Anticipation of a rate cut by the Reserve Bank of India (RBI) and capital infusion in banks led a barometer index of the Indian equity markets to gain 72 points on Monday.The wider 50-scrip Nifty of the National Stock Exchange (NSE), however closed flat during the day's trade. It edged-up only 10.20 points or 0.12 percent at 8,543.05 points.The 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 28,089.09 points, closed at 28,187.06 points, up 72.50 points or 0.26 percent from the previous day's close at 28,114.56 points.The Sensex touched a high of 28,263.35 points and a low of 28,071.37 points in the intra-day trade.
According to analysts, domestic markets remained positive on the back of a surge in banking and auto stocks ahead of the RBI's monetary policy review on Tuesday. The markets rise was arrested by the higher levels of profit booking which trimmed some of the early gains due to weak Greece and Chinese stock markets, cited analysts."The markets are anxious about the monetary policy review. A cut in interest rates will restore investor confidence," Devendra Nevgi, chief executive of ZyFin Advisors, told IANS."Even if there is no rate cut the knee-jerk reaction will neither be that disappointing nor long lasting, as it has been factored in."According to Nevgi, rate cut or not, the markets will closely go through the language used by the RBI governor."The language on the Indian economy, oil prices, monsoon, inflation and the US rate hike will be closely monitored as it will give guidance to future RBI moves," Nevgi said.India Inc expects a rate cut by the RBI during this review. Indian industry feels that the upcoming review might be the last chance by RBI to cut rates in this calendar year before inflation spirals up and the US Fed decides on its own rates in September.
Anand James, co-head, technical research desk, Geojit BNP Paribas, told IANS that the markets were also buoyed by hopes of an end to the political logjam which has stalled parliament."It is expected that the government may find a way out of the political logjam. It had even called for an all party meet today," James elaborated to IANS."Parliament's logjam has cast a shadow over the government's ability to pass economic reforms. It has also put a question mark over the fate of key legislation like the GST (goods and services tax) and the land bill." James pointed out that last week's healthy roll over figures from July derivative expiry and announcement of Rs.70,000 crore infusion into PSBs (public sector banks) in the next four years continued to boost the markets.
However, the continuous slide in the Chinese markets, weakening of the rupee, oil and global commodities prices had a negative impact on the markets here.The slide in the Chinese markets in the last two months has eroded nearly 40 percent of the stock value and caused panic. More importantly, the inability of the Chinese government, fund houses and brokerage firms to arrest the fall has led to global sell-offs.
Sector-wise, healthy buying was observed in banking, consumer durables and automobile stocks. However, metal, information technology (IT) and oil and gas scrips came under selling pressure. The S&P BSE banking index zoomed by 212.49 points, the consumer durables index rose 151.42 points and the automobile index went up 139.27 points.The S&P BSE metal index declined by 93.86 points, followed by the IT index which fell 58.81 points while the oil and gas index was lower by 50.20 points.Major Sensex gainers during Monday's trade were State Bank of India (SBI), up 3.94 percent at Rs.281.05; ICICI Bank, up 3.40 percent at Rs.312.80; Maruti Suzuki, up 2.29 percent at Rs.4,429.60; Dr Reddy's Lab, up 2 percent at Rs.4,146.85; and BHEL, up 1.58 percent at Rs.283.10.The major Sensex losers were Vedanta, down 2.50 percent at Rs.126.90; Mahindra and Mahindra, down 2.04 percent at Rs.1,333.80, Coal India, down 1.96 percent at Rs.430.70; Lupin, down 1.93 percent at Rs.1,663; and HDFC Bank, down 1.49 percent at Rs.1,094.60.Among the Asian markets, Japan's Nikkei was down 0.18 percent and Hong Kong's Hang Seng fell by 0.91 percent. China's Shanghai Composite Index was lower by 1.11 percent. In Europe, the London FTSE 100 index inched down by 0.02 percent. Germany's DAX Index moved up by 0.84 percent. The French CAC 40 was higher by 0.67 percent at the closing bell here.