Markets continue to trade firm on RBI rate cut move

Indian equity benchmarks extended early gains to continue firm trade in afternoon session, hovering near intra-day high levels on account of buying witnessed in frontline blue chip stocks. RBI's surprising move to cut repo rate by 25 basis points ahead of its monetary policy review scheduled for February 3 and firm global cues enthused the domestic markets to extend gains and all sectoral indices were trading in green on BSE. Furthermore, the World Bank statement that India would catch up with China’s growth in the year 2016 and 2017 also added to the optimistic sentiments. Banking and realty stocks were trading up to 6% higher after the RBI cut the interest rate. Investors were also piling up position in infra, capital goods  and power stocks. Among blue chip stocks, HDFC was top gainer up by around 4.43%, while HUL was top loser trading marginally down by around 0.11%. Apart from blue chips, broader indices too equally participated in the rally with both mid and small cap indices trading up by over 1.00%. In stock specific movement, UltraTech Cement has moved higher by around 4% to Rs 3,008, extending its past two day’s rally on domestic bourses, as industry has increased cement prices.

On global front, Asian markets were trading in green with Straits Times up by 0.24% and Jakarta Composite up by 0.4%. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 8,300 and 27,500 levels respectively. The market breadth on BSE was positive, out of 2,502 stocks traded, 1,544 stocks advanced, while 847 stocks declined on the BSE.

The BSE Sensex is currently trading at 27938.02, up by 591.20 points or 2.16% after trading in a range of 27703.70 and 27947.59. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.25%, while Small cap index up by 1.11%.

The gaining sectoral indices on the BSE were Realty up by 6.21%, Bankex up by 3.18%, Capital Goods up by 2.18%, INFRA up by 1.93% and Power up by 1.81%. There was no losing index on BSE.

The top gainers on the Sensex were HDFC up by 4.43%, ICICI Bank up by 4.37%, SBI up by 4.10%, Tata Power up by 3.81% and Mahindra & Mahindra up by 3.35%. On the flip side, Hindustan Unilever down by 0.11% and GAIL India down by 0.01% were the top losers.

Meanwhile, optimistic over the latest economic reforms measures taken by the government, the World Bank has said that India would catch up with China’s growth in the year 2016 and 2017.  World Bank stated that China’s growth will remain high, but will begin to taper very gently, reaching 6.9 per cent in 2017. On the other hand, India is likely to witness GDP growth at 6.4% this year from a 5.6% rate last year. Further, Indian economic growth rate is likely to increase at 7% during 2016 and 2017 and would remain higher as compared to projected 6.9% China growth rate in 2017.    

The World Bank, in its latest update of its Global Economic Prospects, has highlighted that India should be among the prime beneficiaries of the spectacular plunge in crude oil prices that has lost almost 60 percent of its value since June.

Indian economic growth had slowed down to below 5% over the last two financial years. High interest rate and stubborn inflation, low investments and slow execution of infrastructure projects were the leading factors impacting 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.

On South Asia region growth, the Bank stressed that regional growth is projected to rise to 6.8% by 2017 driven by India, the region’s largest economy, which emerged from two years of modest growth.

The CNX Nifty is currently trading at 8455.40, up by 177.85 points or 2.15% after trading in a range of 8380.55 and 8457.35. There were 48 stocks advancing against 2 stocks declining on the index.

The top gainers on Nifty were DLF up by 9.56%, HDFC up by 4.64%, ICICI Bank up by 4.45%, SBI up by 4.17% and Tata Power up by 3.87%. On the flip side, Tech Mahindra down by 0.69% and Hindustan Unilever down by 0.22% were the top losers.

Asian Markets were trading in green, KOSPI Index up by 0.48 points or 0.03% to 1,914.14, FTSE Bursa Malaysia KLCI up by 3.34 points or 0.19% to 1,745.35, Straits Times up by 7.9 points or 0.24% to 3,334.06, Jakarta Composite up by 20.65 points or 0.4% to 5,180.32, Shanghai Composite up by 50.15 points or 1.56% to 3,272.58, Hang Seng up by 74.18 points or 0.31% to 24,186.78 and Nikkei 225 up by 274.91 points or 1.64% to 17,070.87. While, Taiwan Weighted down 15.14 points or 0.16% to 9,165.09