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Markets end higher on rate-cut hopes; RBI policy eyed

By Purva Chitnis
Last updated on: August 03, 2015 16:36 IST

Benchmark indices ended higher with banks leading the gains after the government proposed capital infusion to the tune of nearly Rs 20,000 crore in the next two months to boost their capital base.

Further, hopes of a rate cut by the RBI at its policy meet tomorrow also supported the rally.

The BSE Sensex ended at 28,187, higher by 72 points or 0.26% and the CNX Nifty was at 8,543, up 10 points.

The broader markets, however, witnessed a lot of action during the day.

The BSE Midcap index gained up 0.5% and Smallcap Index is up 1%.

More than 200 stocks, including Coal India, Maruti Suzuki India, Dr Reddy’s Laboratories, LIC Housing Finance, Emami, Godrej Consumer Products, Amara Raja Batteries and Bajaj Finserv, have hit their respective 52-week highs on the BSE.

The health of the market was strong, with 1,756 advancing stocks as against 1,037 declines.

On the currency front, the Indian rupee has recovered by 15 paise against the greenback and was quoting at 63.98 on the back of fresh selling of the American currency by the exporters amid fall in global oil prices.

Meanwhile, the Foreign Portfolio Investors (FPI) were the net sellers to the tune of Rs. 277.77crore as per the provisional stock exchange data.

Economic update

The Reserve Bank of India’s (RBI) third bi-monthly monetary policy review is scheduled for tomorrow ie August 4, 2015.

In its second bi-monthly policy review, the central bank had cut its repo rate by 25 basis points to 7.25%. With average rainfall and high inflation rate, it remains to be seen whether the central bank offers another cut in the interest rate or not.

On the domestic front, the purchasing managers’ index (PMI) rose to 52.7 points for the month of July, up from 51.3 in the previous month.

The PMI index is at a six month high surpassing January’s 52.9 points, thus indicating a recovery in manufacturing activities.

Global markets

In Greece, the Athex Composite reopened with a 23% loss at 615.12 after a five-week shutdown.

Trading on the Greece stock market was suspended on 29 June 2015 after Greek Prime Minister Alexis Tsipras called a referendum on the country's bailout terms. Amongst the Asian equities, Japan’s Nikkei ended 0.2% down while Shanghai Composite ended down by 1.1% Hang Seng also closed down by 1%.

Oil prices fell in Asia on persistent concerns about the global supply glut after the OPEC cartel's indication that it will not budge from its current lofty output levels.

Sectors and stocks

On the sectoral front, rate-sensitive sectors such as Bankex and Auto gained by 1% and 0.7% respectively while BSE Consumer Durables gained 1.4%.

BSE Metal index was down by 1%.

The banking stocks witnessed a lot of movement today post government’s decision to infuse nearly Rs. 20,000 crore into various public sector banks in the next two months.

SBI jumped nearly 4% and was the highest gainer on the Sensex followed by ICICI bank, up by 3.4%.

Maruti Suzuki ended with 2.3% gains on the Sensex post its robust July results.

The automaker registered 20% increase in its year-on-year profit on the back of 1.22 lakh cars that are sold.

Tata Motors saw growth in certain segments of cars for the month of July. The total sales, including the exports in July were at 5% higher y-o-y.

The stock ended with 1% gains. Mahindra & Mahindra shed 2% after its total tractor sales dropped 11% to 15,460 units in July 2015 over July 2014.

L&T lost 0.5% after it reported 37.3% fall in consolidated net profit to Rs 606.19 crore on 6.53% increase in total income to Rs 20509.53 crore in Q1 June 2015 over Q1 June 2014.

At ITC’s annual general meeting held on Friday, the company’s chairman discussed his plans to delist the company’s cigarette business.

The stock ended up by 1.5% Other notable gainers wereDr.

Reddy’s, BHEL, and SunPharma, all gained between 1-2% On the flip side, HDFC twins fell by 1.4% while Lupin and Coal India dropped nearly 2% on the Sensex.

Purva Chitnis in Mumbai
Source: source
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