Benchmarks pare gains as RBI hikes repo rate by 25 bps

After making a positive start in early deal, Benchmarks have slipped into negative territory in late morning after Reserve Bank of India (RBI) hiked the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.75 per cent to 8.0 per cent. However, it kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL). Consequently, the reverse repo rate under the LAF stands adjusted at 7.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per cent. However, losses on the down-side remained capped after the government allaying investors worry over declining value of the rupee and falling stock markets said that country’s economic fundamentals are ‘very strong’ and there is no cause for concern.

On the global front, Asian shares recovered to turn marginally positive after slipping to near five-month lows in early trades, as turmoil in emerging markets and concerns about an economic slowdown in China took their toll. However, the US markets continued their weakness and ended modestly lower in last session on lingering concerns about emerging markets as well as the likelihood of further tapering by the Federal Reserve. Back home, traders were buying, Realty, Capital Goods and Auto while, selling was seen in FMCG, Goods, IT and Teck on the BSE. The market breadth on BSE remains positive with advances to declines in the ratio of 1063: 643. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,700 and 6,150 levels respectively.

The BSE Sensex is currently trading at 20764.50 up by 57.05 points or 0.28% after trading in a range of 20776.51 and 20714.22. There were 20 stocks advancing against 10 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.60% and Small cap index gained 0.77%.

The top gaining sectoral indices on the BSE were, Realty up by 2.27%, Capital Goods up by 1.14%, Auto up by 1.12%, Oil & Gas up by 0.98% and Bankex up by 0.96%. While FMCG down by 0.94%, IT down by 0.60% and Teck down by 0.59% were the only losers on the sectoral index.

The top gainers on the Sensex were Coal India up by 1.77%, L&T up by 1.58%, Tata Motors up by 1.50%, SBI up by 1.43% and Tata Steel up by 1.41%. On the flip side, Hindustan Unilever was down by 2.96%, Infosys was down by 1.24%, ITC was down by 1.23%,  Sun Pharma was down by 0.73% and Hindalco Inds was down by 0.32% were the top losers on the Sensex.

Meanwhile, in a move to increase the Mutual Funds investment in the country, the Securities and Exchange Board of India (SEBI) will soon come out with a long-term policy for mutual funds to help the industry create more understanding and better positioning of products amongst investors.

SEBI chairman UK Sinha asserted that mutual fund industry has lost its focus over the past few years and there is a need to redraw attention through establishing the role and purpose of mutual funds. SEBI chairman expressed hope that in the next board meeting, SEBI will have clearance on this long-term policy as the extensive consultation going on it.

By adding further, Sinha stated that the market regulator is also looking at ways to encourage industry to come out with real estate funds that came into industry’s regulations five years back but none of the player has launched any scheme. SEBI is trying to find out what change or encouragement is required so that this particular product is launched, he added. Further, in order to boost the mutual funds industry, SEBI and the government are also making changes in some policies of mutual funds so that industry could get access to a substantial amount of money from the state-administered provident fund and other retirement programmes.  

The CNX Nifty is currently trading at 6,154.35 up by 18.50 points or 0.30% after trading in a range of 6,157.65 and 6,130.90. There were 36 stocks advancing against 14 stock declines on the index.

The top gainers of the Nifty were JP Associate up by 3.24%, Bank of Baroda up by 3.04%, DLF up by 2.97%, Ranbaxy up by 2.44% and PNB up by 2.19%. On the flip side, Hindustan Unilever down by 2.80%, ITC down by 1.23%, Infosys down by 1.23%, Sun Pharma down by 0.97% and Ultra Cement Company down by 0.89% were the top losers on the index.

The Asian equity indices were trading in green; Shanghai Composite rose 1.56 points or 0.08% to 2,034.86, Hang Seng increased 6.87 points or 0.08% to 2,034.86, Jakarta Composite jumped 30.55 points or 0.71% to 4,353.33, KLSE Composite strengthened 5.56 points or 0.31% to 1,784.44, Nikkei 225 surged 31.39 points or 0.21% to 15,037.12, Straits Times added 7.05 points or 0.23% to 3,049.48 and Seoul Composite was up by 5.14 points or 0.27% to 1,915.48.