Sensex gains 174 points as RBI holds key rates

Photo: Shutterstock
Stocks ended in the positive territory on Wednesday underpinned by the rate-sensitive realty and banking shares after the Reserve Bank of India (RBI) decided to hold rates.

Domestic institutional investors (DIIs) played sheet-anchor for the market, which rallied for the fourth straight session. According to traders, the RBI’s decision to keep the interest rate on hold is in sync with investors’ expectations.

A strengthening rupee, which breached the 65-level against the dollar during the day, pepped up the mood.

The BSE Sensex ended up 174.33 points, or 0.55 per cent, at 31,671.71. The gauge had gained 337.57 points in the previous three sessions. The NSE Nifty followed suit and regained the key 9,900-mark before closing up 55.40 points, or 0.56 per cent, at 9,914.90.

The RBI, in its fourth bi-monthly policy review for 2017-18, kept the repo rate unchanged at six per cent. Reverse repo has been retained at 5.75 per cent. “Other than recapitalisation of public sector banks, there was nothing new in the RBI policy, rather than acknowledgement of reduction in GVA (gross value added) and increase in inflation. But this time, the commentary is not as hawkish, which provides room for a rate cut by the end of the year,” said Vinod Nair, head of research 
at Geojit Financial Services Ltd. “The market is unlikely to react much to the event and move on with the factors like domestic second quarter earnings season and global liquidity.” 

The risk sentiment received a boost after the eight core sectors grew to a five-month high of 4.9 per cent in August, helped by a robust show of coal, natural gas and electricity. DIIs stayed on with the India story as they purchased shares net Rs 1,552.41 crore. But cracks remained in the form of share outflow from foreign portfolio investors, who net dumped shares of Rs 693.03 crore on Tuesday, provisional data showed.

The rate-sensitive financial stocks were on the buy list. The State Bank of India rose 0.82 per cent to Rs 253.35, while Kotak Mahindra Bank was up 2.16 per cent at Rs 1,028.

In the Sensex bloc, Sun Pharmaceutical Industries hit pay dirt, jumping the most by 2.98 per cent. Reliance Industries, ITC, Dr Reddy’s Laboratories and M&M, too, turned green. However, Bharti Airtel fell big, down 2.26 per cent. In the sectoral matrix, healthcare advanced 1.83 per cent, followed by FMCG, oil and gas, PSU, realty and banking. 

The broader markets, too, showed a higher trend, with the BSE small-cap and mid-cap indices surging up to 0.79 per cent.

Most other Asian indices closed higher. Chinese stock exchanges remained shut on Wednesday for a public holiday. Europe offered a mixed picture.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel