BSE Sensex hits new record high even as Raghuram Rajan's RBI bats for status quo

Written by Agencies | Mumbai | Updated: Apr 2 2014, 01:27am hrs
BSE SensexRaghuram Rajan's RBI left the repo rate unchanged today in the monetary policy review. (AP)
Beginning the new fiscal year on a high note, the BSE Sensex today rose by 60.17 points to all-time closing high of 22,446.44 in a volatile session after Guv Raghuram Rajan's RBI kept key policy rates unchanged.

Markets Top Gainers, Markets Top Losers

The 30-share index continued its record setting spree for the seventh session with touching a new high of 22,485.77 points in the day trade.

Also check graphs on RBI Monetary Policy Review, Current Account Deficit, GDP growth, Sensex, and more

The market was jittery in afternoon session and the index dropped by 90 points to a day's low of 22,295.65 points.

Brokers said RBI's decision to keep interest rates unchanged was largely in line with investor expectations and failed to have any immediate effect.

However, buying in IT and oil stocks, mainly in Reliance Industries, at the fag-end helped the barometer end session at fresh record closing high of 22,446.44, up by 60.17 points higher, or 0.27 per cent.

Reliance Industries rose by 1.25 per cent.

The wide-based National Stock Exchange index NSE Nifty also set a new record high level by rising 16.85 points, or 0.25 per cent to 6,721.05, after an intra-day record of 6,732.25.

RBI kept key policy rates unchanged since retail inflation still remains "sticky" but introduced steps to increase liquidity and contain volatility in the money market.

A higher opening in Europe supported the trading sentiment in later part of the session, brokers said.

In 30-BSE index components, 15 stocks gained and 14 ended with losses, while Sun Pharma held unchanged.

IT stocks, led by Wipro, TCS and Infosys, were the star performers in the current rally. The IT sector index gained the most by rising 1.65 per cent to 8,934.45.

The consumer durable was second best performer by adding 1.33 per cent to 6,612.63.

Axis Bank, HDFC, Dr Reddy's Lab, ONGC, NTPC, Sesa Sterlite and Tata Motors were among major gainers.

Dipen Shah, Head- Private Client Group Research, Kotak Securities:

RBI maintained status quo in interest rates and CRR, as expected. It expects the CPI inflation to be at about 8% by end of FY15 and the GDP growth rate to be at between 5.5% and 6% in FY15. In the short term, we believe that, the RBI will remain on hold at least till the new Government releases the budget. While the RBI has maintained status quo, it has given several reasons which can provide an upward bias to the inflation over the course of the year. Among these are, a possible el Nino effect on food inflation, increase in minimum support prices, changes in administered prices of fuel, fertilisers, etc, and the geopolitical tensions. If some of these factors play out, interest rate reductions will likely be further delayed. Although the policy rates are unlikely to come down in current fiscal, we are hopeful that the need for raising rates wouldnt arise as well. RBI is also gradually moving towards market determined liquidity rates rather than the LAF rates. Towards this, it has reduced the LAF eligibility further to 25 bps of NDTL from 50 bps and accordingly increased term repos to 75 bps from 50 bps.

Also read: Raghuram Rajan's full statement

Indian shares continue record run; U.S. jobs on watch after RBI pauses

(Reuters) Indian shares rose to a record high for a seventh consecutive session as blue chips such as Larsen & Toubro extended a rally after the central bank left interest rates unchanged and said it did not expect policy tightening in the near-term.

The Reserve Bank of India has raised the repo rate by 75 basis points since September to contain high inflation, but analysts had expected the central bank would keep rates steady ahead of general elections and an uncertain economic growth outlook.

India's record-setting share rally has been sparked by heavy foreign buying - reaching a $3.3 billion in March - as analysts cite expectations of a recovery in the domestic economy, and bets that main opposition Bharatiya Janata Party, perceived as more business-friendly, will come to power.

However, analysts warn momentum could eventually wane, with investors on Tuesday also booking profits in recent outperformers such as banks. Data on Tuesday showed manufacturing activity grew at a slower pace in March as weaker domestic demand dragged on output growth.

"We continue to believe that till the election result is clear, index will remain in the sidelines and bulk of the action will be witnessed in mid and small caps," Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services.

Profit booking in banking stocks is only a near-term phenomenon, added Nair. India's BSE index rose as much as 0.44 percent to an all-time high of 22,485.77, while the broader NSE index gained 0.41 percent to a record high of 6,732.25. The benchmark BSE index ended 0.27 percent higher while the NSE index ended up 0.25 percent.

Among blue chip stocks, Larsen & Toubro gained 0.6 percent, while Tata Consultancy Services rose 2 percent.

Reliance Industries rose 1.3 percent and Tata Motors ended 1.1 percent higher.

Mahindra and Mahindra Ltd gained 2 percent after the company said its domestic tractor sales rose 7 percent to 16,571 tractors in March.

Kalpatru Power Transmission Ltd rose 2.3 percent after the company on Monday said it had received new orders of over 7 billion rupees.

Still, investors also took profits on recent outperformers such as Hindalco Industries Ltd, which fell 2.5 percent on profit taking after rising 8.3 percent on Monday.

Punjab National Bank ended down 1 percent after being the best performer of the NSE in March with a 35 percent rally.

Among other stocks that fell, Natco Pharma fell 14.22 percent, after the U.S. Supreme Court on Monday agreed to hear an appeal filed by Teva Pharmaceutical Industries Ltd in a patent fight over top-selling multiple sclerosis drug Copaxone.

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