Interest rate sensitive stocks gain ground post decision
Markets have reacted positively to the RBI's decision to cut the repo rate by 25 basis points (bps), to 6.25%, in its bi-monthly monetary policy review. Marginal standing facility (MSF) rate and the Bank Rate adjusted to 6.75 per cent. Reverse repo rate under the LAF stands adjusted to 5.75%.
The benchmark S&P Sensex closed at 28,335 levels, up 91 points or 0.32%. Nifty50 index gained 31 points, or 0.36%, to close at 8,769 levels. The broader markets, too, performed in line with the forntline indices, with S&P BSE Midcap and Smallcap gaining 0.5% and 0.6% respectively.
"The 25 bps cut in the repo rate did not surprise the markets, and we believe this would generally have a neutral impact. We expect the focus to shift to real economy and corporate earnings. At the same time, the 25 bps cut is indicative of the underlying good health of the economy and signals that the situation has progressively improved," said Arun Gopalan, vice president, Research at Systematix Shares & Stocks in a note.
"The MPC has acknowledged the strong improvement in Kharif sowing leading to a consequent lowering of the fear of food inflation. Retaining the Real GVA estimates for FY17 at 7.6% indicates a belief in the gradual improvement in the underlying economy. There is no indication in the Policy that there needs to be a pause or a change in the direction of the interest rates," he adds.
Interest rate sensitive sectors gained ground post the RBI's decision. NIFTY Bank and NIFTY Realty showed a marginal positive bias after trading weak for most part of the day, edging up 0.43% and 0.14% respectively, post the RBI announcement. The NIFTY Auto index too was up 0.38%.
Buzzing stocks
The top gainer on Sensex were ONGC, GAIL and SBI posting gains between 2.5%-5%. On the other hand, Coal India, Larsen and Toubro and Mahindra and Mahindra were among the top losers, slipping between 1%-2%.
HPL Electric & Power got listed at Rs 190 on Tuesday, 6% below its issue price of Rs 202 per share, on the National Stock Exchange (NSE). It closed at Rs 189.
CCL Products has dipped 7% to Rs 242 on BSE in intra-day trade after reporting a 55.7% year on year (YoY) drop in consolidated net profit at Rs 12.96 crore for the quarter ended September 30, 2016.
ONGC, Indraprastha Gas, Petronet LNG, Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), Mahanagar Gas and Cairn India were up between 1% and 6% on the BSE. All these stocks were trading at their respective 52-week highs.
Global markets
Japan's Nikkei share average rose on Tuesday, with exporters up after the yen weakened against the dollar on data suggesting the US manufacturing sector grew better than expected in September.
The Nikkei gained 0.8% to 16,735.65, its highest closing level since September 23. Hang Sheng closed at 23,689 levels up 0.45%.
European shares advanced on Tuesday, with Germany's Deutsche Bank hitting a two-week high following recent steep losses and the world's biggest education company Pearson gaining after encouraging comments by Morgan Stanley.
Pearson rose 5.6 per cent, the top gainer in the pan-European STOXX 600 index, after Morgan Stanley said the company was unlikely to issue a profit warning, "meaning the shares could recover sharply on the Q3 results".
Deutsche Bank rose 2.7 percent to a two-week high. Its shares had slumped to a record low on Friday before bouncing back on expectations of a swift deal with U.S. authorities over a multi-billion dollar penalty.
Photograph: Danish Siddiqui/Reuters