The News International Team
After a roller coaster ride, the equity benchmarks managed to close with marginal gains on Tuesday amid announcement of RBI policy. Indices climbed nearly a percent intraday before erasing gains in last couple of hours of trade today.
The 30-share BSE Sensex rose 33.40 points to close at 26630.51 after hitting an intraday high of 26851.33 and low of 26481.31. The 50-share NSE Nifty reclaimed the 8000 level but failed to hold the same, up 5.90 points to end the day at 7964.80.
The broader markets too saw cut in gains, ending with 0.1 percent upmove but the market breadth was negative. About 1370 shares advanced while 1527 shares declined on the Bombay Stock Exchange.
Experts believe the consolidation may continue in near term due to lack of triggers. As the RBI event is behind us, the market will closely watch July-September quarter earnings that will kick off with Infosys’ numbers on October 10, say experts.
Yogesh Mehta of Motilal Oswal Securities believes the Nifty will be range bound between 7880 and 8000 as there was no surprise move from RBI.
According to Vikas Khemani of Edelweiss Capital, the next trigger for the market would probably be the quarterly earnings and that is where the markets will take the next round of clues. “Depending how the results pan out, you may again see a further short-term movement,” he says.
The major event of the day was monetary policy, though there was some caution over Hong Kong issue. The Reserve Bank of India today kept policy rates (repo rate at 8 percent and cash reserve ratio at 4 percent) unchanged, which was on expected lines and continued its anti-inflationary stance.
RBI governor Raghuram Rajan said the headline inflation has been buffetted slightly, but the risks are still towards the upside; hence reaching 6 percent inflation target by 2016 too is at risk. “The future policy stance will be influenced by the RBI’s projections of inflation relative to the medium term objective of 6 percent by January 2016, while being contingent on incoming data,” Rajan said. He said it would be rather easy to meet the 8 percent CPI target for 2018.
RBI, which expects the GDP growth of 5.5 percent Y-o-Y in FY15 and 6.3 percent in FY16, said the key to a turnaround in the growth path of the economy in the second half of the year is a revival in investment activity – in greenfield as well as brownfield stalled projects – supported by fiscal consolidation, stronger export performance and sustained disinflation.
Nomura expects the RBI to remain on a prolonged pause. “We are officially pencilling in repo rate cuts starting in 2016, with the central bank likely to maintain stability in policy rates until then. We believe this bodes well for the economy in the medium term as it should ensure a rebalancing by generating higher domestic financial savings to fund investments,” said the brokerage.
Meanwhile, the Indian rupee closed at 61.77 a dollar (the lowest closing level since March 5, 2014), down 24 paise compared 61.53 a dollar on Monday.
On the global front, Asian markets closed mixed with the Hang Seng falling over a percent due to protests in Hong Kong.
Back home, HDFC twins, index heavyweights (ITC and Reliance Industries) and healthcare stocks supported the market while banks, capital goods and Tata Group stocks were under pressure.
Shares of HDFC, ITC, Reliance Industries, Sun Pharma, Maruti Suzuki, Bajaj Auto and Cipla rallied 1-3 percent.
However, ICICI Bank, Tata Motors, TCS, Axis Bank, Mahindra & Mahindra, BHEL, Tata Steel and Hindalco Industries declined 1-3 percent.