RBI’s move in sync; bulls cheer

Today's major news

Reserve Bank of India hikes repo, reverse repo rates

Reliance Industries Q1 net profit zooms 32% yoy; the stock closes 0.14% up

Larsen and Toubro Q1 net profit at Rs666 crore; the stock ends 2.94% lower



Global signals

The European shares were trading higher on Tuesday, as banking shares rally after strong results from UBS and Deutsche Bank.

The Asian markets closed on a mixed note, with investors refraining from major moves despite positive figures on the US new home sales. SGX Nifty closed 14 points higher.

The US stock index futures point towards a higher opening at the Wall Street on Tuesday. The investors are eagerly waiting for the earnings of firms like DuPont and Office Depot. The investors will also keep an eye on the home price index data for May and consumer confidence figures for July.

Indian indices

It was a big day for the domestic indices as the Reserve Bank of India (RBI) announced its credit policy and also major companies declared its quarterly results. The Indian bourses welcomed the RBI’s move and ended the session with modest gains. The hike in key rates by the RBI was inline with the market expectations, which lifted the rate sensitive sectors like auto and realty. The RBI hiked repo rate by 25 basis points (bps) to 5.75% and the reverse repo rate by 50bps to 4.5%, while keeping the cash reserve ratio unchanged at 6%. There were reasonably good cues coming in from the overseas markets as well, which supported the Indian markets.

The Sensex opened 21 points lower at 17999 and also its day’s low. The index soon turned positive and remained in the green for most part of day. Post the RBI’s credit policy announcement, the Sensex extended its gains. In the afternoon session, the index hit the day’s high of 18150 on strong European markets and positive US index futures. However, the Sensex pared some of its gains in late trade to settle at 18078, 58 points higher. The Nifty shut 12 points higher at 5431.

Market Outlook: For tomorrow, RIL will be in focus as the company declared its results post market hours. In the US tonight, we will see US Steel and Western Union amongst hundreds reporting along with the foreigners Deutsche Bank and UBS, and also BP. We will also have the Case-Shiller house price index, the Richmond Fed manufacturing index, a consumer confidence measure and an auction of $38 billion of two-year Treasuries.

Market sentiment

The market breadth was negative as declining stocks outdid the advancing ones. Of the 3,000 shares traded on the BSE, 1,519 shares declined whereas 1,368 shares advanced. Hundred and thirteen shares closed unchanged.

Sectoral & stock screening

Out of 13 sectoral indices, previous session’s top losers were the top gainers in today’s trade, BSE Auto surged the most with gains of 2.44%, followed by BSE Realty that advanced by 1.47%. On the other hand, BSE capital goods (CG), BSE healthcare (HC) and BSE Power were the only indices that closed in the negative territory with losses of 1.91%, 0.32% and 0.19% respectively.

In ‘A’ group stocks, the top-3 gainers were - Godrej Consumer Products up by 6.25%, Bajaj Auto surged by 4.88% and Jet Airways rose by 3.97%.

The top-3 losers - Tech Mahindra and Asian Paints fell by 3.67% and 3.28% respectively on poor Q1 results, while Crompton Greaves shed 3.17%.

Viewing volumes

Industrial finance company - IFCI was the most actively traded share with over 0.99 crore shares changing hands on the BSE, followed by India’s second largest developer - Unitech (0.58 crore shares), commercial vehicle maker - Ashok Leyland (0.25 crore shares), India’s largest iron ore exporter - Sesa Goa (0.24 crore shares) and India's largest hospital chain - Fortis Healthcare (0.21 crore shares).