A maturing market amid the mayhem
Sensex rallies despite RBI decision
The BSE Sensex shrugged off the RBI decision to keep rates steady and closed 3.8 percent higher as gains in global markets triggered short covering ahead of the expiry of monthly derivatives.
In today’s policy review, the Reserve Bank left its lending rate steady at 5.5 percent and its reverse repo rate unchanged at 4.0 percent at its policy review on Tuesday. It has also kept the cash reserve ratio unchanged at 5.00 percent.
Gains were led by Reliance Industries, Infosys Technologies, NTPC, Airtel and SBI.
The benchmark indices are trading higher, as buying is seen in metals, power, IT, banking and realty stocks. Majority of the buying today was seen from domestic funds while FII’s remained net sellers, dumping $85.3 million shares.
The metal index outperformed other indices, surging 5.55 percent. Jindal Steel, Sterlite Industries and Hindustan Zinc went up 9-12.5 percent. JSW Steel, Tata Steel and SAIL were up 3-4 percent.
There was some cheer for Satyam shareholders as the fraud-scarred firm jumped more than 28 percent during trade after Larsen & Toubro said it may raise its stake in the company beyond 12 percent. The stock closed up 21.4 pct at 47.15 rupees. L&T closed down 0.4 percent at 638.2 rupees.
Telenor said it will fund its investment in India’s Unitech Wireless, part of India property developer Unitech Ltd with cash flow and new debt. Unitech closed up 1.1 percent at 27.25 rupees.
Today’s Sensex climb was its best one-day rise in 7 weeks. A Reuters poll of analysts has shown that the central bank is expected to cut its key short-term interest rates in the next three months to fuel the slowing economy and provide liquidity to banks. Do you think today’s RBI decision will affect investor sentiment in the days to come?