Markets give thumbs-up to RBI rate hold, monsoon forecast

Mumbai : Buoyed by the RBI’s status quo on policy rates and a revised estimate of a good monsoon, the BSE Sensex on Wednesday closed almost 81 points higher at 31,271.28 with sectors like banking and auto making most of the gains. The NSE Nifty too followed suit. After shuttling between 9,678.55 and 9,630.55, it finally settled 26.75 points higher at 9,663.90.

The strengthening rupee, which closed 10 paise up at 64.33, also pepped up domestic equities. The central bank left lending rates unchanged citing risks to inflation due to spurt in farm loan waivers by states but raised lending capacity of banks to support economic growth.

Banking and auto stocks rose on buying support, while skeptical investors booked profits in IT and Teck shares due to future earnings concerns. “The market was volatile as the policy decision was consistent with their neutral stance, whereas investor expected a change.

The policy will support banks to lend more due to the advantage of 50bps cut in SLR. Moreover, revised estimation of monsoon to 98% will increase the consumption patterns which also provide a positive sentiment to investors,” Vinod Nair, Head of Research, Geojit Financial Services Ltd said.

Both the mid-cap and small-cap indices outperformed the Sensex. The market breadth turned positive as 1,373 stocks ended higher, 1,185 declined, while 153 ruled unchanged. The total turnover on BSE amounted to Rs 3,515.42 crore, higher than turnover of Rs 3,410.00 crore registered during the previous trading session.

The BSE Sensex took off on a positive note at 31,252.71 and advanced to 31,346.99. Later, on profit booking, it slipped to touch a low 31,172.98 before ending 80.72 points, or 0.26 per cent, higher at 31,271.28. The gauge had lost 118.93 points in the previous session. The markets also cheered the Met dept’s revised monsoon estimate which said that the country will get 98 per cent rainfall of the Long Period Average.