Benchmarks moves into green after RBI's surprise 50 bps rate cut

Indian equity markets have recovered early losses and are trading marginally in green in the early noon session after the Reserve Bank of India cut its key repo rate by a bigger-than-expected 50 basis points to 6.75 per cent, with inflation running at record lows and the economy in danger of slowing down. However, gains remained capped on the back of rupee depreciation. The rupee fell sharply against the US dollar in early trade today at the Interbank Foreign Exchange due to month-end demand for the American currency from importers. Traders were seen piling up position in Realty, Bankex and IT stocks while selling was witnessed in Oil & Gas, Metal, Power, FMCG and Consumer durables sector stocks.

The BSE Sensex is currently trading at 25628.68, up by 11.84 points or 0.05% after trading in a range of 25287.33 and 25703.38. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.13%, while Small cap index down by 0.26%.

The top gaining sectoral indices on the BSE were Realty up by 1.44%, Bankex up by 0.40% and IT up by 0.35%, while Oil & Gas down by 1.29%, Metal down by 1.17%, Power down by 0.38%, FMCG down by 0.33%, Consumer Durables down by 0.22% were the losing indices on BSE.

The top gainers on the Sensex were HDFC up by 2.50%, BHEL up by 1.41%, HDFC Bank up by 1.16%, Mahindra & Mahindra up by 1.16% and SBI up by 0.90%. On the flip side, Vedanta down by 4.82%, Bharti Airtel down by 3.04%, Dr. Reddys Lab down by 2.93%, Tata Steel down by 2.36% and Hindalco down by 1.98% were the top losers.

Meanwhile, finance Minister Arun Jaitley has said that the government is open to dilute its stake in public sector banks to 52 per cent. He said that “We are willing to look at all other changes including bringing down government equity to 52 per cent (in state-run banks), and therefore giving additional financial strength and teeth to the banking institutions themselves”.

Jaitley who was addressing the 68th Annual General Meeting of Indian Banks Association, also said the state-run lenders need to be given independence and should be kept away from any political interference. He added that even Prime Minister Narendra Modi has said that no bank should ever receive formal or informal directives from the government and had advised the banks to operate essentially and exclusively on banking considerations.

The FM said that government would also consider other issues including problems tied to distressed state power providers. He further stated that our distribution networks through the national grids have improved, but the final access is by the state discoms and at the level of state discoms reforms have been carried out in very few states. He further said that RBI has put those state governments on notice that if they do not charge adequately and make users pay for the power supplied the banking system at its own peril cannot continue to support them.

In the major public sector banks, the government owns over 59 per cent stake in largest public sector lender SBI, 76.5 per cent stake in IDBI Bank, nearly 64.5 per cent equity in Canara Bank, in excess of 59 per cent n Punjab National Bank, in Bank of Baroda, the government holds 57.5 per cent, in Allahabad Bank over 60 per cent, 61 per cent in Andhra Bank, 64.4 per cent in Bank of India and 81.5 per cent in Central Bank of India.

The CNX Nifty is currently trading at 7800.75, up by 5.05 points or 0.06% after trading in a range of 7691.20 and 7817.75. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were HDFC up by 2.63%, Zee Entertainment up by 2.22%, Bank of Baroda up by 1.77%, Kotak Mahindra Bank up by 1.32% and Mahindra & Mahindra up by 1.25%. On the flip side, Vedanta down by 4.66%, Bharti Airtel down by 2.92%, Dr. Reddys Lab down by 2.90%, Adani Ports &Special down by 2.49% and BPCL down by 2.35% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 697.53 points or 3.95% to 16,947.58, Hang Seng decreased 690.55 points or 3.26% to 20,495.77, Shanghai Composite decreased 53.95 points or 1.74% to 3,046.81, Straits Times decreased 40.74 points or 1.46% to 2,751.18, Jakarta Composite decreased 32.4 points or 0.79% to 4,088.10, FTSE Bursa Malaysia KLCI decreased 9.44 points or 0.59% to 1,598.99 and KOSPI Index decreased 4.25 points or 0.22% to 1,942.85, while Taiwan Weighted increased 9.25 points or 0.11% to 8,132.35.