Markets rebound as RBI ups GDP outlook, spares policy rates
Mumbai: In a highly choppy trade, the benchmark Sensex on Friday recovered the sharp decline it suffered after the RBI announced a more-than-expected CRR hike by closing 51 points higher as the central bank raised the growth forecast and kept the key policy rates unchanged.
The 30-share Bombay Stock Exchange barometer, which sunk below the psychological 16,000-level after the Reserve Bank raised the amount of money that banks have to park with RBI (CRR) by 75 basis points--25 bps more than the market view--bounced back to close 51.09 points up at 16,357.96 as the central bank spared key policy rates such as banks buying and borrowing rates, and raised GDP growth outlook to 7.5 percent from 6 percent.
In a highly volatile trade, the key index dwindled between 16,390.31 and 15,982.08 points during the sessions. Still, for every one stock that fell there was an equal number that gained. And among the 30-Sensex counters, 17 closed with gains while 13 ended with losses.
Banking, realty and capital goods sectors-- the sectors which are more interest sensitive and hence battered for long now--were the winners on Friday.
Similarly, the wide-based National Stock Exchange index Nifty 50, after dipping below the 4,800 level, closed in the green with gain of 14.80 points to 4,882.05.
The RBI increased the cash reserve ratio to 5.75 percent from 5 percent but kept the benchmark interest rates unchanged while raising its inflation estimate to 8.5 percent by March end from 6.5 percent. It has also revised upwards its GDP estimate from a low 6 percent to a high 7.5 percent for this fiscal.
Badly hit in the last few sessions, anticipating sterner RBI action on the rates front, the banking sector gained the most by 2.99 percent to 9,654.09, driven mostly by ICICI Bank which rose the most in three months by adding 5.29 percent to Rs 820.40 and HDFC Bank by 2.25 percent to Rs 1,630.85.
The realty sector was the second best performer by adding 2.60 percent to 3,500.22 as the Sensex-related DLF soared 2.54 percent to Rs 332.80 after earlier sinking 3.2 percent.
The third grosser was the capital goods index which rose by 1.26 percent to 13,125.06, followed by the power index by 1.12 percent to 3,061.52, PSU index by 1.05 percent to 9,473.93, oil and gas index by 0.43 percent to 9,939.00 and auto sector by 0.37 percent to 6,953.20.
However, a further fag-end rally was capped as the FMCG sector index fell by 1.86 percent to 2,725.38 and metal index by 1.56 percent to 15,962.05. IT and tech indices were also moderately lower.
As the investors hunt for safe hedge, Small-cap index gained 1.20 per cent to 8,232.68 and Mid-cap index by 1.01 percent to 6,509.80.