerce Department showing a much steeper than expected drop in retail sales in the month of December. The Commerce Department said retail sales slumped by 0.9 percent in December, while economists had expected sales to edge down by just 0.1 percent. The Asian markets after negative starts pared most of their losses and were trading mostly in the green at this point of time as investors opted to buy beaten down but fundamentally strong stocks.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. On the sectoral front, realty, banking and public sector undertaking witnessed the maximum gain in trade, while there were no losers on the BSE sectoral space. The broader indices too were trading with traction, while the market breadth on the BSE was negative; there were 1414 shares on the gaining side against 537 shares on the losing side while 54 shares remain unchanged.

The BSE Sensex is currently trading at 27810.48, up by 463.66 points or 1.70% after trading in a range of 27703.70 and 27947.59. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.92%, while Small cap index up by 0.76%.

The gaining sectoral indices on the BSE were Realty up by 2.92%, Bankex up by 2.85%, PSU up by 1.48%, Infrastructure up by 1.43% and Power up by 1.32%, while there were no losers on the index.

The top gainers on the Sensex were ICICI Bank up by 3.84%, HDFC up by 3.62%, SBI up by 3.45%, Axis Bank up by 2.80% and Mahindra & Mahindra up by 2.54%. On the flip side, GAIL India down by 0.45%, Hindustan Unilever down by 0.42% and Tata Steel down by 0.25% were the top losers.

Meanwhile, optimistic over the improving fundamentals of domestic economy, Finance Minister Arun Jaitley has asserted that economic revival has started adding that the government has managed to bring current account deficit within comfort level with help from falling oil prices.

Finance Minister stated that global economic situation is facing a critical challenge and thus focus will be given to domestic market and consumption as global economy is still not showing positive signs of growth except the USA. By adding further, he stated that the government is committed to fiscal discipline, boosting investment in infrastructure and reviving of manufacturing sector. The government has taken lots of initiatives during the last 7-8 months and economic growth is improving and inflation and external fronts has managed under control. Finance Minister held a pre-Budget interaction with economists and discussed about the key measures to boost the domestic economic growth.

After registering an average growth rate of 8% during FY08-FY12, Indian economic growth had slowed down to below 5% over the last two financial years. The factors like high interest rate and stubborn inflation, low investments and slow execution of infrastructure projects have impacted country’s economy growth. However, the domestic economy has shown signs of nascent recovery and expanded at 5.5% during first half of this fiscal as compared to 4.9% in the same period of previous fiscal.  

The CNX Nifty is currently trading at 8416.70, up by 139.15 points or 1.68% after trading in a range of 8380.55 and 8453.60. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 3.98%, HDFC up by 3.90%, IDFC up by 3.77%, Ultratech Cement up by 3.52% and SBI up by 3.45%. On the flip side, Hindustan Unilever down by 0.74%, GAIL India down by 0.60%, Tech Mahindra down by 0.42%, Tata Steel down by 0.38% and Asian Paints down by 0.31% were the top losers.

Asian markets were trading mostly in the green; FTSE Bursa Malaysia KLCI increased 2.86 points or 0.16% to 1,744.87, Straits Times rose 3.42 points or 0.1% to 3,329.58, Jakarta Composite jumped 15.81 points or 0.31% to 5,175.48, Hang Seng added 29.58 points or 0.12% to 24,142.18, Shanghai Composite surged 30.47 points or 0.95% to 3,252.91 and Nikkei 225 was up by 201.16 points or 1.2% to 16,997.12. On the flip side, Taiwan Weighted decreased 9.01 points or 0.1% to 9,171.22 and KOSPI Index was down by 1.09 points or 0.06% to 1,912.57.