BSE Sensex ends 12 Points up as RBI maintains Policy Rates

A benchmark index of Indian equities markets, the 30-scrip BSE Sensitive Index (Sensex), closed Tuesday’s trade flat — up 12 points or 0.04 percent. The BSE Sensex recovered after falling 230 points in the wake of the Reserve Bank of India (RBI) deciding to maintain its policy rates unchanged in its first monetary review for the 2015-16 fiscal.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) also ended the day’s trade flat. It closed 0.40 points up at 8,660.30 points.

The BSE Sensex, which opened at 28,582.33 points, closed the day’s trade at 28,516.59 points — up 12.13 points or 0.04 percent from the previous day’s close at 28,504.46 points. The BSE Sensex touched a high of 28,641.08 points and a low of 28,274.36 points in the intra-day trade.

RBI Governor Raghuram Rajan, who conducted the first bi-monthly review of the monetary policy for the current fiscal year, decided to retain the repurchase rate, the reverse repurchase rate, the cash reserve ratio and the statutory ratio at existing levels.

He also projected a 7.8 percent growth for the current fiscal year, subject to a normal monsoon — over which the RBI was worried — as also an inflation rate of 5.8 percent by the end of the year, after easing to around 4 percent by August.

Rajan said the Reserve Bank adopted an accommodative policy stance since January, ensuring comfortable liquidity in the system. “Going forward, the accommodative stance of monetary policy will be maintained, but monetary policy actions will be conditioned by incoming data.”

Accordingly, the repurchase rate and reserve repurchase rate have been maintained at 7.5 percent and 6.5 percent, respectively, while the cash reserve ratio and the statutory liquidity ratio have been left untouched at 4 percent and 21.5 percent, respectively.

Charting Tuesday’s trade, an analyst said the Indian markets opened on a positive note by tracking global cues. However, they slipped into the negative territory after the RBI policy meet, but later recovered due to selective buying.

“As expected, RBI has maintained its status quo. RBI is interested seeing banks to start sharing benefit of 50 basis points cut in repo rate earlier,” said Vinod Nair, head – Fundamental Research, Geojit BNP Paribas Financial Services.

According to Nair, RBI rate cut will depend on forthcoming data, US fed decision and improvement of business environment.

“Hence, as per the first requirement, fourth quarter performance of banks will be very important in terms of NPAs (non-performing assets) restructuring. Post which we can expect banks to lower the lending rate,” Nair added.

Healthy buying took place in metal, capital goods, consumer durables, fast moving consumer goods (FMCG) and information technology (IT) sectors. However, banks, healthcare and realty stocks came under intense selling pressure.

However, metal index gained 208.74 points, capital goods index augmented by 80.18 points, consumer durables index increased by 70.67 points, FMCG index rose 51.83 points and IT index was up 36.18 points.

The S&P BSE bank index shed 151.84 points, healthcare index declined by 34.68 points and realty index was lower by 29.74 points.

The major Sensex gainers on Tuesday were: Tata Steel, up 4.89 percent at Rs.333.60; Sesa Sterlite, up 3.14 percent at Rs.197.35; Bajaj Auto, up 3.03 percent at Rs.2,093; NTPC, up 2.73 percent at Rs.156; and Bharti Airtel, up 2.03 percent at Rs.409.15.

The losers were: Axis Bank, down 1.69 percent at Rs.558.90; Sun Pharma, down 1.42 percent at Rs.1,151.95; Tata Motors, down 1.32 percent at Rs.560.05; ICICI Bank, down 1.20 percent at Rs.317.45; and Hero MotoCorp, down 1.19 percent at Rs.2,640.

Among the Asian markets, Japan’s Nikkei went up by 1.25 percent while Hong Kong’s Hang Seng closed higher by 0.77 percent. China’s Shanghai Composite Index gained by 2.51 percent.

In Europe, London’s FTSE 100 was up by 1.38 percent and France’s CAC 40 was higher by 1.29 percent. However, Germany’s DAX Index was down 0.93 percent at the closing in the Indian markets. (