Sensex up 57 pts despite RBI rate hike

Sensex erased initial gains in choppy trading today but still closed over 57 points up.

The BSE Sensex erased initial gains in choppy trading today but still closed over 57 points up at 16,933.83 as RBI raised key interest rate on the expected lines,amid firm cues from global markets.

Extending gains for the third day in a row,the 30-share BSE benchmark took cues from firm Asian markets and opened strong at 17,047.73. In fact,it touched a high of 17,122.54 when RBI hiked its lending rates by 25 basis points (bps),in line with broad market expectations.

The Reserve Bank has raised key rates 12 times since March last year to tame inflation,which was 9.78 per cent in August,even as the economic and industrial growth rates have slowed down. The high interest rate regime has also hit corporate margins,slowing fund flows into equities.

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RBI said its anti-inflationary stance in future monetary policy reviews will be influenced by signs of downward movement in the inflation trajectory.

This worried investors and they went on profit-booking. Finally,Sensex closed at 16,933.83,still a rise of 57.29 or 0.34 per cent. At the day’s high,it was up 246 points.

Similarly,the broad-based 50-issue Nifty also improved by 8.55 points or 0.17 per cent to 5,084.25.

Power,realty,auto and PSU stocks attracted good buying,while some of the FMCG,IT and technology counters fell on profit booking.

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“Although expected,hike of 25 bps in Repo rate by RBI brought some jittery reaction in the market. High volatility remained the key trait,” said Shanu Goel,Senior Research Analyst at Bonanza Capital.

She said that from now on markets will be more influenced by global developments. Rise in petrol prices by about five per cent by PSU oil firms too impacted market sentiment. On the one hand,the move will improve earnings of oil firms and on the other,it will fan inflation putting more pressure on interest rates.

FIIs,after four days of sell-off,pumped in Rs 166.80 crore yesterday as per Sebi data.

Globally,Asian stocks closed higher following smart rally on Wall Street yesterday.

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Analysts said the decision from global central banks to boost dollar liquidity in Europe,to ease concerns of another funding crisis,boosted investor confidence. Key indices in China,Hong Kong,Japan,Singapore,South Korea and Taiwan ended up between 0.13 per cent and 3.72 per cent. European markets too were trading up in afternoon deals. The DAX gained 2.23 per cent,the FTSE (0.97 pc) and the CAC (0.78 pc).

Despite the rise in Sensex,losers outnumbered the gainers as 17 index-based counters ended in the red,while 13 finished in the green. Tata Motors was the top gainer for the second day,up 7.02 per cent,over 6.04 pc gain yesterday.

State-owned ONGC spurted 5.61 per cent after government deferred its proposed Rs 12,000 crore follow-on public offer (FPO) due to unfavourable market conditions.

Other gainers were NTPC (4.75 pc),Sterlite Ind (3.66 pc),Tata Power (2.69 pc),SBI (2.50 pc),Maruti (2.18 pc),L&T (1.23 pc),HDFC (0.85 pc) and ICICI (0.58 pc).

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However,HUL dipped by 2.65 per cent,Wipro (2.37 pc),BHEL (1.39 pc),Tata Steel (1.30 pc),Jindal Steel (1.10 pc),TCS (1.04 pc),RIL (0.92 pc) and Infosys (0.51 pc).

From the sectoral indices,BSE-PSU rose 1.66 per cent,Power (1.55 pc),Realty (1.26 pc) and Auto (1.14 pc).

The total market breadth at BSE turned negative with 1,460 stocks losing ground,as against 1,337 settling with gains. The total turnover rose to Rs 2,786.52 crore from Rs 2,570.88 crore yesterday.

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