Markets end flat as RBI keeps repo rate rate unchanged; Nifty holds 9,250

Nifty Realty index rose over 1.5% after MPC said banks can invest in REITs

Benchmark indices pared losses to end the day on a flat note after the Reserve Bank of India decided to keep the repo rate unchanged at 6.25% in line with the market expectations. Maintaining the ‘neutral’ stance, the Central Bank raised the FY17 GVA target for FY18 to 7.4%.
 
However, it raised the reverse rate to 6% from 5.75% due to narrowing of the liquidity adjustment facility corridor. Consequently, the Bank rate and MSF was cut to 6.5%, from 6.75%.
 
The S&P BSE Sensex settled the day at 29,927, down 47 points, while the broader Nifty50 ended at 9,262 down 3 points. BSE Midcap index gained 0.15%, while BSE Smallcap index was down 0.23%.

"With no major surprises from RBI, markets stabilised, but will await the NPA resolution measures that is widely expected shortly. Q4 numbers should take centre stage from here on, but global cues could also hold sway in the coming days specially with US markets beginning to show vulnerability ahead of NFP jobs data,” said Anand James, Chief Market Strategist, Geojit Financial Services in a technical note.
 
Market breadth depicted gains with 1,476 advances over 1,403 declines on the BSE. 140 stocks remained unchanged.
 
RBI keeps repo rate unchanged
 
The Reserve Bank of India kept its repo rate at 6.25% for a third consecutive policy meeting to guard against rise in inflation and an uncertain global economic environment.

 
"The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth," Governor Urjit Patel said while announcing the policy.
 
RBI also plans to allow banks to invest in REITs and InvITs.
 
“Currently, banks are allowed to invest in equity-linked mutual funds, venture capital funds (VCFs) and equities to the extent of 20% of their NOF. It is proposed to allow banks to invest in REITS and InvITs within this umbrella limit. Detailed guidelines will be issued by end-May 2017,” the Reserve Bank of India (RBI) said in statement on development and regulatory policies.

 
Rate-sensitive Stocks
 
Banking stocks did not react much to the RBI decision, with the Nifty Bank index trading flat (down0.14%). The bank index has risen about 19% this year.
 
IndusInd Bank, PNB and Axis Bank were top gainers in the index while Federal Bank and ICICI Bank were losers post the policy outcome.
 
Extending gains for third straight session, Nifty Realty index rose over 1.5% after the Monetary Policy Committee (MPC) said banks can invest in Real Estate Investment Trusts (REITs).
 
The realty companies were trading higher by up to 6% at intra-day, erasing their morning losses. DLF, Unitech, Godrej Properties, Oberoi Realty, Housing Development & Infrastructure (HDIL), Sobha and Indiabulls Real Estate from the realty index were up 1% to 4% on the BSE at closing.

 
Nifty Auto also barely reacted to the RBI decision with the index ending flat (up 0.02%) for the day. While Bharat Forge, Bajaj Auto, Hero Moto Corp gained; Maruti, Ashok Leyland, Eicher Motors ended lower for the day.
 
Other stocks
 
Tata Steel, Bajaj Auto, RIL and GAIL were the top movers on BSE Sensex while ITC, SBI, ICICI Bank were the top laggards on the index.
 
RIL hit a fresh 9-year high of Rs 1,435, up 1.4%, gaining for the sixth straight trading days. Since March 28, the stock rallied 15% as compared to 1.5% rise in the S&P BSE Sensex. The stock ended 1.37% higher

  
Sobha ended nearly 2% higher after gaining upto 4% at intra-day, extending its Wednesday’s 17% surge after the real estate developer said the operational cash flow of the company remained healthy and positive during the fourth quarter of 2016-17 (Q4).
 
BHEL ended the day 4.5% higher after the state-owned power equipment maker on Wednesday said it has added 45,254 MW capacity during the 12th Five Year Plan period (2012-17) beating the targets set for the company.
 
Jindal Steel and Power gained 7.4% after posting a 12.3% sequential rise in quarterly consolidated steel production.
 
Global Markets
 

Stocks slipped and bonds rose on Thursday, with risk appetite soured by signs the Federal Reserve might start paring asset holdings later this year just as the chance of early US fiscal stimulus seems to be evaporating.
 
Investors were also wary before a potentially tense meeting between US President Donald Trump and his Chinese counterpart Xi Jinping, the first between the world's two most powerful leaders.
 
Lingering fears of a possible trade war had kept Asian markets on edge and Europe was just as cautious. A 0.8% fall put the pan-regional FTSE on course for its biggest fall in over a month.

 
Wall Street futures ESc1 pointed to opening falls of around 0.15% for the S&P 500, Dow Jones and Nasdaq. The Dow posted its largest intra-day downside reversal in 14 months on Wednesday in reaction to the Fed, shedding a near 200-point gain.
 
The whiplash in sentiment saw Japan's Nikkei hit its lowest since early December.
 
Australia's index also lost 0.5%. Shanghai .SSEC made marginal gains as a private survey of China's service sector showed activity expanded at its slowest pace in six months in March.