Expectations of rate cut swells equity markets (Roundup)

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Mumbai, March 21 (IANS) Hopes of a rate cut, coupled with positive Chinese cues and lower interest on small savings, swelled the Indian equity markets on Monday.

The broad based buying lifted the wider 50-scrip Nifty of the National Stock Exchange (NSE) to its highest levels since early January.

The NSE Nifty edged up by 100 points, or 1.31 percent, at 7,704.25 points at the end of the day’s trade.

The barometer 30-scrip sensitive index (Sensex) of the BSE which opened at 25,007.56 points, closed at 25,285.37 points — up 332.63 points or 1.33 percent from its previous day’s close at 24,952.74 points.

The Sensex touched a high of 25,327.45 points and a low of 24,988.27 points during the intra-day trade.

The BSE market breadth was tilted in favour of bulls — with 1,485 advances and 1,193 declines.

Initially, both the key indices of the Indian equity markets opened on a positive note, in-sync with their Chinese peers and expectations of a future rate cute.

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Short-coverings pushed prices higher, as investors expect the Union Budget’s fiscal prudence measures, reduction in interest rate on small savings and lower inflation to allow the Reserve Bank of India (RBI) to further ease monetary policy.

The RBI will conduct its first bi-monthly monetary policy review for 2016-17 on April 5.

Besides, crude oil prices at $40 per barrel and stable rupee led investors to chase stock prices higher.

The rupee closed flat in the day’s trade. It stood at 66.51-52 to a US dollar from its previous close of 66.50 to a greenback.

“Markets rose sharply despite mixed global cues led by the rate cut in small savings. Markets factored in another rate cut of 25 basis points in the upcoming credit policy,” Vaibhav Agarwal, vice president and research head at Angel Broking told IANS.

“The rate sensitive sectors traded sharply higher with the bank, real estate, auto and consumer durables indices all outperforming the Sensex. This being a curtailed week we may witness some profit taking ahead of the weekend. However the directional trend continues to remain positive.”

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According to Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, investors confidence was boosted on hopes of lower borrowing costs, as a result of the government’s decision to cut interest rates on small savings.

“The move has heightened expectations for a RBI rate cut. Even positives cues from China and oil prices around $40 per barrel supported prices,” James told IANS.

Furthermore, foreign institutional investors (FIIs) were net buyers during the day’s trade, while the domestic institutional investors (DIIs) sold stocks.

The data with stock exchanges showed that FIIs invested Rs.1,396.33 crore, while the DIIs sold stocks worth Rs.618.77 crore.

Sector-wise, all 19 indices of the BSE ended the day’s trade in the green, led by banks, capital goods and automobile stocks.

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The S&P BSE banking index augmented by 303.78 points, followed by capital goods index which edged up by 250.48 points, automobile index climbed higher by 206.91 points, the S&P BSE consumer durables index rose by 203.11 points, healthcare index gained by 172.74 points.

Major Sensex gainers during Monday’s trade were Hindustan Unilever, up 4.05 percent at Rs.880.35; State Bank of India (SBI), up 2.93 percent at Rs.196.65; Bharti Airtel, up 2.58 percent at Rs.353.55; Sun Pharma, up 2.42 percent at Rs.835.65; and Larsen and Toubro (L&T), up 2.38 percent at Rs.1,227.80.

Major Sensex losers during the day’s trade were Asian Paints, down 1.75 percent at Rs.859.55; Lupin, down 1.51 percent at Rs.1,535.35, BHEL, down 1.24 percent at Rs.111.95, Hero MotoCorp, down 1.06 percent at Rs.2,802.75 and Gail, down 0.58 percent at Rs.362.05.

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