Stock markets recovered sharply after the Reserve Bank of India (RBI) raised the cash reserve ratio (CRR) for banks by 75 basis points and kept key interest rates unchanged. Short-covering in banking and real estate stocks, along with a rise in European markets and US index futures, also boosted sentiment.
The Bombay Stock Exchange (BSE) Sensex recouped its early losses — it fell below 16,000 on news of the CRR change — and recovered 376 points to close at 16,357, up 51 points, or 0.3 per cent. The S&P CNX Nifty of the National Stock Exchange was up 14.8 points, or 0.3 per cent, at 4,882 points.
“The markets were expecting a hike in key interest rates, which did not happen. The CRR hike was (already) factored in and won’t have any major impact, expect on banking stocks, as over Rs 30,000 crore cash will have to be deposited with RBI,” said Ambreesh Baliga, vice-president of equities at Karvy Stock Broking.
Baliga said the Nifty had strong support at 4,025 and there could be more selloffs if it fell below this.
ICICI Bank was the top gainer and rose 5.3 per cent to Rs 830.40. Bharat Heavy Electricals rose 3.1 per cent to Rs 2,406.45, State Bank of India was up 2.7 per cent at Rs 2,058, DLF rose 2.54 per cent to Rs 332 and HDFC Bank rose 2.25 per cent to Rs 1,630. In all, 1,471 stocks rose and 1,354 declined on the BSE.
FIIs turn net sellers in ’10
Foreign institutional investors (FIIs) have turned net sellers in the current calendar year. FIIs’ net selling on Thursday stood at Rs 2,163.80 crore, the biggest one-day sale in more than 15 months. The net outflow for the current calendar year now stands at Rs 1,334.60 crore.
The selling, which has been primarily on account of global factors, has led to a sizeable decline in equity indices.
Thursday’s outflow is the most since October 10, 2008, when FIIs net sold equities worth Rs 2,320 crore.
