Thursday 15 January 2015

Sensex rallies 400 points after RBI cuts repo rate

At 9:21AM, the S&P BSE Sensex is trading at 27,788 up 441 points, while NSE Nifty is trading at 8,394 up 116 points.

The BSE Mid-cap Index and BSE Small-cap Index was trading up at 1%. Auto, Consumer Durables, Power, banking, capital goods, FMCG, Oil and gas, healthcare metal, realty indices are the gainers.

The RBI has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 8% to 7.75% with immediate effect. 

The RBI will keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL). 

Consequently, the reverse repo rate under the LAF stands adjusted to 6.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 8.75 per cent with immediate effect. 

Banks could see a big upmove. TCS could swing ahead of the results. Bajaj Auto, DB Corp, Federal Bank and PTC India Financial Services are the other counters which will announce their numbers today. 

On the data front, the wholesale price index (WPI)-based inflation rose marginally to 0.11% in December from 0% the previous month. While fuel prices cooled primary products rose and Food prices were higher. 

The base effect too has to be taken into account. For India of course there remain some bright spots with the Indian economy expected to catch up with China by 2016-17 and grow 6.4% in 2015. 


The World Bank has credited the measures taken by the new government to arrive at such a stand. US indices fell after World Bank forecast brought in fears about global economic weakness. 

US retail sales saw a their biggest drop in 11 months in December. 

The Dow Jones fell 1% while S&P 500 shed 0.58%. Nasdaq lost almost half a percent. 

US crude oil was up over 5% and Brent added ~4.5%. Asian markets are in a range with Japan's Nikkei higher. 

Hong Kong's Hang Seng index and China's Shanghai index are marginally up.

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