Post Session: D-Street cheers rate cut by RBI; rate sensitives rally Analysis for Sep 29, 2015

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The Indian equities ended higher led by gains in the interest rate sensitives such as banking, auto and realty, reversing early morning's steep losses, after the Reserve Bank of India (RBI) announced interest rates cut and allowed for steady increase in foreign investment limit in government securities. Taking markets by surprise, RBI delivered a bigger than expected cut in interest rates by 50 basis points to 6.75 per cent as cooling inflation enables the central bank to increase focus on growth in Asia"s third biggest economy. However, persistent concerns over sliding Chinese economy and possible US rate hike by end of this year sours appetite for risky assets.

The 30-share BSE SENSEX closed at 25778.66, up by 161.82 points or by 0.63 per cent and the NSE Nifty ended 47.6 points higher at 7843.30.

In the choppy trade, the BSE Sensex touched intraday high of 26054.37 and intraday low of 25287.33, while the NSE Nifty touched high and low of 7926.55 and 7691.2, respectively.

Marking its fourth interest rate reduction this year, the RBI slashed the repo rate by 50 basis points to 6.75 per cent while the Cash Reserve Ratio (CRR) was left unchanged at 4 per cent.

In a partial blow to market, the central bank cut the GDP forecast to 7.4 per cent for the current fiscal to 7.6 per cent while projecting retail inflation at 5.8 per cent for January. However, weakness the Asian markets restricted gains in the domestic markets.

On the sectoral front, rate sensitive realty and bankex indices emerged as top gainers, adding 1.99 per cent and 0.9 per cent, respectively.

Leading the rally on BSE Sensex pack were Housing Development Finance Corporation Ltd. (Rs. 1213.55,+3.46%), Maruti Suzuki India Ltd. (Rs. 4674.75,+3.12%), Mahindra & Mahindra Ltd. (Rs. 1251.75,+2.48%), Coal India Ltd. (Rs. 314.60,+1.60%), Larsen & Toubro Ltd. (Rs. 1448.25,+1.27%), among others.

Meanwhile, Vedanta Ltd. (Rs. 86.25,-5.43%), Tata Steel Ltd. (Rs. 201.35,-3.87%), Hindalco Industries Ltd. (Rs. 68.15,-3.54%), Dr. Reddy's Laboratories Ltd. (Rs. 4080.05,-2.67%), Sun Pharmaceutical Industries Ltd. (Rs. 850.40,-1.21%), were among top losers on BSE.

The Market breadth, indicating the overall strength of the market, was weak. On BSE out of total shares traded 2707, shares advanced were 1265 while 1338 shares declined and 104 were unchanged.

On the global front, the Asian equities ended in red as concerns over the China deepened before the start of the week-long trading holiday in mainland China. China"s industrial profits shrank the most in at least four years, down 8.8 per cent, year on year in August 2015 while Thursday"s manufacturing data is set to show a contraction. China"s Shanghai Composite slid 2.2 per cent, Hang Seng tumbled 2.97 per cent and Japan"s Nikkei 225 shed 4.05 per cent as a stronger yen curbed the appeal of exporter stocks.

Story first published: Tuesday, September 29, 2015, 16:48 [IST]
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