Mumbai: Equity benchmarks ended at record closing highs on Tuesday after the RBI credit policy review indicated huge amount of liquidity coming into the system and positive Chinese manufacturing data.
The 50-share NSE Nifty closed above 7400-mark for the first time ever, up 53.35 points to 7415.85 while the 30-share BSE Sensex jumped 173.74 points to 24858.59. The policy measures of the Reserve Bank of India (RBI) have given a very clear indication that they are here to consider the differential rates of interest, says Deven Choksey, MD, KR Choksey Shares and Securities.
"The way they are talking about bringing the liquidity back into the system, it does suggest that in next three-six months we will see a larger amount of credit offtake taking place," he elaborates. Anand Rathi maintains its view of 25-50-bp cut in Q3FY15, followed by another 50-100-bp reduction in CY15.
The central bank left repo rate and cash reserve ratio unchanged at 8 percent and 4 percent, respectively while it slashed statutory liquidity ratio by 50 basis points to 22.5 percent and cut liquidity under export credit refinance to 32 percent from 50 percent.
The Reserve Bank says it remains committed to keeping the economy on a disinflationary course, taking CPI inflation to 8 percent by January 2015 and 6 percent by January 2016. "If the economy stays on this course, further policy tightening will not be warranted. On the other hand, if disinflation, adjusting for base effects, is faster than currently anticipated, it will provide headroom for an easing of the policy stance," it adds.
In the banking space, private sector lender ICICI Bank was down 0.25 percent and Axis Bank declined 0.15 percent while HDFC Bank gained 0.56 percent. Metals were the biggest gainers in today's trade with the BSE Metal Index rising 5 percent. The private survey showed that China's factory sector turned in its best performance in four months in May as export orders improved although activity still contracted. Sesa Sterlite surged 6.5 percent and Coal India gained 5.3 percent.
Tata Steel rallied 6.7 percent and SAIL was up 4 percent. In case of Tata Steel and SAIL, sources told CNBC-TV18 that Odisha government has allowed mining in four Tata Steel and three SAIL iron ore mines. SAIL has received environment nod for its Chhattisgarh iron ore mine, say sources. BSE Realty Index gained 3 percent after sources say that finance ministry is likely to announce tax breaks for Real Estate Investment Trust (REITs) in Budget.
DLF surged nearly 5 percent. Shares of ONGC, NTPC, Hero Motocorp, BHEL and Hindalco Industries climbed 3-4 percent. Index heavyweights Reliance Industries and HDFC were up 1-1.7 percent. However, ITC, Hindustan Unilever, Dr Reddy's Labs, Gail and Wipro were down 1-3 percent. In the broader space, BSE Midcap Index rose 0.6 percent and Smallcap gained 1.2 percent. Advancing shares beat declining ones by a ratio of 1873 to 1120 on the BSE.
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