MARKETS ON THURSDAY: Sensex up 578 pts; RBI holds rates; inflation outlook cut

All that happened in the markets today

Markets ended over 1.5% higher on Thursday after the Reserve Bank of India kept the repo rate unchanged at 6% in the first Monetary Policy Committee (MPC) meet of FY19.

The S&P BSE Sensex ended at 33,597, up 578 points while the broader Nifty50 index settled at 10,325, up 197 points.

The MPC had started its 2-day meeting on Wednesday amid little hope of a rate cut, given a hardening in global crude oil prices.

The RBI has maintained the status-quo on the key short-term borrowing rate (repo) in its last three policy meets. The benchmark lending rate was reduced by 0.25 percentage points to 6 per cent last August, bringing it to a 6-year low.
 

Among other economic data, India's services industry returned to growth in March as new business picked up on improved demand, a private survey showed on Thursday, encouraging firms to hire at the fastest pace in nearly seven years. After taking a big hit in February, the Nikkei/IHS Markit Services Purchasing Managers' Index managed to narrowly push back above the 50-mark that separates growth from contraction, rising to 50.3 last month from 47.8.

GLOBAL MARKETS

In global markets, Asian shares bounced from two-month lows on Thursday as world equities recovered from a selloff triggered by escalating Sino-US trade tensions, with investors hoping a full-blown trade war between the world’s two biggest economies can be averted.

Sentiment was lifted as the United States expressed willingness to negotiate a resolution to the trade fight after the proposed US tariffs on $50 billion in Chinese goods prompted a quick response from Beijing that it would retaliate by targeting key American imports.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 per cent, a day after it hit its lowest in almost two months. Trade-dependent Singapore's Straits Times Index rose more than 2.0 per cent.

Japan's Nikkei gained 1.6 per cent while markets in mainland China, and those in Hong Kong and Taiwan, are closed for the Tomb Sweeping Day holiday on Thursday.

(with inputs from Reuters)

4:00 PM

COMMENT ON RBI POLICY

As expected, the RBI in its first bi-monthly monetary policy statement for 2018-19 kept the policy rate unchanged at 6.0%. Also, the tone of the policy commentary suggest that despite several uncertainties surrounding the inflation trajectory, RBI is not in a hurry to change its neutral stance of monetary policy.

Although RBI has listed a number of issues such as - (i) revised MSP announced in the FY19 Union Budget, (ii) staggered impact of HRA revisions by various state governments, (iii) another round of fiscal slippage both at the central and select state governments and (iv) industrial outlook survey of RBI indicating rise in input and output prices and (v) volatility in crude oil prices - to put pressure on inflation during the coming months, it is still hopeful of CPI remaining in the range of 4.7%-5.1% during 1HFY19 and 4.4% in 2HFY19. India Ratings and Research therefore believes that RBI may remain in a pause mode in the near term so far as policy rate is concerned

3:58 PM

MARKET COMMENT Devang Mehta, Head – Equity Advisory, Centrum Wealth

There has been consistent improvement in certain macros & important data points like better than expected 3rd quarter GDP, pick up in the manufacturing sector & industrial production, excellent auto sales numbers & pick up in credIt growth. With revised lower Inflation trajectory by RBI, Equity markets were clearly enthused. We have been constantly advising clients to accumulate good quality stocks in a market which has corrected both in terms of valuations & price points. We continue to be bullish on domestic themes where there is good predictability of earnings growth

3:54 PM

MARKET COMMENT Motilal Oswal, CMD, Motilal Oswal Financial Services

As expected, the RBI has left all key rates unchanged. Markets have corrected very well and now awaiting a bouce in the corporate earnings momentum. We think 10,000 level on Nifty 50 and 33,000 level on S&P BSE Sensex are good levels to invest in the equity markets from a long-term perspective. We will witness some turbulence, thanks to global trade fight, but subject to that volatility, these are good levels for retail investors to commit some money

Motilal Oswal

3:52 PM

MARKET COMMENT Prateek Agrawal, Business Head & CIO, ASK Investment Managers

Keeping interest rates unchanged has been as per expectations. This along with the leeway given to banks to absorb loan losses (done over last few day) has provided fuel to the stock market. RBI has been conscious of lower inflation risk and uncertain global trade environment

3:48 PM

Nifty Metal index ends 4.06% higher. Top gainers:

COMPANY	LATEST	PREV CLOSE	GAIN( )	GAIN(%)
JINDAL STEEL	235.55	219.60	15.95	7.26
HINDALCO INDS.	214.05	200.80	13.25	6.60
VEDANTA	289.10	274.30	14.80	5.40
JINDAL STAIN .HI	177.40	170.00	7.40	4.35
S A I L	75.25	72.30	2.95	4.08

3:43 PM

Nifty PSU Bank index surges 4.92%. Top gainers:

COMPANY	LATEST	PREV CLOSE	GAIN( )	GAIN(%)
CANARA BANK	288.15	262.50	25.65	9.77
BANK OF INDIA	112.05	103.45	8.60	8.31
BANK OF BARODA	148.70	139.90	8.80	6.29
SYNDICATE BANK	60.15	56.65	3.50	6.18
ALLAHABAD BANK	52.05	49.20	2.85	5.79

3:38 PM

Sectoral performers

3:35 PM

BSE Sensex: Top gainers and losers of the day

3:33 PM

Market at close

 

The S&P BSE Sensex ended at 33,597, up 578 points while the broader Nifty50 index settled at 10,325, up 197 points.

3:26 PM

MARKET COMMENT Garima Kapoor, Economist, Elara Capital on RBI Policy

In line with our expectation, MPC maintained status quo in today’s monetary policy. The recent softening in retail inflation that had firmed up during early months of winter, supported RBI’s decision to maintain status-quo. The recent moderation also supported a downward revision to RBI’s forecasts for FY19 CPI inflation. However, we expect headline CPI inflation to overshoot RBI’s forecast.

We expect retail inflation to remain in the range of 4.7%-5.6% in H1 FY19 (vs. RBI’s forecast of 4.7%-5.1%) and 3.7%-5.0% in H2 FY19 (vs. RBI’s forecast of 4.4%). We believe factors such as the expected trajectory of food prices (following new formula for MSP revision), trend in crude oil and other commodity prices and outlook for South West Monsoon will remain key in determining policy trajectory. We expect one rate hike of 25 bps towards second half of FY19

3:24 PM

RBI monetary policy review: Repo rate kept unchanged at 6%; highlights

In its first bi-monthly monetary policy review of 2018-19, the Reserve Bank of India’s (RBI’s) six-member monetary policy committee (MPC), headed by Governor Urjit Patel, on Thursday kept unchanged the key repo rate at 6 per cent and cash reserve ratio at 4 per cent. Also, the reverse repo rate was kept unchanged at 5.75 per cent. READ MORE

3:19 PM

InterGlobe Aviation, Avenue Supermarts, MRF hit new highs

Shares of Avenue Supermarts, which operates supermarkets under the brand name of D-Mart, InterGlobe Aviation, which operates no-frills carrier IndiGo and tyre major MRF have hit their respective new highs on the BSE after the benchmark indices gaining more than one percentage points on Thursday.

InterGlobe Aviation rallied 4.7% to Rs 1,455, extending its past three days 8% surged after the media report suggested that budget carrier will be able to bid solo for Air India’s 76% stake, while other domestic airlines will have to form a consortium to meet the net worth criteria stipulated by the government. READ MORE

3:15 PM

Nifty PSU Bank, Nifty Realty index up 3% as RBI keeps repo rate unchanged

Shares of interest-rate sensitive sectors such as auto, banking and realty were trading higher by up 4% on the National Stock Exchange (NSE) after the Reserve Bank of India (RBI) maintained status quo on the key short-term borrowing rate in its first bi-monthly monetary policy for the financial year 2018-19 (FY19) today.

Nifty PSU Bank, the public sector bank index and Nifty Realty, the real estate index, were up 3% each, while Nifty Auto, Nifty Bank and Nifty Private Sector Bank index were up nearly 2% as compared to 1.6% rise in the benchmark Nifty 50 index at 02:37 pm. READ MORE

3:02 PM

RBI Policy Decision

RBi's Kanungo: Will constitute a comittee to explore the possibility of launching digital currency by the central bank

2:56 PM

RBI Policy Decision

Viral Acharya: Liquidity surplus continue to decline