 "Expect strong returns in new Samvat")
Markets have advanced with Nifty hovering near the 8,250 mark after the Reserve Bank of India (RBI) left the key rates unchanged at a five-year low of 6.50% in line with the analysts expectations. Strength in the global equities has also aided sentiment.
At 12:45 pm, the S&P BSE Sensex was up 229 points at 27,006 and the Nifty50 was up 72 points at 8,273 after hitting an intra-day high of 8,252. Broader markets are trading in line with the benchmark indices- BSE Midcap and Smallcap indices are up 0.3%-0.7%.
"Nifty has been moving in a small range in last seven trading days and if Nifty holds onto 8,140, 8,500-8,580 levels look possible and can happen in next 1-2 weeks. Nifty trading above the 8,265 mark would propel rally towards 8,500-8,580 levels. 8,336 & 8,655 are very important levels for the Nifty and if we are unable to surpass these levels then profit booking can emerge," says AK Prabhakar, Head of Research, IDBI Capital.
"Nifty has been moving in a small range in last seven trading days and if Nifty holds onto 8,140, 8,500-8,580 levels look possible and can happen in next 1-2 weeks. Nifty trading above the 8,265 mark would propel rally towards 8,500-8,580 levels. 8,336 & 8,655 are very important levels for the Nifty and if we are unable to surpass these levels then profit booking can emerge," says AK Prabhakar, Head of Research, IDBI Capital.
The central bank retained the repo or the repurchase rate at 6.50% on the back of higher food inflation and amid expectations of a rate action by the US Federal Reserve. Since the rate-easing cycle began in January 2015, the RBI has reduced policy rates by 150 basis points. Cash Reserve Ratio (CRR) has also been kept unchanged at 4%.
Adds Mihir Vora- Director and Chief Investment Officer, Max life Insurance,"In line with expectations, the RBI has kept all the policy rates unchanged. It has also maintained the accommodative stance and the focus continues to be on the transmission of the previous rate-cuts into lower lending rates. While the inflation estimate for this year is still unchanged, due to the recent stickiness of food inflation, there is now an upward risk to the projections. However, given the uneven nature of growth signs, the accommodative stance is retained. We continue to expect another 25 to 50 basis point rates during the current financial year, more likely in the second half."
Among some of the prominent gainers, ICICI Bank has soared 3% after the private lender decided to raise Rs 25,000 crore in tranches via private placement of bonds, debentures and securities, including bonds and non-convertible debentures (NCDs). Adds Mihir Vora- Director and Chief Investment Officer, Max life Insurance,"In line with expectations, the RBI has kept all the policy rates unchanged. It has also maintained the accommodative stance and the focus continues to be on the transmission of the previous rate-cuts into lower lending rates. While the inflation estimate for this year is still unchanged, due to the recent stickiness of food inflation, there is now an upward risk to the projections. However, given the uneven nature of growth signs, the accommodative stance is retained. We continue to expect another 25 to 50 basis point rates during the current financial year, more likely in the second half."
Meanwhile, rate sensitive stocks are trading largely in green post RBI stance. In the banking segment, State Bank of India (SBI), Bank of India, Yes Bank, Bank of Baroda, Canara Bank, Federal Bank and Bank of India were up between 1% and 3%.
In the auto pack, M&M, Hero Motocorp, Maruti Suzuki and Bajaj Auto have climbed between 0.2%-1% while Tata Motors has shed 0.1%
Sun Pharma has gained over 1% after Dilip Shanghvi, the promoter of Sun Pharmaceutical Industries, is set to expand his oil & natural gas business.
Mining and metal stocks have climbed across the bourses amid a global rally in base metal prices after the US dollar fell to a three-week low against a basket of global currencies. JSW Steel, NMDC, Hindalco, Vedanta, Tata Steel, Coal India and Hindustan Zinc have advanced between 0.5%-1%.
Meanwhile, FMCG stocks are witnessing buying interest amid progress in monsoons. HUL and ITC gained 1.5%and 0.8% each.
On the flip side, Axis Bank, Dr Reddy’s Lab, RIL, Adani Ports and HDFC have shed between 0.1%-0.5%.
GLOBAL MARKET
Asian shares are trading higher after Federal Reserve Chair Janet Yellen said US interest rate hikes are likely on the way, held back any reference to the timing.
The Fed chief said last month's jobs report was "disappointing" and bears watching, though she gave a largely upbeat assessment of the US economic outlook, warning against attaching too much significance to the payrolls data in isolation.
Japan’s Nikkei, Hong Kong’s Hang Seng, China's Shanghi Composite and Singapore’s Straits Time shave gained between 0.3%-1.5%.
