Benchmarks continue to trade in high spirits; Bankex leads

Local equity markets, which rebounded into green zone instantly after the rate cut announcement, continue to trade with similar fervor on sustained buying activities in rate sensitive Bankex, Realty and Auto counters. Market took a heart out of 25 basis point cut in cash reserve ratio (CRR), besides the much anticipated repo cut move, as this would release around Rs 18,000 crore of primary liquidity into the banking system. Further, even positive global cues, were adding to the upside momentum of Indian equity markets. Trading in vicinity to intra-day’s high level, 30 share barometer index, Sensex, was comfortably sailing past the 20,100 psychological level. In the similar way, 50 share barometer index, Nifty, too adding over quarter points, was oscillating above 6100 crucial mark. Additionally, broader indices too were trading sanguine. On the global front, Asian pacific shares were trading mostly positive on Tuesday, as recent selling drew bargain hunters ahead of more U.S. economic data and a Federal Reserve policy decision later in the week, which may offer clues to the Fed's stimulus plans.

Closer home, only stocks from Oil & Gas and Consumer Durable counters were acting contradictory to the positive trend. Drop of Oil Marketing companies, HPCL, BPCL and IOC, besides the decline of index heavyweight, Reliance Industries, was mainly weighing on the Oil & Gas pivotal. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1263:1193, while 128 shares remained unchanged.

The BSE Sensex is currently trading at 20172.07, up by 68.72 points or 0.34% after trading in a range of 20203.66 and 20029.42. There were 19 stocks advancing against 11 declines on the index. The broader indices added some ground; the BSE Mid cap and Small cap index were trading up by 0.61% and 0.25% respectively.

The top gaining sectoral indices on the BSE were, Bankex up by 1.28%, Realty up by 1.12%, Metal up by 0.33%, Auto up by 0.55% and Health Care up by 0.48%. While, Oil & Gas down by 0.49%, Consumer Durables down by 0.12% were the top losers on the index.

The top gainers on the Sensex were ICICI Bank up by 2.94%, Jindal Steel up by 1.88%, Tata Motors up by 1.81%, Cipla up by 1.08% and Coal India up by 1.01%.

On the flip side, HDFC Bank down by 0.97%, Wipro down by 0.86%, ONGC down by 0.79%, Mahindra & Mahindra down by 0.59% and Reliance Industries down by 0.48% were the top losers on the Sensex.

Meanwhile, caving into growing clamour for a rate cut, Reserve  Bank of India (RBI), in ‘Third Quarter Review of Monetary Policy 2012-13’, dropping its prolonged anti-inflationary stance, went ahead and slashed  repo rate by 25 basis points to 7.75 per cent against 8 per cent earlier.

Consequently, the reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, now stands adjusted to 6.75 per cent with immediate effect. Subsequently, the Marginal Standing Facility (MSF) rate, determined with a spread of 100 basis points above the repo rate, also stood adjusted to 8.75 per cent with immediate effect.

India’s apex bank was widely expected to make a modest cut in interest rates to support an economy set for its slowest growth in a decade, however deeper cut was anyways unlikely due to worries over the fiscal and external deficits and inflation.

What came as a pleasant surprise to the street, was the reduction in cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.25 per cent to 4.0 per cent of their net demand and time liabilities (NDTL) effective the fortnight beginning February 9, 2013, a move that would release around Rs 18,000 crore of primary liquidity into the banking system.

Further, with regards to inflation, the RBI in report also stated the possibility to moderate below its projection of 7.5 percent by March-end. However, it added, 'suppressed inflation continues to pose a significant risk to the inflation in 2013-14. As some of the risks materialises, inflation path may turn stick.'Caving into growing clamour for a rate cut, Reserve  Bank of India (RBI), in ‘Third Quarter Review of Monetary Policy 2012-13’, dropping its prolonged anti-inflationary stance, went ahead and slashed  repo rate by 25 basis points to 7.75 per cent against 8 per cent earlier.

Consequently, the reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, now stands adjusted to 6.75 per cent with immediate effect. Subsequently, the Marginal Standing Facility (MSF) rate, determined with a spread of 100 basis points above the repo rate, also stood adjusted to 8.75 per cent with immediate effect.

India’s apex bank was widely expected to make a modest cut in interest rates to support an economy set for its slowest growth in a decade, however deeper cut was anyways unlikely due to worries over the fiscal and external deficits and inflation.

What came as a pleasant surprise to the street, was the reduction in cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.25 per cent to 4.0 per cent of their net demand and time liabilities (NDTL) effective the fortnight beginning February 9, 2013, a move that would release around Rs 18,000 crore of primary liquidity into the banking system.

Further, with regards to inflation, the RBI in report also stated the possibility to moderate below its projection of 7.5 percent by March-end. However, it added, 'suppressed inflation continues to pose a significant risk to the inflation in 2013-14. As some of the risks materialises, inflation path may turn stick.'

The S&P CNX Nifty is currently trading at 6,103.60, up by 28.80 points or 0.47% after trading in a range of 6,111.80 and 6,056.15. There were 35 stocks advancing against 15 declines on the index.

The top gainers of the Nifty were Axis Bank up by 5.28%, JP Associate up by 3.95%, ICICI Bank up by 2.88%, IDFC up by 1.84% and Tata Motors up by 1.83%

On the flip side, BPCL down by 1.43%, HDFC Bank down by 1.25%, Wipro down by 0.92%, ONGC down by 0.66% and Ranbaxy down by 0.64% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite added 0.67%, Jakarta Composite rose 0.34%, KLSE Composite up by 0.10%, Nikkei 225 surged 0.39%, KOSPI Composite gained 0.84%and Taiwan Weighted was up by 1.13%.

On the flip side, Straits Times declined 0.09% and Hang Seng was down by 0.06%.