RBI's move drives Sensex 217 points higher

The Sensex closed higher by 217 points as sentiments turned bullish after the RBI kept interest rates unchanged

Major headlines

RBI keeps repo, reverse repo and CRR unchanged

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Indian indices

After taking a pause in the previous session, the domestic markets continued its upmove in today’s trade. The sentiments received a boost after the Reserve Bank of India (RBI) kept interest rates unchanged after six increases this year and said it would inject cash to alleviate a liquidity crunch in the banking system. Information Technology (IT) stocks gained the most and also lifted the markets higher. The markets registered a strong growth in the last hour of the trade and both the benchmark indices gained around 1%.

The RBI kept repo rate unchanged at 6.25%, reverse repo at 5.25% and cash reserve ratio at 6%. The statutory liquidity ratio (SLR) has been cut to 24%.

State Bank of India, the largest lender of the country, advanced by 2.44%. The RBI will buy government bonds and reduce the amount of money lenders need to invest in the securities, policy makers said in their statement today. IT biggies like Tata Consultancy Services, Infosys Technologies and Wipro were among the top gainers in the Sensex and the Nifty.

The Sensex started the session 51 points higher at 19699. The index hovered between the negative and positive territory and remained rangebound in the morning session. The index turned negative in afternoon session and hit the day’s low of 19554. The Sensex witnessed a sharp pullback and hit the day’s high of 19897 in late trade as buying was seen in IT and banking stocks.

Finally, the Sensex closed 217 points higher at 19865 and the Nifty rose 56 points to close at 5949.

Bond update: India's 10-year T-bills rose after RBI leaves rates unchanged and yields were at 8.06% versus 8.08% yesterday.

Currency: India rupee was practically unchanged at 45.385 per dollar versus 45.39 yesterday’s closed, after the RBI announcement.

Market sentiment

The market breadth was positive as rising shares outnumbered the declining ones. Out of the 3,012 stocks traded on the BSE, 1,534 gained while 1,314 fell. Hundred and sixty-four stocks traded unchanged.

Sectoral & stock screening

BSE IT was the top performer, rose by 2.79%, followed by BSE TECk up by 2.16% and BSE Bankex surged by 1.86%. On the other hand, BSE Capital Goods (CG) and BSE Power were the only losers, down by 0.29% and 0.02% respectively.

Among ‘A' group stocks, top three gainers - Suzlon Energy gained by 5.92%, Steel Authority of India rose by 5.32% and Shree Renuka Sugars advanced by 4.98%. Top three losers - United Phosphorus slid by 3.19%, Container Corporation declined by 3.03% and Mahindra & Mahindra lost by 2.73%.

Viewing volumes

Industrial finance company - IFCI was traded the most, with over 0.50 crore shares changing hands on the BSE, followed by sugar major - Shree Renuka Sugars (0.42 crore shares), wind turbine major - Suzlon Energy (0.40 crore shares), India’s leading steel company - Tata Steel (0.27 crore shares) and public sector bank - Uco Bank (0.21 crore shares).

Global signals

The European markets edged higher, though gains were limited on caution ahead of a European Union leaders meeting.

All the Asian markets closed on a negative note except Nikkei and Straits Times that ended marginally higher by 0.01% each.

The US stock index futures point to a flat opening on the Wall Street ahead of weekly Jobless Claims and Housing Starts data.

Market Outlook: Tonight in the US, we have Jobless Claims coupled with Housing Starts & Building Permit data to hit the tape, while the Philadelphia Federal Index for the month of December expected at 15.