Key benchmark indices extended gains and hit fresh intraday high in mid-afternoon trade. At 14:26 IST, the barometer index, the S&P BSE Sensex, was up 369.74 points or 1.44% at 25,986.58. The 50-unit CNX Nifty was up 120.35 points or 1.54% at 7,916.05. The Sensex was currently trading below the psychological 26,000 mark after hitting one week high above that level in mid-afternoon trade. The Sensex surged 437.53 points at the intraday high of 26,054.37 in mid-afternoon trade, its highest level since 22 September 2015. The Nifty also registered one week high after gaining 130.85 points at the intraday high of 7,926.55 in mid-afternoon trade, its highest level 22 September 2015. 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.
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.
The market breadth indicating the overall health of the market turned positive from negative. On BSE, 1,334 shares gained and 1,110 shares declined. A total of 123 shares were unchanged. The BSE Mid-Cap index was up 0.58%. The BSE Small-Cap index was up 0.2%. Both these indices underperformed the Sensex.
In overseas markets, European equities were hovering near 2015 lows and Asian stocks dropped to 3-1/2-year as global economy worries continue to batter risk assets. Taiwan's market was closed because of Typhoon Dujuan. South Korea's market was closed for 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.
Auto stocks gained after the Reserve Bank of India (RBI) announced a steeper-than-expected cut in the policy repo rate at its fourth bi-monthly monetary policy review for the year 2015-16 today, 29 September 2015. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Tata Motors (up 2.37%), Maruti Suzuki India (up 3.86%), Mahindra & Mahindra (M&M) (up 3.25%), Eicher Motors (up 2.09%) and Ashok Leyland (up 0.83%) gained.
Two-wheeler stocks fell. Bajaj Auto (down 0.7%), Hero MotoCorp (down 0.57%) and TVS Motor Company (down 0.32%) fell.
Shares of housing finance companies gained after the Reserve Bank of India (RBI) announced a steeper-than-expected cut in the policy repo rate at its fourth bi-monthly monetary policy review for the year 2015-16 today, 29 September 2015.
HDFC (up 4.55%), LIC Housing Finance (up 7.1%), Indiabulls Housing Finance (up 1.62%), GIC Housing Finance (up 5.91%), Gruh Finance (up 1.88%) and Can Fin Homes (up 4.263%) gained.
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, 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. The International Monetary Fund (IMF) is reportedly likely to revise downwards its estimates for global economic growth due to slower expansion in emerging economies. 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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