Volatility ruled the roost as the key benchmark indices jumped in afternoon trade. At 13:16 IST, the barometer index, the S&P BSE Sensex, was up 255.97 points or 1% at 25,872.81. The 50-unit CNX Nifty was up 65.40 points or 0.84% at 7,861.10.
The Sensex rose 258.87 points at the intraday high of 25,875.71 in afternoon trade. The Nifty rose 74.30 points at the intraday high of 7,870 in afternoon trade.
Earlier, the Sensex hit three week low when it dropped 329.51 points at the day's low of 25,287.33 in mid-morning trade. The Nifty also hit its lowest level in over 2-1/2 weeks when it fell 104.50 points at the day's low of 7,691.20 in mid-morning trade. Gains triggered by a steeper-than-expected rate cut by the Reserve Bank of India (RBI) after its fourth bi-monthly monetary policy review for the year 2015-16 today, 29 September 2015 helped domestic bourses outpace losses caused by weak global cues.
The market breadth indicating the overall health of the market turned positive from negative. On BSE, 1,163 shares rose and 1,159 shares declined. A total of 111 shares were unchanged. The BSE Mid-Cap index was up 0.34%. The BSE Small-Cap index was up 0.06%. Both these indices underperformed the Sensex.
The Reserve Bank of India (RBI) surprised the financial markets by announcing a steeper-than-expected cut in the policy repo rate under the liquidity adjustment facility by 50 basis points to 6.75% at its fourth bi-monthly monetary policy review for the year 2015-16 today, 29 September 2015. The RBI has kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liability (NDTL). The RBI marked down slightly the FY16 gross domestic product (GDP) growth target to 7.4% from 7.6% earlier as global growth and trade were slower than initial expectations, a continuing lack of appetite for new investment in the private sector, the constraint imposed by stressed assets on bank lending and waning business confidence.
In overseas markets, European equities were trading lower in early trade today, 29 September 2015, with investors keeping an eye on the auto sector amid the Volkswagen emission scandal and on the commodity stocks after miner Glencore tanked on Monday amid a commodities rout. Asian stocks dropped to 3-1/2-year lows following sharp losses on Wall Street after weak Chinese data rekindled worries about its fragile economy. South Korean markets are closed for a Thanksgiving holiday. US stocks settled yesterday, 28 September 2015 at their lowest levels since late August as concerns about slowing economic growth in China and mixed domestic economic data unnerved investors.
FMCG shares were in demand. Godrej Consumer Products (up 1.11%), Jyothy Laboratories (up 0.80%), Hindustan Unilever (up 0.57%), Colgate Palmolive (India) (up 0.48%), Britannia Industries (up 0.29%), Tata Global Beverages (up 0.28%), Procter & Gamble Hygiene & Health Care (up 0.19%), Dabur India (up 0.11%) and Nestle India (up 0.05%), edged higher. GlaxoSmithKline Consumer Healthcare (down 0.43%), Marico (down 0.63%) and Bajaj Corp (down 1.06%), edged lower.
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Pharmaceutical shares edged lower. Dr. Reddy's Laboratories (down 2.31%), IPCA Laboratories (down 1.81%), Glenmark Pharmaceuticals (down 1.35%), Sun Pharmaceutical Industries (down 0.97%), Piramal Enterprises (down 0.89%), Strides Arcolab (down 0.67%), Lupin (down 0.62%), Divi's Laboratories (down 0.47%), Cadila Healthcare (down 0.37%) and Cipla (down 0.37%), edged lower. Aurobindo Pharma (up 0.05%), GlaxoSmithKline Pharmaceuticals (up 0.10%) and Wockhardt (up 1.15%), edged higher.
In overseas markets, concern over a slowdown in China, the world's second-largest economy, and its potential impact on the US Federal Reserve's plans to normalize monetary policy after years of rock-bottom rates, has fueled market volatility in recent weeks. In China, data yesterday, 28 September 2015 showed industrial profits dropping the most in at least four years.
US economic data released yesterday, 28 September 2015 showed household spending climbed more than forecast in August and incomes also rose as the biggest part of the US economy continued to power past a global slowdown. Separate data showed contract signings to purchase previously owned US homes unexpectedly declined in August for just the second time this year, signaling residential real estate might have difficulty building on recent momentum.
Meanwhile, Federal Reserve Bank of New York President William C. Dudley reportedly said yesterday, 28 September 2015 the central bank will probably raise interest rates later this year despite uncertainties over global growth. John Williams, head of the San Francisco Fed, also reportedly signaled support for an interest rate hike this year, though Chicago Fed chief Charles Evans sounded a far more dovish tone.
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