The News International Team
2:50 pm MF exposure to banks: The mutual fund industry is betting big on banking stocks as its equity exposure to the sector climbed to an all-time high of nearly Rs 73,000 crore in December. This also marks the third consecutive rise in MF industry’s exposure to banking stocks. MFs collect funds from various investors for investing in securities such as stocks, bonds, money market instruments and similar assets.
Their investments in banking stocks stood at Rs 72,835 crore as on December 31, 2014, accounting for 21.88 per cent of their total equity assets under management (AUM) of Rs 3.33 lakh crore, according to data available with the Securities and Exchange Board of India (Sebi). The previous high was November this year when investment in the sector surged to Rs 70,575 crore. MFs had been raising their exposure to banking shares since January but their investment level in the sector dropped in September.
2:40 pm Market outlook: Hailing the Reserve Bank’s move to pare repo rate by 25 basis points , Raamdeo Agrawal, joint managing director, Motilal Oswal Financial Services, says the cut was imminent for the Indian market due to global deflation and fall in inflation. In an interview to CNBC-TV18, Agrawal says the rate cut will give a momentum to the economy and he sees more rate cuts in the upcoming days. “But don’t try to time the market,” advises Agrawal who believes that retail investor participation will now increase significantly. “Though we may not get very large foreign instituitional investor (FII) flows, if we get USD 15 billion from FIIs and a similar figure from domestic instituitional investor (DIIs), then we’ll still be very comfortable,” he adds.
2:36 pm Market check: The Nifty has hit 8500, up 230.30 points or 2.8 percent at 8507.85. The Sensex is up 781.86 points or 2.9 percent at 28128.68. About 1718 shares have advanced, 1069 shares declined, and 320 shares are unchanged.
HDFC is up 6 percent while SBI and ICICI Bank are up 5 percent each.
02:15pm More rate cut possible?
Brokerage house Morgan Stanley says a big rate cut cycle is underway, and it sees the RBI cutting interest rates by 125 basis points over the next 12 months.
It sees the RBI cutting the repo rate by 25 basis points more at its monetary policy review on February 3.
“We expect the RBI to front load the rate cuts by potentially taking up a 50bps rate cut in one of the monetary policy meetings after February 3,” said the Morgan Stanley note to clients, penned by Chetan Ahya and Upasana Chachra.
“Our rate cut forecasts is predicated on our view that CPI inflation will stay at closer to 5% in most of the calendar year 2015, as the reduction in fiscal deficit, sustained deceleration in rural wages and lower global commodity prices will mean that inflationary pressures in the economy will be contained,” said the note.
02:00pm Market Check
Bulls are in complete control of the street today as the frontline indices rallied 2.5 percent each and the rupee touched two-month high in afternoon trade after the Reserve Bank of India surprised the market with rate cut.
The 30-share BSE Sensex gained 693.94 points at 28040.76 and the 50-share NSE Nifty rallied 206.05 points to 8483.60 while the broader markets underperformed benchmarks. The BSE Midcap and Smallcap indices climbed 1.5 percent and 1.2 percent, respectively.
About 1627 shares have advanced, 1095 shares declined, and 327 shares are unchanged on the Bombay Stock Exchange.
The Reserve Bank of India slashed repo rate by 25 basis points to 7.75 percent and left cash reserve ratio unchanged at 4 percent ahead of its February policy meeting.
BSE Realty Index topped the buying list among sectoral indices, up 8 percent followed by Bankex with 3.5 percent upside. HDFC, ICICI Bank, L&T, SBI and M&M rallied 4-6 percent.
Meanwhile, the Indian rupee jumped to 61.48 a dollar, the highest level since November 2013. The currency appreciated by 65 paise to 61.52 a dollar.
Telecom Regulatory Authority of India (TRAI) has rejected Department of Telecommunications’ proposal for higher 3G price of Rs 3,899 crore and reiterated its old stance on 3G spectrum price. Bharti Airtel and Idea Cellular gained more than a percent while Reliance Communications and Tata Teleservices climbed nearly 4 percent.
In the broader space, Atul surged 7 percent as US FDA has approved its Dapsone manufacturing facility in Valsad, Gujarat.