SENSEX 16995.77 +244.04
NIFTY 5127.35
+81.10
USD/INR 0050.02 -00.07
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UPDATEDTIME 09.28 PM 24 JANUARY 2012
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The National Stock Exchange's Nifty witnessed a sharp up move and
closed above important resistance levels as investors cheered the reversal of
tight monetary policy after the Reserve Bank of India cut Cash Reserve
Ratio (CRR) by 50 basis points effective from January 28, 2011. The cut will
inject Rs 32000 crore in the system.
In its meet, the RBI left the policy rates unchanged, kept inflation forecast unchanged at 7 per cent and cut FY12 GDP forecast to 7 per cent from 7.6 per cent earlier.
RBI has said that the CRR cut reinforces guidance on future rate cuts. However, it is premature to cut rates before sustainable dip in inflation. It expects the economy to exhibit modest recovery in FY13.
"In line with expectations towards addressing the prevailing tight liquidity situation, the RBI cut the CRR by 50bps to 5.5%. Continued concerns on both core inflation and in-complete pass through of fuel prices have resulted in its key policy rates - repo/reverse repo unchanged.
Going forward, we maintain our view of a minimum 100bps cut in the repo rate in 2012 and depending on the timing of the Union Budget; we expect the first cut either in the March 15 review or the April 17 meeting. However, it's worth noting that the RBI has said the timing and quantum would be contingent on (1) policy measures to induce investments and (2) steps towards fiscal consolidation.
The market, which was anticipating a CRR cut, gained momentum led by rate sensitive sectors like banks, capital goods, realty and auto space. According to analysts, investors are expecting the RBI to start cutting interest rates from beginning of FY13.
"We believe that this is the beginning of monetary easing and would expect a cumulative repo rate cut of 100-150bps for this calendar year. The biggest beneficiaries of this reversal in policy would be interest rate sensitive sectors like banks, autos and capital goods.
We are becoming more constructive on these sectors now. Several PSU banks which were badly beaten down, look extremely attractive from a valuation perspective.
The Nifty ended at 5127.35, up 81.10 points or 1.61 per cent. The broader index touched a high of 5141.05 and low of 5049.80 intraday.
The Bombay Stock Exchange's Sensex ended at 16995.77, up 244.04 points or 1.46 per cent. The 30-share index touched a high of 17050.32 and low of 16770.01 in trade today.
"The market continues to gather steam and if banking and infrastructure are going to gain further momentum than there is more upside here. Although Infosys, Reliance are probably going to stay flat but once we consolidate above 5100, I think we should have some more spectacular days and finally this move will end around 5350-5400. On the downside, I will keep a watch on probably levels closer to 5000. As long as 5000 is maintained we would continue with our long positions.
BSE Midcap Index was up 1.38 per cent and BSE Smallcap Index moved 0.70 per cent higher.
All the sectoral indices were in the green. BSE Capital Goods Index was up 3.30 per cent, BSE Bankex moved 3.21 per cent higher, BSE Metal Index gained 1.78 per cent, BSE Auto Index climbed 1.53 per cent and BSE Realty Index rose 1.14 per cent.
Larsen & Toubro (5.93%), IDFC (5.53%), State Bank of India (5.33%), Jaiprakash Associates (4.68%) andHindalco Industries (4.48%) were the major Nifty gainers.
Grasim Industries (-2.32%), Coal India (-1.57%), DLF (-1.05%), Sun Pharmaceuticals (-0.95%) and Hindustan Unilever (-0.77%) were amongst the losers.
Market breadth was positive on the NSE with 698 gainers against 403 losers.
In its meet, the RBI left the policy rates unchanged, kept inflation forecast unchanged at 7 per cent and cut FY12 GDP forecast to 7 per cent from 7.6 per cent earlier.
RBI has said that the CRR cut reinforces guidance on future rate cuts. However, it is premature to cut rates before sustainable dip in inflation. It expects the economy to exhibit modest recovery in FY13.
"In line with expectations towards addressing the prevailing tight liquidity situation, the RBI cut the CRR by 50bps to 5.5%. Continued concerns on both core inflation and in-complete pass through of fuel prices have resulted in its key policy rates - repo/reverse repo unchanged.
Going forward, we maintain our view of a minimum 100bps cut in the repo rate in 2012 and depending on the timing of the Union Budget; we expect the first cut either in the March 15 review or the April 17 meeting. However, it's worth noting that the RBI has said the timing and quantum would be contingent on (1) policy measures to induce investments and (2) steps towards fiscal consolidation.
The market, which was anticipating a CRR cut, gained momentum led by rate sensitive sectors like banks, capital goods, realty and auto space. According to analysts, investors are expecting the RBI to start cutting interest rates from beginning of FY13.
"We believe that this is the beginning of monetary easing and would expect a cumulative repo rate cut of 100-150bps for this calendar year. The biggest beneficiaries of this reversal in policy would be interest rate sensitive sectors like banks, autos and capital goods.
We are becoming more constructive on these sectors now. Several PSU banks which were badly beaten down, look extremely attractive from a valuation perspective.
The Nifty ended at 5127.35, up 81.10 points or 1.61 per cent. The broader index touched a high of 5141.05 and low of 5049.80 intraday.
The Bombay Stock Exchange's Sensex ended at 16995.77, up 244.04 points or 1.46 per cent. The 30-share index touched a high of 17050.32 and low of 16770.01 in trade today.
"The market continues to gather steam and if banking and infrastructure are going to gain further momentum than there is more upside here. Although Infosys, Reliance are probably going to stay flat but once we consolidate above 5100, I think we should have some more spectacular days and finally this move will end around 5350-5400. On the downside, I will keep a watch on probably levels closer to 5000. As long as 5000 is maintained we would continue with our long positions.
BSE Midcap Index was up 1.38 per cent and BSE Smallcap Index moved 0.70 per cent higher.
All the sectoral indices were in the green. BSE Capital Goods Index was up 3.30 per cent, BSE Bankex moved 3.21 per cent higher, BSE Metal Index gained 1.78 per cent, BSE Auto Index climbed 1.53 per cent and BSE Realty Index rose 1.14 per cent.
Larsen & Toubro (5.93%), IDFC (5.53%), State Bank of India (5.33%), Jaiprakash Associates (4.68%) andHindalco Industries (4.48%) were the major Nifty gainers.
Grasim Industries (-2.32%), Coal India (-1.57%), DLF (-1.05%), Sun Pharmaceuticals (-0.95%) and Hindustan Unilever (-0.77%) were amongst the losers.
Market breadth was positive on the NSE with 698 gainers against 403 losers.
Regards
RAKESH MAKIN
+91,
9041667797(DIRECT), 9915684997
OFF
0172-4657997
PANCHKULA (Haryana).
Email:makin_97@yahoo.com
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