Indian markets rose for fourth straight session on absence of any negative surprises in the Union Budget 2017-18, and were holding near four-month-high levels ahead of the Reserve Bank of India’s monetary policy review meet due Tuesday-Wednesday on hopes of an interest rate cut. The surge was also aided by a firm rally in global markets. All the major sectoral indices were trading in green, with banking & financials, pharma, FMCG and cement sector stocks leading the gains.
BSE Sensex was trading up 0.65% at 28.424.33 points, after hitting its highest since October 5, 2016, while NSE Nifty was up 0.61% at 8,794 points after topping the 8,800-mark and hitting its highest since September 26.
Earlier last week, Finance Minister Arun Jaitley proposed to relax the fiscal deficit limit for his government to 3.2% of GDP in order to enable higher public spending to boost investments and consumption. However, the relaxation from the earlier prescribed limit of 3% was not as steep as some had expected on account of a much-needed spending stimulus to the economy.
Analysts hope that the central bank would ease interest rates this week to help revive demand in the economy recovering from the pains of demonetisation.
“Markets are in a bullish mood because of rate-cut expectations,” Reuters said quoting Taurus Asset Management Company managing director RK Gupta. “However, irrespective of what the RBI does, I expect the market to correct itself with the upside being 9,000 points,” Gupta said.
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The Reserve Bank of India is expected to cut interest rates by 25 basis points at its policy review on Wednesday, a Reuters poll showed, after consumer inflation hit a two-year low in December, giving the central bank room to ease.
Global stocks rally
Asian markets were trading positive in the morning, following strong US markets, which rose on good jobs report. The US economy added 227,000 jobs in January, topping the estimated 175,000, while the unemployment rate rose to 4.8%. European markets also ended higher.
Cement, Banking stocks up
Ambuja Cements and ACC led gains on NSE Nifty, both rising over 4% on news of the parent company considering merging the two giants. Banking stocks were also among the top gainers with ICICI Bank rising about 3% and Bank of Baroda rising as much 2.82%.
On the Sensex, Lupin was the top gainer, up 4%, followed by rival Sun Pharma, which also rose 3%.
Another pharma company Dr. Reddy’s Laboratories fell as much as 3.14% after the company reported a 16 percent drop in its consolidated net profit for the December quarter. IT stocks continued to be under pressure on US visa concerns, with Tech Mahindra down 1.54% and HCL Tech falling about 1%.