Markets add gains as RBI cuts rates by 25 bps

Indian equity benchmarks added gains in morning deals, after the RBI has cut interest rate by 25 basis points to 5.25 per cent in a bid to further bolster economic growth, which rose to a six-quarter high of 8.2 per cent in the second quarter of the current financial year. The development is expected to make advances, including housing, auto and commercial loans cheaper. Traders took support with Commerce and Industry Minister Piyush Goyal’s statement that India has emphasised on the need to reduce trade barriers, and boost exports to Russia with an aim to bridge the widening trade deficit between the two countries. Goyal said there are huge opportunities to expand bilateral trade and there is a need to make it more balanced. On the global front, Asian markets were trading mixed as traders remained cautious ahead of the rate decisions by the US Fed and the Bank of Japan in the coming days. They also looked ahead to key U.S. inflation data and the September income and spending report later in the day for further clues on the interest rate. 

The BSE Sensex is currently trading at 85590.03, up by 324.71 points or 0.38% after trading in a range of 85078.12 and 85599.97. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.05%, while Small cap index was down by 0.51%.

The top gaining sectoral indices on the BSE were IT up by 1.12%, Realty up by 1.08%, TECK up by 0.85%, Auto up by 0.33% and Bankex up by 0.31%, while FMCG down by 0.44%, Industrials down by 0.24%, Consumer Durables down by 0.24%, Capital Goods down by 0.22% and Healthcare down by 0.21% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 2.00%, Infosys up by 1.66%, HCL Technologies up by 1.64%, Bajaj Finserv up by 1.45% and TCS up by 1.18%. On the flip side, Hindustan Unilever down by 4.18%, Axis Bank down by 0.80%, Sun Pharma down by 0.67%, Tata Steel down by 0.60% and Tata Motors Passenger down by 0.59% were the top losers.

Meanwhile, Food Processing Secretary A P Das Joshi has asked corporates to invest more in the sector to enhance the processing level from the current low of 12 per cent and also boost exports of processed food items. He emphasised the need to dispel the myth that processed food is inherently bad. He also highlighted that the labour codes would benefit the sector.

The secretary said that the issues related to the HFSS (High fat, sugar, salt) and FOPNL (Front-of-pack nutrition labelling) are under ‘very, very active consideration of the government’ and there could be some decision in the near future. He said ‘we have 24 lakh units across the country, and only 2 per cent are organised. I look forward to a higher level of investment from the captains of the industry, and there is a huge scope for FDI and private domestic investment.’

He also emphasised the need for formalisation of the informal. He said ‘whatever you process ultimately comes from lakhs of farmers. So whenever we are doing the value addition, a part of it goes to the farmers. So rural prosperity, it is necessary that we increase the processing level. We process hardly 12 per cent of our food. We produce so much, but when we talk about the processing, we are not even nearby to countries like the Philippines and Thailand, forget about the EU and the US.’

He noted that the share of processed food in total agriculture exports has increased to 22 per cent from 11 per cent in 2014-15. He said the share could reach 30-32 per cent by 2020 as there is ‘unlimited scope’ for growth in the food processing sector. Talking about labour codes, he said the reform is very inclusive and will benefit food processing sectors, which are labour intensive. He said the labour codes are ‘worker-friendly, industry-friendly, and overall, it is growth-friendly’. He said ‘sometimes we have to undergo the changes so that we can achieve the higher heights or the higher performance.’

The CNX Nifty is currently trading at 26130.70, up by 96.95 points or 0.37% after trading in a range of 25985.35 and 26134.15. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 2.02%, Shriram Finance up by 1.93%, HCL Technologies up by 1.72%, Infosys up by 1.63% and Bajaj Finserv up by 1.37%. On the flip side, Hindustan Unilever down by 4.27%, Interglobe Aviation down by 2.66%, Axis Bank down by 0.84%, Sun Pharma down by 0.68% and Trent down by 0.52% were the top losers.

Asian markets were trading mixed; Taiwan Weighted added 69.95 points or 0.25% to 27,865.66, Jakarta Composite gained 15.78 points or 0.18% to 8,655.98, Shanghai Composite strengthened 0.36 points or 0.01% to 3,876.15 and KOSPI increased 42.93 points or 1.07% to 4,071.44.

On the flip side, Hang Seng declined 1.9 points or 0.01% to 25,934.00, Straits Times fell 15.15 points or 0.33% to 4,519.99 and Nikkei 225 slipped 602.42 points or 1.18% to 50,426.00.