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Benchmark share indices ended at record closing highs as the cut in statutory liquidity ratio by the Reserve Bank of India at its policy meet today will help inject liquidity, paving the way for credit growth revival.
The 30-share Sensex ended higher by 174 points at 24,859 and the 50-share Nifty closed higher by 53 points at 7,316. The Sensex and Nifty touched an intra-day high of 24,892 and 7,425 levels, respectively.
The broader markets performed well in line with the benchmark indices- BSE Midcap and Smallcap indices ended higher by nearly 1%.
The market breadth in BSE ended positive with 1,920 shares advancing and 1,092 shares declining.
RBI’S MONETARY POLICY
The Reserve Bank of India (RBI) in the bi-monthly monetary policy review today kept the repo rate unchanged at 8% as per the street's expectations. The Cash Reserve Ratio (CRR) was also unchanged at 4% of net demand and time liabilities (NDTL).
However, the Statutory Liquidity Ratio (SLR) was reduced by 50 basis points to 22.5% of banks NDTL with effect from the fortnight beginning June 14. Besides, RBI also reduced the liquidity provided under the export credit refinance (ECR) facility from 50% of eligible export credit outstanding to 32% with immediate effect. The SLR cut will be effective June 14.
RBI also introduced a special term repo facility of 0.25% of NDTL to compensate fully for the reduction in access to liquidity under the ECR. RBI shall also continue to provide liquidity under 7-day and 14-day term repos of up to 0.75% of NDTL of the banking system.
EXPERT VIEW
According to Navneet Daga, Derivative Analyst, KR Choksey Securities, “Well after the sharp rally on Nifty, some call OI shed is visible on 7300-7400 range, with now writing visible at 7500 zone, nifty likely to touch and surpass the levels of 7500 this expiry. Buying on dips with stop loss placed at 7200 zone is recommended.”
GLOBAL MARKETS
Asian shares rode higher on Tuesday, supported by solid US and Chinese data, while the euro dragged its feet near a 3 1/2-month low on expectations of fresh monetary easing by the European Central Bank.
Japan's Nikkei hit a two-month high, further boosted by talk of public pension funds increasing their assets allocated to domestic shares.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2%, nearing a one-year high hit last week.
Back home, the Reserve Bank of India was spotted buying dollars via state-run banks starting around 59.16, two traders said.
RUPEE & FIIs
The rupee was at 59.2050/2100 per dollar, off its session high of 59.12.
Foreign institutional investors (FIIs) bought shares worth a net Rs 234.49 crore on Monday, as per provisional data from the stock exchanges.
SECTORAL INDICES
On the sectoral front, BSE Metal index surged by over 5% followed by counters like Realty, Capital Goods, Oil & Gas and Consumer Durables, all gaining between 1-3%. However, BSE FMCG and Healthcare indices declined by nearly 1%.
GAINERS & LOSERS
Metal stocks zoomed on the back of positive manufacturing data in China, the world's biggest consumer and producer of the metal. Coal India, Sesa Sterlite, Tata Steel surged between 5-7%. CNX Metal index recorded highest closing ever since Feb 12, 2014.
Other notable gainers were ONGC, BHEL, Hindalco, NTPC, Hero Moto and HDFC.
Deutsche Bank raises L&T target price to Rs 1,905 from Rs 1,560; rating buy. The stock gained by nearly 1%.
The banking ended marginally negative after witnessing choppy trend after the Reserve Bank of India left the key interest rate unchanged in its monetary policy review.
ICICI Bank, Axis Bank and SBI ended marginally lower.
Defensive shares like Dr Reddy’s Labs, GAIL, HUL, and ITC ended in negative zone.
Sugar stocks surged on hopes that the Modi-led government would help revive the industry by encouraging ethanol blending in petrol and also hike import duty on the commodity to support local prices.
Bajaj Hindusthan, Dhampur Sugar Mills, Shree Renuka Sugar Mills and Balram Chini Mills have gained between 7-11%.
Eicher Motors surged 5.41% to Rs 7,230 on the BSE after posting a net profit of Rs 1,606.20 crore in Q4 March 2014 compared to net profit of Rs 972 crore in Q4 March 2013.
Zee Entertainment has surged 2% to Rs 271 after RBI permitted investment by foreign institutional investors in the media and Entertainment Company up to 100%. Earlier investment limit for FIIs in the company was 49%.
Spice Jet has edged 2% higher to Rs 18.30 on the BSE following a promotional offer launched on select routes. The reduction of jet fuel prices also helped sentiment.
