Rate cut hopes cheer markets; interest sensitive stocks up

Mumbai, May 29:

Hopes of a policy rate cut by the apex bank early next month cheered the markets during trading session on Friday with a benchmark index of the Indian equities markets gaining more than 320 points or 1.17 percent.

The 30-scrip BSE Sensitive Index (Sensex) ended the day with gains of more than 320 points or 1.17 percent as interest-sensitive stocks like automobile, banks and capital goods rose on rate-cut hopes.

Rupee value fluctuation had a positive impact on healthcare and oil and gas srcip.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) also closed with gains. It rose by 114.65 points or 1.38 percent up at 8,433.65 points.

The Sensex of the S&P Bombay Stock Exchange (BSE), which opened at 27,553.03 points, closed the day’s trade at 27,828.44 points — up 321.73 points or 1.17 percent from the previous day’s close at 27,506.71 points.

The Sensex touched a high of 27,888.32 points and a low of 27,467.23 points in the intra-day trade.

Analysts covering the day’s trade said that being the first day of June F&O (future and options) series, the markets rallied despite weak European market cues.

According to the analysts, the European markets fell for a second day as Greece has not reach a debt agreement with its creditors.

In the day’s trade, the domestic retail investors started building fresh long positions in the new series on anticipation of a possible rate cut in the next RBI policy meet, which helped the market recover.

“Indian Rupee depreciated even as equities rose, a relationship that is usually seen the other way round, suggesting that both asset classes are individually positioning themselves ahead of the several event risks lined up for next month,” said Anand James, co-head technical research desk with Geojit BNP Paribas.

“Recent declines may have given a platform for today’s swing higher, which eclipsed the weaker expectations of GDP data which was due for release later in the day.”

Gaurav Jain, director with Hem Securities: “Hopes of a rate cut by RBI, broad-based renewed buying interest, mixed bag of corporate earnings in the week also weighed on the sentiment.

According to Rajesh Iyer, head of investment advisory services and family office with Kotak Wealth Management said that the stocks have been reacting to results which on an aggregate basis are disappointing.

Iyer added that in spite of poor results Indian market is holding on to expectation of a rate cut on June 2nd Reserve Bank of India (RBI) policy meeting.

During the Friday’s, healthy buying was observed in the automobile, banking, healthcare, capital goods, oil and gas, fast moving consumer goods (FMCG) and information technology (IT) sectors.

However, the realty sector stocks came under selling pressure.

The S&P BSE automobile index zoomed by 388.44 points, followed by banking index which rocketed by 306.82 points, healthcare index augmented by 271.55 points, capital goods index increased by 203.95 points, oil and gas index rose by 125.25 points, FMCG index gained by 90.80 and IT index was up by 86.88 points.

The S&P BSE realty index slipped by 1.99 points.

However, S&P BSE banking index augmented by 251.06 points, capital goods index rose 116.71 points, consumer durables index increased by 99.13 points, oil and gas index was higher by 90.88 points and FMCG index was up 54.16 points.

The major Sensex gainers on Friday were: Bharti Airtel, up 5.98 percent at Rs.425.30; Mahindra and Mahindra (M&M), up 4.89 percent at Rs.1,260.20; Gail, up 2.30 percent at Rs.389.90; Maruti Suzuki, up 2.26 percent at Rs.3,785.45; and Coal India, up 2.14 percent at Rs.391.30.

The losers were: Hindalco Inds, down 2.16 percent at Rs.129.15; Tata Motors down 0.40 percent at Rs.481.60; BHEL, down 0.14 percent at Rs.251.60; and Vedanta, down 0.10 percent at Rs.196.70. (IANS)