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Friday, September 06, 2013

The day after...Nifty ends above 5550

Its been just a day that the new RBI governor has taken charge and the effects are already showing. The measures announced by Dr. Raghuram Rajan to liberalise financial markets and the banking sector lifted the Nifty and Sensex to surge past the 5,550 and the 18,500 mark respectively.

The banking sector once again showed strong leadership. The index jumped 9% in a single trading session. Commenting on the same, Amar Ambani, Head of Research at IIFL said, "Banking stocks rallied on the back of measures announced by the new governor Raghuram Rajan to support the battered rupee and liberalize the Indian banking system. He indicated that RBI will take steps to reduce the statutory liquidity ratio and provide freedom to banks to open branches without prior permission. The Rupee appreciated and the 10-year bond yield receded in response to the announced measures".

The rally in the banks was seen even after Moody's Investors Service announced that it downgraded the subordinated debt (subdebt) and junior subordinated debt ratings of 11 Indian banks.

Among the other major gainers were, the realty index up 5.4%, consumer durables index up 4.5%, capital goods index 3.4% and FMCG index up 2.8%. Even the mid-cap and the small-cap index rose by 1.7% and 1.5% respectively.

In a bid to boost sentiment in the foreign exchange market, the Reserve Bank of India (RBI) has decided to offer banks a window to swap fresh foreign currency non-resident (banks) dollar funds. These are mobilised for a minimum tenor of three years and at a fixed rate of 3.5 % per annum.

The Rupee continued to show strength against the US Dollar and was trading around the Rs66.05 mark.

In another important development, the Lok Sabha passed the Pension Fund Regulatory & Development Authority (PFRDA) Bill, which seeks to give statutory powers to the interim regulator constituted by an executive order in 2003.

Finally, BSE Sensex closed at 18,979 up 412 points, while NSE Nifty closed at 5,592 up 144 points over the previous close.

The advance-decline ratio favoured the bulls. On the BSE, 1488 stocks advanced against 848 declining stocks, while 138 remained unchanged.

The INDIA VIX plunged 8% at 28.53. It hit a day’s high of 31.11 and low of 27.51.

Stocks in News

Axis Bank, Kotak Bank, SBI, ICICI Bank, Bank of Baroda, DLF, BHEL, HDFC Bank, IndusInd Bank, PNB and Coal India were among the top gainers in the Nifty. While, Sesa Goa, TCS, Infosys, Lupin, HCL Tech, GAIL and Ranbaxy were among the top losers in the Nifty.

Shares of Tata Motors gained by 1.5% to close at Rs316. The company announced that it is looking at launching the much-awaited diesel version of small car Nano in the current financial year.

Shares of IPCA Laboratories extended rally on Thursday after the company cleared US FDA inspection for its oral solid dosage formulations manufacturing facility situated at Pharmazone, SEZ Indore, Pithampur, Madhya Pradesh. The stock rose another 2% to close at Rs714 per share.