Sensex up 148 points at 1 week high; RBI offers rate-cut hope
Mumbai: Stock markets rose for the second straight day Monday with the BSE barometer Sensex closing up by 148 points at one-week high on value buying in auto, IT and oil & gas shares amid RBI holding key rates on expected lines but offering hopes of rate cut in near future.
The 30-share benchmark index closed higher by 147.94 points, or 0.77 percent, at 19,325.87 points, a level not seen since last week. It hovered in a wide range of 19,344.28 and 19,084.68 points during the day.
"Positive global markets and buying from lower levels after many stocks reached oversold zone, boosted the market sentiment," Bonanza Portfolio Senior Research Analyst Nidhi Saraswat said.
As expected by market participants, RBI Monday kept policy rates and CRR unchanged citing elevated food inflation, rupee depreciation and uncertainty over foreign fund inflows.
"The move was largely anticipated by market participants after recent weakening of rupee; however the change in tone comes as positive surprise," said Kunal Shah, Fund Manager - Debt, Kotak Mahindra Old Mutual Life Insurance Ltd.
"The guidance provided by RBI is in sharp contrast to way it communicated in past when it perceived monetary space was shrinking," he added.
RBI in its mid-quarter policy review said a durable receding of inflation will open up the space for monetary policy to continue to address risks to growth.
The NSE 50-share Nifty also rose by 41.65 points or 0.72 percent to 5,850.05.
Mahindra &Mahindra rose the most by 4.43 percent. "The street was upbeat on the stock after it?s auto component business made a deal with Spanish auto major CIE," Inventure Growth & Securities Chairman & MD Nagji K Rita said.
Bharti Airtel gained close to 2 percent after it allotted around 200 million shares to Doha-based Qatar Foundation Endownment for around Rs 6,796 crore, Rita said.
RIL and Infosys too rose by over 1 percent helping the barometer post gains for second session in a row.
Among global markets, benchmark indices in Hong Kong, Japan, Singapore and Taiwan rose by 0.69 percent to 2.73 percent while European markets were positive in early trade.
Back home, 23 shares of Sensex-based pack closed with gains while other finished with losses.
Among major gainers, BHEL rose by 3.37 percent, Bajaj Auto by 2.50 percent, Sun Pharma by 2.20 percent and HDFC by 1.20 percent.
"Since last trading session, some recovery is visible from lower levels, as buying revived after decent correction, with most stock prices at comfortable levels," Saraswat said.
Reserve Bank retained lending rate 7.25 percent, while the cash reserve ratio at 4 percent.
"The monetary policy stance has been informed by the evolving growth-inflation dynamics, the balance of risks as well as recent developments in the external sector," RBI Governor D Subbarao said in the mid-quarter policy review.
Amar Ambani, Head of Research at IIFL, said that RBI had no choice but to maintain status quo on account of the 9 percent depreciation in the rupee since the beginning of May.
"Another dampener was the disappointing trade data. The trade deficit widened to USD 20.1 billion in May as against USD 16.9 billion the same period last year. However, positive cues from Europe post lunch boosted sentiment and helped the benchmark indices end in the black," Ambani said.
Barring metal, all the sectoral indices closed with gains up to 1.90 percent.
The Auto sector index gained the most by 1.90 percent to 10,901.11 followed by capital goods index by 1.15 percent to 9,422.81. Teck index rose by 1.09 percent to 3,583.31 and consumer durable index by 1.02 percent to 6,659.68.
Total market turnover dropped sharply to Rs 1,548.66 crore from Rs 2,507.39 crore yesterday. Total market breadth was positive as 1,205 stock closed in the green while 1,091 that finished in the red.
Meanwhile, Foreign Institutional Investors (FIIs) sold net Rs 305.68 crore yesterday as per the provisional figures issued by the stock exchanges.