Mkts see optimism in RBI's status quo, gain for 5th day after initial fall

Benchmark indices Sensex and Nifty continued their winning run for the fifth day on Thur­s­day as the Reserve Bank of India’s (RBI's) surprise policy move to pause rate hikes boo­sted buying in interest rate-sensitive stocks. Gains in index majors HDFC twins and Reli­a­nce Industries helped offset los­ses in IT, Power and FMCG stocks amid weak global trends.
 

Bouncing back from early fall, the 30-share BSE Sensex rose by 143.66 points or 0.24 per cent to settle at 59,832.97. Dur­ing the day, it advanced 260.75 points or 0.43 per cent to 59,950.06. The broader NSE Ni­fty gained 42.10 points or 0.24 per cent to finish at 17,599.15 after falling in initial trade. After raising interest rate by a cumulative 250 basis points in 11 months, the RBI unexpectedly kept benchmark rate unchanged as global banking woes added uncertainty to the economic outlook. RBI Governor Shaktikanta Das however pledged to hike interest rate again if needed, saying the decision to pause was "for this meeting only".
 

 

Most analysts had expected one final hike of 25 basis points in RBI's current tightening cycle before hitting a pause.
 

“RBI's pause is like Sachin stroke on a tricky pitch but with eyes set in and having the luxury of hitting the ball where ever he wanted. RBI had the option of a rate hike or a pause. The pause was not entirely unexpected. RBI will watch developments and data before taking the next call. The market expects RBI to fetch maximum run and win the match on inflation and growth, no matter which direction they hit the ball,” said Nilesh Shah, MD, Kotak Mahindra Asset management Company.

 

Among the Sensex firms, Bajaj Finance emerged as the biggest gainer by climbing 2.95 per cent. Tata Motors, Bajaj Finserv, IndusInd Bank, Sun Pharma, Mahindra & Mahindra, State Bank of India, Larsen & Toubro, HDFC, HDFC Bank, Maruti, Reliance Industries and Bharti Airtel were the other major winners.
 

HCL Technologies, Axis Bank, ICICI Bank, Tech Mahindra and Titan were among the laggards. The RBI surprised the market by pausing policy rates; nonetheless, there was some talk about this unexpected statement, which keeps it ahead of other major central banks across the world, said Santosh Meena, Head of Research, Swastika Investmart.
 

“The market is in a good mood, and this policy provides us with further cause to rejoice. However, given that we have witnessed a good recovery from recent lows and that we have a long weekend and a weekly expiry, some profit-taking or consolidation cannot be ruled out,” Meena added.
 

In the broader market, the BSE midcap gauge climbed 0.71 per cent and smallcap index advanced 0.70 per cent.
 

Among sectoral indices, realty jumped 2.90 per cent, auto climbed 0.94 per cent, industrials (0.89 per cent), utilities (0.80 per cent), oil & gas (0.77 per cent), healthcare (0.76 per cent) and power (0.73 per cent).

IT, teck, metal, consumer durables and telecommunication were the laggards.
 

Sensex surged 2,219 points or 3.73 per cent while Nifty jumped 647 points or 4.21 per cent in the five-day rally, bolstered by a recovery in financial, banking and auto shares.
 

"The surprising policy move to pause interest rate hikes has had a convincing effect on bond yields and the stock market. A plausible peaking of the interest rate will have a positive effect on the financial markets, which was reflected in today's drop in yield and marginal upside of domestic stock market when the Asian market was negative," Vinod Nair, Head of Research at Geojit Financial Services said.
 

In Asian markets, Seoul, Japan and Shanghai ended lower, while Hong Kong settled in the green. European equity markets were trading in positive territory during the afternoon trade. The US markets ended mostly lower on Wednesday.
 

Meanwhile, global oil benchmark Brent crude dipped 0.54 per cent to USD 84.53 per barrel.
 

Foreign Portfolio Investors (FPIs) bought equities worth Rs 806.82 crore on Wednesday, according to exchange data.