Markets remained firm but came off their day highs after the RBI maintained status quo on key policy rates. However, the central bank announced reduction in cash reserve ratio by 25 basis points.
The 30-share Sensex was up 114 points at 18,579 and the 50-share Nifty was up 36 points at 5,614.
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(Updated at 10:28 hrs)
Markets are trading on a firm note ahead of the Reserve Bank of India's (RBI) policy review. The Nifty which touched the 52-week high at 5,630 in the opening deals is up 48 points at 5,625 and the Sensex has advanced 148 points at 18,612.
Meanwhile, shares of rate sensitive sectors such as banking, real estate and infrastructure have rallied on expectations that the Reserve Bank of India (RBI), at its meeting today to review monetary policy, may announce reduction in key policy rates.
The Bombay Stock Exchange (BSE), real estate sector index have surged more than 4%, while capital goods, bankex and auto index are trading higher by 2-3% each as compared to 1.1% rise in benchmark Sensex at 0933 hours.
The government's reforms move provides room for RBI to ease monetary policy to give thrust on growth, according to market reports.
Meanwhile, SBI’s Pratip Chaudhuri expects the RBI to leave the key policy rates unchanged, but sees a 1% reduction in the cash reserve requirements (CRR), which can help banks trim base rates.
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(Updated at 9.20 AM)
Markets have opened on a strong note in trades today after the cabinet gave a go ahead to the much awaited economic reforms post the market hours on Friday. The Sensex has opened higher by 244 points at 18,708 and the Nifty has jumped 72 points to open at 5,649 levels, its new 52-week high.
Meanwhile, the Asian markets are witnessing mild profit booking after rallying late last week on hopes that fresh stimulus from the world's top central banks will support flagging growth. Hang Seng and Shanghai Composite are trading in the red.
The US stocks pared gains on Friday but were up for the fourth straight day on Friday on the Federal Reserve's aggressive new plan to stimulate the economy.
Back home, the cabinet committe on political affairs (CCPA) gave a go ahead to the much awaited economic reforms suchs as clearing 51% foreign direct investment (FDI) in Multi-Bran Reteail, FDI in Aviation sector and divesting stake in four public-sector undertakings (PSU) namely Oil India, MMTC, National Aluminium Company (NALCO) and Hindustan Copper.
Meanwhile, the Reserve Bank of India's (RBI) mid-quarter policy review is scheduled later in the day today.
Larsen & Toubro is the top gainer among the Sensex stocks. The stock is up 5% at Rs 1,558. Jindal Steel, Tata Motors, State Bank of India, ICICI Bank, Sterlite Industries, Tata Steel and index heavyweight Reliance Industries have also opened higher by 2.2-4.2% each.
On the other hand, TCS, ITC, Dr Reddy's Labs, Cipla, Infosys, Wipro, Coal India and Sun Pharma are among the losers from the heavyweight space.
Most of the sectors are witnessing buying interest barring defensives and IT stocks. Rate sensitive sectors such as realty, bankex, auto and capital goods indices are up 2-3.4% each ahead of the central bank's policy review. Oil & gas, metal, power, PSU and consumer durable indices are also trading higher by 1-2% each.
Shares of companies engaged in retail, aviation and cable operating business have rallied in opening deals after the cabinet approved the foreign direct investment (FDI) in these sectors.
Pantaloon Retail and Shoppers Stop from retail, SpiceJet and Kingfisher Airlines from aviation have rallied more than 14% each, while Den Networks, Dish TV and Hathway Cable and Datacom from cable operating sector are trading higher by over 5% each on the Bombay Stock Exchange (BSE).
The broader markets are also trading higher. The BSE mid-cap and small-cap indices are up 1% each.
The overall breadth is extremely positive as 1,053 stocks are advancing while 388 are declining.