Benchmarks cheer after RBI keeps policy rates unchanged

Benchmarks rallied more than a percent in late morning deals after the RBI surprised the street by keeping policy rates unchanged in its mid-quarter monetary policy review. Some support also came in from reports that foreign institutional investors (FIIs) bought shares worth a net Rs 249.93 crore on December 17, 2013, as per provisional data from the stock exchanges.

On the global front, the Asian equity benchmarks were trading mixed at this point of time led by Japanese Nikkei, which surged over one and a half percent, as the country saw a merchandise trade deficit of 1.292 trillion yen in November, beating forecasts for a shortfall of 1.351 trillion yen. Back home, traders were buying, Capital Goods, Realty and Oil & Gas while selling was seen in Metal and FMCG on the BSE. Banking sector rallied as RBI kept cash reserve ratio, repo rate, marginal standing facility rate and bank rate. The market breadth on BSE remains positive with advances to declines in the ratio of 1028:598. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,600 and 6,150 levels respectively.

The BSE Sensex is currently trading at 20612.14 up by 106.55 points or 0.52% after trading in a range of 20735.29 and 20568.70. There were 23 stocks advancing against 7 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.61% and Small cap index gained 0.46%.

The top gaining sectoral indices on the BSE were, Capital Goods up by 1.31%, Realty up by 1.03%, Oil & Gas up by 0.85%, Power up by 0.82% and Consumer Durables up by 0.77%, while Metal down by 0.07% and FMCG down by 0.15% were the only losers on the sectoral index.

The top gainers on the Sensex were BHEL up by 2.49%, HDFC up by 2.21%, Bajaj Auto up by 1.91%, Tata Power up by 1.88% and Hero MotoCorp up by 1.44%. On the flip side, Jindal Steel was down by 1.80%, SSLT was down by 1.16%, Wipro was down by 0.70%, ICICI Bank was down by 0.62% and  ITC was down by 0.52% were the top losers on the Sensex.

Meanwhile, In a positive surprise for the markets, Reserve Bank of India (RBI), delivered the unexpected, as it left the policy repo rate and reverse repo rate under the liquidity adjustment facility (LAF) unchanged at 7.75% and 6.75% respectively. Further, the cash reserve ratio (CRR) of scheduled banks remains unchanged at 4.0% of net demand and time liability (NDTL). Meanwhile, Marginal Standing Facility and Bank rates continues to remain at 8.75%.

However, despite maintaining a status quo, RBI underscored that it will have to act, if the expected softening of food inflation does not materialise and translate into a significant reduction in headline inflation in the next round of data releases, or if inflation excluding food and fuel does not fall.

The CNX Nifty is currently trading at 6,167.85 up by 28.80 points or 0.47% after trading in a range of 6,177.90 and 6,129.95. There were 38 stocks advancing against 12 stock declines on the index.

The top gainers of the Nifty were BHEL up by 2.62%, HDFC up by 2.22%, Bajaj-Auto up by 2.08%, Hero Moto co up by 1.62% and Tata Power up by 1.53%. On the flip side, Jindal Steel down by 1.61%, SSLT down by 0.94%, ICICI Bank down by 0.76%, NMDC down by 0.76% and Wipro down by 0.72%, were the top losers on the index.

The Asian equity indices were trading mixed; Hang Seng rose 147.39 points or 0.64% to 23,216.62, Jakarta Composite strengthened 19.02 points or 0.45% to 4,201.37, Nikkei 225 surged 240.40 points or 1.57% to 15,519.03, Seoul Composite gained 8.69 points or 0.44% to 1,974.43. On the flip side, Shanghai Composite slipped 0.85 points or 0.04% to 2,150.23, Straits Times decreased 1.44 points or 0.05% to 3,065.91, Taiwan Weighted was down by 12.12 points or 0.15% to 8,335.64 and KLSE Composite was down by 2.00 points or 0.11% to 1,848.90.