Post Session- Sensex ends flat as RBI maintains status quo on rates Analysis for Dec 01, 2015

Posted By: Religare
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Dalal Street logged mild gains on Tuesday as traders assessed a dovish RBI monetary policy statement from the RBI which left the door open for further policy easing in Asia"s third biggest economy even as it kept key rates unchanged, much on expected lines. Mixed signals from the economy weighed on sentiment as upbeat Q2 GDP numbers were offset by poor November factory data.

Marking a fourth straight advance, the 30-share BSE SENSEX closed at 26,169.41, up by 23.74 points or by 0.09 per cent and then NSE Nifty ended at 7954.9, up by 19.65 points or by 0.25 per cent.

The RBI refrained from further monetary easing in its fifth bi-monthly policy review on Tuesday, keeping the repo rate unchanged at 6.75 per cent while the CRR was also left unaltered at 4 per cent as a pickup in inflationary pressures crimped room for further policy easing, while the central bank is also treading a cautious path ahead of the Fed policy meet in mid-December, where it could raise interest rates for the first time in almost a decade.

Meanwhile, the RBI sounded optimistic over India"s growth prospects, saying that the robust second quarter GDP numbers suggest that the economy is in early stages of recovery. The Indian economy grew by 7.4 per cent, year on year in the September 2015 quarter, beating analysts" expectations of 7.3 per cent, and above the 7 per cent expansion registered in the June quarter. However, a weak manufacturing report dwindled some of the optimism over the country"s economic prospects as a gauge measuring manufacturing fell to a 25-month low in November. The gauge measuring manufacturing in India fell to 50.3 in November from 50.7 in October.

Metal and Healthcare stocks advanced 3.18 per cent and 1.07 per cent, respectively.

The top gainers of the BSE Sensex pack were Vedanta Ltd. (up 4.66 per cent), Dr. Reddy's Laboratories Ltd. (up 3.31 per cent), Tata Steel Ltd. (up 3.30 per cent), Coal India Ltd. (up 3.27 per cent) and Hindalco Industries Ltd. (up 3.24 per cent).

The Market breadth, indicating the overall health of the market, was strong. On BSE out of total shares traded 3126, shares advanced were 1753 while 1209 shares declined and 164 were unchanged.

Asian stocks rallied as a worsening contraction in China"s factory index raised speculation of further policy easing by officials to help stave off a hard landing in the world"s second biggest economy. The official China factory gauge fell to the lowest level in three years at 49.6 in November from 49.8 in October, with a reading below 50 signaling contraction. China"s Shanghai Composite advanced, Hang Seng rallied and a weaker yen boosted Japanese stocks.

Story first published: Tuesday, December 1, 2015, 16:36 [IST]
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