Sensex ends 275 points higher; Nifty near 10,700 post RBI meet outcome

The Sensex is up 275.67 points or 0.79% at 35178.88, while the Nifty is up 91.50 points or 0.86% at 10684.70. The market breadth is positive as 1664 shares advanced, against a decline of 957 shares, while 136 shares were unchanged.

Airtel, Tata Motors, and Titan were the top gainers, while HDFC Bank, Asian Paints, Tech Mahindra and HPCL lost the most. 

Dhananjay Sinha- Head Institutional Research, Economist & Strategist at Emkay Global Financial Services said, "The announcement of 25bp rate hike by RBI today broadly encompasses considerations of upside revision in inflation trajectory going ahead, impact of rising commodity prices and rising global yields, led by tightening of US dollar liquidity."

"With this hike the RBI has finally reversed the 25bp cut it initiated in Aug’17, while retaining neutral stance, in the aftermath of demonetisation and impact of GST implementation, which led to surplus liquidity condition. Even With this rate hike the stance is still not of tightening. In our view, this rate hike could lead to a tightening stance if the inflation risks accentuate along with currency depreciation," he added.

Expert speak: The six member  MPC committee of RBI raised interest rates by 0.25 bps for the first time in 4.5 years in BJP-led NDA govt, keeping CRR & SLR status quo. Recent hike in crude prices & better GDP for last quarter of FY 18 suggest inflation trajectory may be on the higher side. Though, this may put some pressure on borrowers, it is positive news for the savers in the economy, Anita Gandhi, Whole Time Director at Arihant Capital Markets said in a statement.

Market check: Post the Monetary Policy Committee’s (MPC) decision to hike repo rate, equity benchmarks continued their strong momentum, gaining 0.7-0.8 percent, with the Sensex rising over 250 points. The Nifty was trading well above 10,650. Strength is visible among all sectoral indices, with a surge in Nifty PSU banks as well as Nifty Auto index too. Metals as well as pharmaceutical names too witnessed a surge. In the broader markets, midcaps extended their gains, up over 1 percent on the Nifty. Among stocks, Airtel, Tata Motors and Titan are the top gainers, while Asian Paints, ONGC, Tech Mahindra and HPCL have lost the most. 

Repo rate hiked by 25 bps to 6.25 percent

Reverse repo rate hiked by 25 bps to 6 percent 

The Monetary Policy Committee has maintained its neutral stance 

GDP forecast retained at 7.4% for FY19

April-September GDP growth projected at 7.5-7.6 percent 

October-March GDP growth projected at 7.3-7.4 percent

April-September CPI likely in 4.8-4.9% range including rent allowance impact       

October-March CPI likely around 4.7% including home rent allowance impact          

Considering norms to prevent abuse in the markets that are regulated by the RBI 

Equity benchmarks are currently trading off the day’s high points. The Sensex is currently trading higher by over 100 points, while the Nifty is trading below 10,650-mark. The drag is led by a fall in banking names, with the Bank Nifty trading around flat lines. The PSU bank index has trimmed its gains too. Rate sensitive sectors such as automobile and real estate, among others are too marginally off their highs.

RBI says: The central bank’s MPC has kept a neutral stance despite a repo rate hike and said that its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis. 

Further, it also said that the April/September CPI seen at 4.8 percent to 4.9 percent.   

RBI outcome: The Reserve Bank of India’s Monetary Policy Committee (MPC) has, for the first time in four years, hiked key repo rate by 25 basis points (bps) to 6.25 percent.  

The MPC decided to increase it by a quarter percentage point on account of high inflation and firming crude oil prices.

The central bank also hiked the reverse repo rate to 6 percent. 

The last time RBI had raised the repo rate was in January 2014, by 25 bps to 8.00 percent. Since then, it has either reduced it or maintained status quo. Repo rate is the rate at which banks borrow from RBI for their short-term funding requirements.

All rate-sensitive stocks were trading higher on the back of this announcement. Banking stocks were trading higher. Sectoral indices such as Bank Nifty, Nifty PSU bank, Nifty Auto and Nifty PSU bank were all trading higher by up to 2 percent.  

Gold Update: Gold prices rebounded by Rs 260  to Rs 31,860 per 10 grams at the bullion market today on firm cues from global markets and fresh buying by local jewellers.

Silver prices also went up by Rs 250 to Rs 40,750 per kg, backed by increased offtake by industrial units and coin makers.

Marketmen said sentiment turned better largely in sync with a firming trend overseas where gold prices inched up on a weaker dollar and lower treasury yields, but expectations of a US rate rise next week kept a lid on gains.

Buzzing: Share price of Hindustan Construction Company (HCC) surged 7 percent as company won a contract worth Rs 737 crore. The company in joint venture with MAX Group in Bangladesh has been awarded USD 110 million (Rs737 crore) contract by Russia's State Nuclear Company, JSC Atomstroyexport. 

The contract includes civil works of Turbine Island for Unit 1 of Rooppur Nuclear Power Plant.  

The company share in the joint venture is 40 percent (USD 44 million / Rs 295 crore).  

Market Check: The market is now gaining strength ahead of the RBI policy outcome. The Sensex is higher by 200 points, while the Nifty is well above 10,650. Midcaps are trading strong, with Nifty Midcap index trading over half a percent higher. Meanwhile, rate-sensitive sectors such as auto, banks, and real estate are all up ahead of the key announcement. Airtel , Bajaj Auto, Titan and HCL Tech are the top gainers, while Asian Paints, Power Grid, and HPCL are the top losers.

Mcleod Russel to sell 8 tea estates: The share added 2.6 percent as company has decided to dispose of certain tea estates in Assam.

The company has entered into a memorandum of understanding (MoU) to sell its 8 tea estates to M.K. Shah Exports for a consideration of Rs 331 crore.

The company is going to sell Beesakopie Tea Estate, Raidang Tea Estate, Daimukhia Tea Estate, Samdang Tea Estate, Baghjan Tea Estate, Bordubi Tea Estate, Koomsong Tea Estate and Phillobari Tea Estate.

Buzzing: USFDA inspected the manufacturing facility of Cadila's wholly-owned subsidiary, Alidac Pharmaceuticals, located at SEZ, Ahmedabad from May 28 to June 5, 2018.

At the end of the inspection, no observation (483) is issued.

The site manufactures oncology injectables for the regulated markets.

At 11:06 hrs Cadila Healthcare was quoting at Rs 352.75, up Rs 4.10, or 1.18 percent

Benchmarks have extended their gains now, with the Sensex trading over 100 points higher, while the Nifty is well above 10,600-mark. A sudden spike is seen in metals, pharmaceuticals, as well as midcaps too. The Nifty Auto index is also trading higher by almost half a percent. Reliance Industries, HDFC and L&T are contributing to gains on Sensex and Nifty, while HDFC Bank, ICICI Bank and IOC are looking to cap the upside. 

Buzzing Stocks: Shares of CG Power have gained almost 3 percent in the morning trade as investors cheered an order win from the Indian Railway. 

The company on Tuesday announced an order win worth Rs 319 crore to supply of Under Slung Electrics for Diesel Electric Tower Car (DETC). 

“Large quantities of DETCs are required for massive track electrification drive taken up by Indian Railways across the country. More than 1000 DETCs shall be required for electrification and thereafter for inspection and maintenance in the coming years,” the company said in a filing to the exchanges.  

Market Opens: D-Street has begun the session on a flat note, but with a positive bias, even as investors look for cues ahead of Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meet outcome later in the day. 

The Sensex is up 51.86 points or 0.15% at 34955.07, and the is Nifty up 13.10 points or 0.12% at 10606.30. About 232 shares advanced against a decline of 291 shares, while 48 shares were unchanged.

All sectoral indices on the Nifty are largely trading in the flat terrain, while some weakness is seen in the financial names, possibly on a caution note ahead of central bank’s meet outcome. 

Coal India, Sun Pharma, and Bajaj Finance are the top gainers, while Power Grid, Airtel and Zee Entertainment have lost the most. 

Among global markets, Asian stocks edged up after tech sector strength lifted Wall Street shares, while concerns about Italy's debt prompted investors to move into lower-risk government debt elsewhere, pushing U.S. Treasury yields down from recent highs.

Meanwhile, US stocks mostly edged higher on Tuesday as technology shares extended recent gains while U.S. Treasury yields fell on safe-haven buying after Italy's new prime minister outlined new economic policies that could add to the nation's debt

Pre-opening: The benchmark indices are flat in the pre opening ahead of RBI policy. The Sensex up 29.94 points at 34933.15, and the Nifty up 10.30 points at 10603.50.

Rupee opens higher: The Indian rupee opened higher by 7 paise at 67.08 per dollar on Wednesday versus 67.15 yesterday.

In the last few sessions rupee is consolidating in a range of 66.90 and 67.35 as most market participants are cautious ahead of the important RBI policy statement that will be released later today. Expectation is that the central bank could hold rates but at the same time could change its stance from ‘Neutral’ to ‘Hawkish’, said motilal Oswal.

Ex-Bonus:  Gruh Finance 1:1

Ex- Dividend: Aptech and Shree Surgovind Tradelink

Bandhan Bank appoints Harun Rasid Khan as non-executive, part time chairman of the Bank

Corporation Bank to consider raising of capital by way of issuance of fresh equity shares and/or by issuance of additional Tier – I or Tier – II capital

Gujarat Ambuja Exports clarifies about NGT order for closure of its units

CG Power bags a large order of Rs 3190 million from Indian Railways

Bank of Baroda: The lender has raised lending rates by 5 bps.

Everest Industries clarifies that comapny is not involved in any infringement proceedings initiated by Ultratech Cement

Electrosteel Steels spells out steps for completion of acquisition by Vedanta

The Nifty50 is expected to open flat on Wednesday following muted trend seen in other Asian markets. The Nifty50 closed 35 points lower at 10,593 levels. 

Trends on SGX Nifty indicate a negative opening for the broader index in India, a fall of 20 points or 0.19 percent. Nifty futures were trading around 10,587-level on the Singaporean Exchange.

US stocks mostly edged higher on Tuesday as technology shares extended recent gains while US Treasury yields fell on safe-haven buying after Italy’s new prime minister outlined new economic policies that could add to the nation’s debt, said a Reuters report. 

Asian stocks edged up on Wednesday after tech sector strength lifted Wall Street shares, while concerns about Italy’s debt prompted investors to move into lower-risk government debt elsewhere, pushing US Treasury yields down from recent highs.