Key lending rate cut lifts equity markets (Roundup)

Mumbai, Oct 4 (IANS) Reduction in a key lending rate, coupled with short covering and value buying, swelled the Indian equity markets on Tuesday.

The key indices which opened on a higher note following positive cues from Asian markets, held on to their gains after the Reserve Bank of India (RBI) announced a 25 basis points cut in one of its key lending rates.

Both the key Indian equity indices closed the day’s trade with appreciable gains, as healthy buying was witnessed in oil and gas, banking and metal stocks.

The wider 51-scrip Nifty of the National Stock Exchange (NSE) gained 31.05 points, or 0.36 per cent, to 8,769.15 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 28,377.64 points, closed at 28,334.55 points — up 91.26 points, or 0.32 per cent, from the previous close at 28,243.29 points.

The Sensex touched a high of 28,404.70 points and a low of 28,242.25 points during the intra-day trade.

The BSE market breadth was tilted in favour of the bulls — with 1,691 advances and 1,156 declines.

On Monday, both the key Indian indices had soared on the back of positive global cues, coupled with value buying and higher crude oil prices.

The barometer index had gained 377.33 points, or 1.35 per cent, while the NSE Nifty surged by 126.95 points, or 1.47 per cent.

Initially on Tuesday, the benchmark indices opened on a higher note in sync with their Asian peers.

The Asian markets rose after US manufacturing data showed expansion.

Besides, the announcement made by the newly-constituted Monetary Policy Committee (MPC) headed by RBI Governor Urjit Patel to cut a key lending rate by 25 basis points provided some boost to the domestic markets.

Short covering and value buying at lower levels, healthy inflow of foreign funds and an appreciating rupee also kept the market sentiment buoyed.

The Indian rupee strengthened by 12 paise to 66.47 against a US dollar from its previous close of 66.59 to a greenback.

However, some gains were capped due to profit booking at higher levels.

“Short covering and value buying supported the equity markets upward movement. Broadly positive Asian and European markets too supported the day’s rise,” Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, told IANS.

“However, short covering rallies of the last few days left little room for further upsides after the monetary policy delivered an unanimous verdict to cut rates. Markets also chose to skim profits as the second half of the week is likely to see focus shifting to US jobs data.”

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the key indices traded with volatile sentiments due to profit booking at higher levels.

“IT stocks traded with firm sentiments, while banking, pharma and auto stocks traded with mixed sentiments due to profit booking,” Desai said.

“Oil-gas and textile stocks traded with firm sentiments on buying support from traders.”

In terms of investments, provisional data with exchanges showed that the foreign institutional investors (FIIs) purchased stocks worth Rs 344.13 crore, whereas the domestic institutional investors (DIIs) divested scrip worth Rs 172.23 crore.

Sector-wise, all the sub-indices of the BSE witnessed healthy buying, except the capital goods index, which fell by 66.86 points.

The S&P BSE oil and gas index surged by 271.15 points, followed by the banking index, which rose by 94.37 points, and the metal index gained by 78.40 points.

Major Sensex gainers during Tuesday’s trade were: ONGC, up 5.21 per cent at Rs 273.75; Gail, up 4.55 per cent at Rs 402.25; Tata Steel, up 1.89 per cent at Rs 390.10; Tata Motors, up 1.60 per cent at Rs 549.35; and the State Bank of India (SBI), up 1.59 per cent at Rs 259.25.

Major Sensex losers were: Coal India, down 2.06 per cent at Rs 321.10; Mahindra and Mahindra (M&M), down 1.92 per cent at Rs 1,415.35; Larsen and Toubro (L&T), down 1.43 per cent at Rs 1,448.90; Hindustan Unilever (HUL), down 1.02 per cent at Rs 859.95; and Axis Bank, down 0.75 per cent at Rs 546.80.

–IANS

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