Nifty99000 100%

Sensex99000 100%

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Equity markets rise after RBI cuts SLR to induce liquidity

Author: S Vijaykrishnan/Wednesday, June 7, 2017/Categories: Economy, Regulatory

Equity markets rise after RBI cuts SLR to induce liquidity

Mumbai, (IANS) Cheered by the decision of the Reserve Bank of India (RBI) to boost liquidity levels in the commercial banking system, the Indian equity markets on Wednesday recovered from a flat trading session to close in the green.

The RBI in its second bi-monthly monetary policy review of 2017-18 decided to reduce the Statutory Liquidity Ratio (SLR) by 50 basis points to 20 per cent. However, it kept its key lending rate unchanged at 6.25 per cent.

Besides, a better-than-expected monsoon forecast by the India Meteorological Department (IMD), coupled with firm global cues and healthy buying in banking, automobile and healthcare sectors, kept market sentiments buoyant.

The Nifty of the National Stock Exchange (NSE) closed at 9,663.90 points -- up 26.75 points or 0.28 per cent

The 30-scrip Sensitive Index (Sensex) of the BSE, which opened at 31,252.71 points, closed at 31,271.28 points -- gaining 80.72 points or 0.26 per cent from its previous close at 31,190.56 points.

It touched a high of 31,346.99 points and a low of 31,172.98 points during intra-day trade.

The BSE market breadth was bullish -- with 1,460 advances and 1,200 declines.

The broader market indices outperformed the Sensex, with the S&P BSE mid-cap index rising by 0.46 per cent and the small-cap index by 0.75 per cent.

"Markets ended with modest gains on Wednesday after witnessing intra-day volatility after the RBI decided to keep the repo-rate unchanged after a policy review meet today. Good prospects of rains and firm global stocks supported gains on the bourses," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.

"Interest rate-sensitive stocks like banks, auto and realty rose after the RBI kept rates steady. Major Asian markets have ended on a mixed note, while European indices like FTSE 100, CAC 40 and DAX traded higher."

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the Bank Nifty hit a record high after RBI cut the SLR.

"The RBI used a less hawkish tone while leaving interest rates unchanged at its policy meeting, as inflation is running well below forecasts and the economy has slowed more than expected. This prompted the rupee to strengthen against the US dollar," Desai said.

On the currency front, the rupee strengthened by 10 paise to 64.33 per US dollar from its previous close of 64.43.

In investments, provisional data with the exchanges showed that foreign institutional investors (FIIs) purchased stocks worth Rs 73.79 crore, while domestic institutional investors (DIIs) bought scrips worth Rs 166.22 crore.

"Banking stocks, too, got a boost after RBI lowered inflation target for the year. The IT sector traded negative by 1.83 per cent after Infosys COO (chief operating officer) said that clients are seeking 20-30 per cent price discount from the company," Desai added.

Sector-wise, the S&P BSE banking index rose by 193.07 points, the automobile index by 167.90 points, and the healthcare index by 148.51 points.

On the other hand, the S&P IT index plunged by 207.16 points and the Teck (technology, media and entertainment) index was down by 88.72 points.

Major Sensex gainers on Wednesday were: Reliance Industries, up 1.96 per cent at Rs 1,339.20; ICICI Bank, up 1.91 per cent at Rs 324.75; Mahindra and Mahindra (M&M), up 1.49 per cent at Rs 1,432.75; Sun Pharma, up 1.31 per cent at Rs 511.15; and Hindustan Unilever, up 1.27 per cent at Rs 1,106.70.

Major Sensex losers were: Tata Consultancy Services (TCS), down 2.97 per cent at Rs 2,615.35; Wipro, down 2.10 per cent at Rs 548.85; Infosys, down 1.83 per cent at Rs 961.50; Tata Motors, down 0.64 per cent at Rs 457.95; and Adani Ports, down 0.59 per cent at Rs 359.70.

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S Vijaykrishnan
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