The BSE Sensex closed above the 17k mark to 10-week high of 17,077.18,up 81 points on sustained buying as RBI policy shifted focus to pushing growth from taming inflation,and investors settled this months derivative contracts amid strong overseas markets.
Metals,PSU,teck,auto,consumer durables and IT stocks attracted good buying,with 12 of the 13 sectoral indices making gains. Only BSE-Capital Goods finished in the red after yesterday’s gains.
Firm cues from the Asian markets aided the sentiment,although weak European equities weighed down the market.
In the last five sessions,Sensex has moved up by 625.71 points or 3.80 per cent,with FIIs – major market movers — pumping in over USD 1 billion so far this month.
Investor confidence got further boost yesterday after the Reserve Bank cut the cash reserve ratio (a portion of deposits banks keep with RBI) by 0.50 percentage points to 5.5 per cent — a move that would infuse Rs 32,000 crore in the financial system,easing liquidity.
It also left lending rates unchanged,indicating that its focus would be on growth,going forward rather than taming inflation.
“Markets continued with the bullish momentum after the CRR cut by RBI yesterday,leading investors to look forward to cut in lending rates from this point on and spurring growth,” said Alex Mathew,Research Head of Geojit BNP Paribas.
The Bombay Stock Exchange 30-share index resumed higher but moved in a narrow range before closing at 17,077.18,up 81.41 points or 0.48 per cent.
The NSE 50-issue index Nifty also gained 30.95 points or 0.60 per cent to end at more-than 10-week high of 5,158.30.
Globally,key indices in Japan,Singapore and South Korea gained up to 1.48 per cent,while those in Europe were trading weak in the afternoon deals.
After selling 12.80 crore on Monday,FIIs continued buying Indian equities and picked up shares worth Rs 801.29 crore yesterday as per provisional data.
Analysts said the markets moved in a narrow range as investors squared positions on the last day of the settlement in January’s derivatives contracts.
Of the 30 Sensex scrips,18 closed in the green. Coal India gained 3.90 per cent,followed by Tata Motors (3.78 pc),Tata Steel (2.97 pc),Sterlite (2.47 pc),Maruti Suzuki (2.44 pc),Infosys (1.51 pc),HDFC (1.12 pc),Bharti Airtel (1.03 pc) and RIL (0.89 pc).
However,Tata Power fell 2.09 pc,Jindal Steel – 1.67 pc,Hero MotoCo (1.43 pc),L&T (1.35 pc),Hindalco – 1.08 pc) and ONGC – 0.98 pc.
Among the sectoral indices,BSE-metal spurted 1.79 per cent,PSU – 1.24 pc,Teck – 1.20 pc,Auto – 1.15 pc,Consumer Durables – 1.12 pc and IT by 1.06 per cent.
The market breadth at the BSE was positive and 1,808 stocks gained ground,as against 1,040 finishing with losses.
The total turnover was sharply lower at Rs 2,794.96 crore from Rs 4,673.08 crore.
Sensex seen higher; Cairn may rise
Sensex today is expected to open higher after a shift in stance by the central bank to bolster growth raised expectations for more foreign fund investments.
The Reserve Bank of India slashed cash reserve requirement for banks by 50 basis points on Tuesday to help ease tight liquidity,but kept rates unchanged due to high core inflation.
We could give another bump up … but you will not have a one way street from here,said Ambareesh Baliga,chief operating officer at Way2Wealth.
He said the main 30-share BSE index,which has gained 10 per cent this month,could see some profit-taking.
Trading could be choppy because of the expiry of monthly derivatives contracts.
Cairn India may rise after the oil explorer reported a 12.5 per cent rise in its December quarter earnings.
Top-listed biotechnology firm Biocon is likely to fall after its quarterly net profit fell 15.8 per cent.
Asian shares rose on Wednesday underpinned by strong earnings from US technology giant Apple Inc,stabilising European money markets and falling euro zone debt yields,with investors shifting their focus to the Federal Reserve from Europe.
At 0224 GMT,the MSCI’s broadest index of Asia Pacific shares outside Japan and the Nifty India stock futures in Singapore were both up 0.8 per cent.
STOCKS TO WATCH
* Indian Hotels Company,Tata Global Beverages ,Union Bank of India,Bank of Baroda and Tata Communications report quarterly earnings on Wednesday.
* Indiabulls Real Estate could fall after its December quarter net profit slumped 45.5 per cent.
* Grasim Industries may rise after its October-December net profit rose 33.3 per cent.
* GMR Infrastructure after an official told Reuters,the company withdrew its bid to modernise and expand an airport in Croatia but is preparing to bid on similar projects in Brazil.