Benchmarks continue firm trade in late morning session

After getting a gap-up start, benchmark equity indices continued to trade in fine fettle in late morning deals on continued buying activities by both funds and retail investors. At present, Sensex and Nifty were trading above the crucial 27,700 and 8,400 levels respectively, with gains of over 1.50%.  Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by over 0.70%. 

Sentiments on the street got a boost after the Reserve Bank of India (RBI) Governor Raghuram Rajan unexpectedly cut the benchmark repo rate by 25 basis points to 7.75% from 8%. Easing rate stance will help revive health of businesses which are highly sensitive to interest rate movements apart from improving the general sentiment towards investments. Besides, encouraging quarterly earnings by some blue-chip companies and a better trend at other Asian bourses too boosted sentiments. 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. Furthermore, 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.

Back on street, all the sectoral indices were in the green with BSE Realty index emerging as the top gainer up 3.56% followed by Banking, Infrastructure and Power indices among others. In scrip specific development, Shares of Bajaj Finserv surged on reporting 24% rise in its consolidated  net profit at Rs 347.37 crore for the quarter as compared to Rs 281.11 crore for the same quarter in the previous year. Furthermore, PC Jeweller rose after the government has designated the company as nominated agency for direct import of precious metals to be used for domestic business.

On the global front, Asian stocks mostly rose as oil prices steadied after a series of plunges but gains were uneven amid uncertainty about the global economic outlook. However, the US overnight markets closed lower for the fourth straight session on concerns over global economic growth. Back home, the market breadth on BSE was positive, out of 2243 stocks traded, 1457 stocks advanced, while 698 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27771.48, up by 424.66 points or 1.55% after trading in a range of 27703.70 and 27947.59. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.87%, while Small cap index up by 0.75%.

The gaining sectoral indices on the BSE were Realty up by 3.56%, Bankex up by 2.73%, Infrastructure up by 1.49%, Power up by 1.39%, PSU up by 1.36%, while there were no losers on the BSE sectoral index.

The top gainers on the Sensex were HDFC up by 3.90%, ICICI Bank up by 3.72%, SBI up by 3.30%, Mahindra & Mahindra up by 2.67% and Axis Bank up by 2.55%. On the flip side, Hindalco down by 0.95%, GAIL India down by 0.88%, Sesa Sterlite down by 0.64% and Tata Steel down by 0.61% were the top losers.

Meanwhile, in a big surprise move, the Reserve Bank of India (RBI) has cut the repo rate by 25 basis points to 7.75% with immediate effect. Consequently, the reverse repo rate under the LAF stands adjusted to 6.75% and the marginal standing facility (MSF) rate, determined at a spread of 100 basis points above repo rate, stands at 8.75%, while bank rate also remains at 8.75%.  The RBI move came as inflation has declined significantly over the recent months below the RBI set target of 8% by January 2015.

The RBI notified that inflationary pressures have been easing since July 2014. Lower than expected inflation has been enabled by the sharper than expected decline in prices of vegetables and fruits since September, ebbing price pressures in respect of cereals and the large fall in international commodity prices, particularly crude oil. Crude prices, barring geo-political shocks, are expected to remain low over the year. Inflation is likely to be below 6% by January 2016 and these developments have provided headroom for a shift in the monetary policy stance. However, cash reserve ratio (CRR) of scheduled banks remained unchanged at 4.0% of net demand and time liabilities (NDTL).

This was first rate cut by RBI since January 2014. Keeping inflation battle at the top of agenda, central bank kept interest rate at 8%, which has impacted the economic growth as well as the investments. 

The CNX Nifty is currently trading at 8404.35, up by 126.80 points or 1.53% after trading in a range of 8380.55 and 8453.60. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were DLF up by 5.25%, HDFC up by 3.94%, ICICI Bank up by 3.86%, Ultratech Cement up by 3.37% and SBI up by 3.33%. On the flip side, GAIL India down by 0.96%, Hindalco down by 0.95%, Tata Steel down by 0.77%, Tech Mahindra down by 0.77% and Sesa Sterlite down by 0.37% were the top losers.

Asian markets were trading mostly in the green; FTSE Bursa Malaysia KLCI increased 0.19%, Straits Times rose 0.15%, Jakarta Composite jumped 0.40%, Hang Seng added 0.12%, Shanghai Composite surged 1.03% and Nikkei 225 was up by 1.46%. On the flip side, Taiwan Weighted decreased 0.13% and KOSPI Index was down by 0.16%.