MARKET WRAP: Sensex ends 276 points higher; RBI hikes repo rate by 25 bps
Markets ended higher after the RBI maintained neutral stance in its second policy decision of FY19
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Markets ended higher after the RBI maintained neutral stance in its second policy decision of FY19. The central bank hiked repo rate by 25 bps to 6.25%, in line with market expectations. This is the first rate hike in over four years, reverse repo rate adjusts to 6%. All six members on the rate panel voted for an increase.
The S&P BSE Sensex ended the day at 35,179, up 276 points, while the broader Nifty50 index settled at 10,685, up 91 points
The S&P BSE Sensex ended the day at 35,179, up 276 points, while the broader Nifty50 index settled at 10,685, up 91 points
RBI also revised its retail inflation estimate for 2018-19 to 4.8-4.9 per cent for the first half, and 4.7 per cent for the second. The MPC said that a sharp and durable increase in global crude oil price was seen as a key risk to retail inflation. The central bank retained its gross domestic product (GDP) growth projection at 7.4 per cent for 2018-19.
The MPC decision was in line with a Reuters poll, where an increasing number of economists expected the RBI to raise interest rates, even as some said the rate might be held for now in preparation for an August hike.
GLOBAL MARKETS
Shares of rate sensitive sectors such as bank, real estate and automobiles are trading firm after RBI monetary policy decision. Nifty PSU Bank, Nifty Realty and Nifty Auto were up more than 1% each.
Amomg individual stocks, State Bank of India (SBI), Bank of India and Allahabad Bank from the banking, Indiabulls Real Estate, Godrej Properties and Oberoi Realty from real estate and Tata Motors, Eicher Motors, Bosch and Bharat Forge from auto sector were up more than 2% on the NSE.
GLOBAL MARKETS
Globally, Asian stocks edged up on Wednesday after tech sector strength lifted Wall Street shares, while concerns about Italy’s debt prompted investors to move into lower-risk government debt elsewhere, pushing US Treasury yields down from recent highs.
MSCI’s world equity index, which tracks shares in 47 countries, was up 0.24 percent, mainly as a result of a strong showing from Asian stocks. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.63 per cent.
3:54 PM
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RBI's repo rate hike: Two factors that took the market by surprise
The decision to raise the repo rate by 25 bps is surprising for two reasons. The first is that it is being done in expectation of inflation increasing in the coming months, though the targeted rate at 4.8-4.9% is still below the 6% upper band. This was not the stance taken earlier, even as inflation increased and expectations were in the upward direction. The second is that the decision was unanimous, which has rarely been the case in past policies where not more than 2 members spoke of rate hikes or assumed a hawkish tone. READ MORE
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MARKET COMMENT Dheeraj Singh – Head of Investments & Fund Manager – Fixed Income, Taurus Mutual Fund
The decision on interest rate hike was generally expected ever since the release of the last monetary policy committee meeting minutes indicated that the committee members were leaning towards a hike in policy rates. The markets will probably take solace in the fact that the central bank continues to maintain a neutral stance and has not moved towards a removal of accommodation stance. This suggests that, unless further inflation prints are significantly higher, the August committee meeting may keep policy rates unchanged. Higher inflation in the immediate future could however increase the probability of a further increase in policy rates
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MARKET COMMENT Motilal Oswal, chairman & managing director, Motilal Oswal Financial Services
RBI Governor changed the rate little higher, as at this juncture that was the best thing to do. India is in a situation where anything sharp can hurt economy. If we raise the Interest rates too fast & too sharp and try tightening the money supply, it can hurt the corporate earnings that are just about on cusp of expanding. Lowering of interest further was not the case at all, as global volatility due to crude oil prices and rate tightening never offered that option.
At the current levels, markets are looking little expensive but for a reason of expectation of earning momentum kicking in. We think even the correction in the mid-caps is overdone and they should start stabilising. It would be a good idea to commit some capital into well-managed mid-cap mutual funds, as the recovery in earnings will bring the quick buoyancy. Broad markets are currently holding well and we think have a case to move higher towards 11,000 Nifty mark in the short term
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MARKET COMMENT Shishir Baijal, Chairman & Managing Director, Knight Frank India
The RBI’s stance of increasing the policy rate by 25bps is in line with our expectation considering that the crude oil flared inflation level and the interest rates in the broader economy have been marching higher for some time now. However, this increase in policy rate will delay the revival of the country’s housing market, which after suffering a prolonged period of slump has just begun to show early signs of improvement on account of uptick in affordable housing
The RBI’s stance of increasing the policy rate by 25bps is in line with our expectation considering that the crude oil flared inflation level and the interest rates in the broader economy have been marching higher for some time now. However, this increase in policy rate will delay the revival of the country’s housing market, which after suffering a prolonged period of slump has just begun to show early signs of improvement on account of uptick in affordable housing
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Nifty Realty index gained 1.5%
| COMPANY | LATEST | PREV CLOSE |
GAIN( ) | GAIN(%) | VOLUME |
|---|---|---|---|---|---|
| INDBULL.REALEST. | 177.95 | 172.15 | 5.80 | 3.37 | 8607447 |
| GODREJ PROPERT. | 726.20 | 706.35 | 19.85 | 2.81 | 111348 |
| PHOENIX MILLS | 664.90 | 649.15 | 15.75 | 2.43 | 73821 |
| OBEROI REALTY | 509.15 | 501.55 | 7.60 | 1.52 | 208971 |
| UNITECH | 4.15 | 4.10 | 0.05 | 1.22 | 9894359 |
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Nifty PSU Bank index gains 2.5% post RBI policy
| COMPANY | LATEST | PREV CLOSE |
GAIN() | GAIN(%) | VOLUME |
|---|---|---|---|---|---|
| ALLAHABAD BANK | 43.30 | 39.75 | 3.55 | 8.93 | 10478877 |
| INDIAN BANK | 347.95 | 330.20 | 17.75 | 5.38 | 1892339 |
| UNION BANK (I) | 90.60 | 87.00 | 3.60 | 4.14 | 7594762 |
| ORIENTAL BANK | 78.60 | 75.85 | 2.75 | 3.63 | 2654392 |
| SYNDICATE BANK | 48.65 | 47.15 | 1.50 | 3.18 | 2665106 |
3:38 PM![]()
Nifty PSU Bank index gains 2.5% post RBI policy
| COMPANY | LATEST | PREV CLOSE |
GAIN() | GAIN(%) | VOLUME |
|---|---|---|---|---|---|
| ALLAHABAD BANK | 43.30 | 39.75 | 3.55 | 8.93 | 10478877 |
| INDIAN BANK | 347.95 | 330.20 | 17.75 | 5.38 | 1892339 |
| UNION BANK (I) | 90.60 | 87.00 | 3.60 | 4.14 | 7594762 |
| ORIENTAL BANK | 78.60 | 75.85 | 2.75 | 3.63 | 2654392 |
| SYNDICATE BANK | 48.65 | 47.15 | 1.50 | 3.18 | 2665106 |
3:37 PM
Sectoral Trend
3:36 PM
Top Sensex gainers and losers
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Markets at Close
The S&P BSE Sensex ended the day at 35,179, up 276 points, while the broader Nifty50 index settled at 10,685, up 91 points
The S&P BSE Sensex ended the day at 35,179, up 276 points, while the broader Nifty50 index settled at 10,685, up 91 points
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MARKET COMMENT Ramesh Nair, CEO & Country Head, JLL India
The hike may seem to dampen sentiments in the market but in terms of real estate may have little or no impact. As almost all home loans these days are on floating rates, the rise and fall in home loan rates does not impact the performance of residential real estate sector much and tends to balance each other out over long term.
As buying decisions are generally not taken based on fluctuations in home loan rates, there will be very little effect on the real estate market. Though for some home buyers looking towards making a very low ticket size purchase decision, there may be some tentativeness in the decision making, overall we will see minimal impact on the end-user in the housing sector
The hike may seem to dampen sentiments in the market but in terms of real estate may have little or no impact. As almost all home loans these days are on floating rates, the rise and fall in home loan rates does not impact the performance of residential real estate sector much and tends to balance each other out over long term.
As buying decisions are generally not taken based on fluctuations in home loan rates, there will be very little effect on the real estate market. Though for some home buyers looking towards making a very low ticket size purchase decision, there may be some tentativeness in the decision making, overall we will see minimal impact on the end-user in the housing sector
3:15 PM
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Rate sensitive shares trade firm after RBI hikes repo rate by 25 bps
Shares of rate sensitive sectors such as bank, real estate and automobiles are trading firm after the Reserve Bank India (RBI) hiked repo rate by 25 bps to 6.25%. This is the first rate hike since January 2014. The central bank maintained neutral stance in the second policy decision of FY19.
Nifty PSU Bank (up 2%), Nifty Realty (1.4%) and Nifty Auto (up 1.5%) were up more than 1% as compared to 0.88% rise in the benchmark Nifty 50 index at 02:57 pm. Nifty Bank and Nifty Private Bank index however, up 0.42% and 0.37%, respectively. READ MORE
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RBI Policy Decision
RBI Deputy Governor, NS Vishwanathan says decided to permit core investment cos to invest in invITs as sponsors
RBI Deputy Governor, NS Vishwanathan says decided to permit core investment cos to invest in invITs as sponsors
3:08 PM
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RBI Policy Decision
RBI Deputy Governor, Viral Acharya says food inflation has remained benign, typical seasonal pick up delayed; hardening has resulted in higher inflation projections for next year
3:08 PM
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RBI Policy Decision
RBI Deputy Governor, Viral Acharya says inflation excluding food & fuel has hardened sharply
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First Published: Jun 06 2018 | 3:30 PM IST
