Mumbai: Indian equity benchmarks closed Friday's trade with moderate gains despite key rate hikes and hawkish stance of RBI to maintain anti-inflationary stance. Even the positive global cues were ignored by the benchmarks.
Initially, the market reacted negatively to RBI policy announcement, but recovered immediately. However, in the late trade, the sell-off in technology, FMCG along with Reliance Industries and BHEL dragged the benchmarks near previous day's closing value.
The 30-share BSE Sensex rose 57.29 points, to end at 16,933.83, after erasing 189 points from day's high of 17,122.54. The 50-share NSE Nifty moved up 8.55 points, to close at 5,084.25.
The Reserve Bank of India (RBI) has raised the repo rate for the 12th time by quarter of a percent point to 8.25 per cent on Friday and reverse repo rate adjusted to 7.25 per cent to tame inflation. However, it kept cash reserve ratio (CRR) rate unchanged.
Experts were expecting that this would be the last rate hike from the central bank but that may not be the case. RBI said it would continue with its anti-inflationary stance as inflation is much above the comfort zone. Even global economic environment has worsened, it said.
Jim Walker, the managing director of Asianomics Limited says the RBI’s rate hike is inline with their expectations. "Even though the central bank has put too much weight on the WPI number, it will start watching the growth numbers much more carefully now."
While he applauds the RBI on being ahead of the curve on its policy measures, he advices caution going ahead. "It certainly has been very prudent in its management yet again but those monetary indicators are signaling for it to begin pausing and to think about whether or not it should raise again," adds Walker.
ONGC and Tata Motors were the biggest gainers throughout the session today; gained 5.6 per cent and 7 per cent, respectively. Government has put ONGC FPO on hold today and subsidy sharing burden with oil marketing companies would be lower post petrol price hike by Rs 3.14/Litre on Thursday by the Government was the another reason for ONGC's uptrend. For the Tata Motors, company's Jaguar and Land Rover's August sales jumped 31 per cent to 21242 units year-on-year basis and 11 per cent on month-on-month basis.
SBI, HDFC and ICICI Bank were up 2.5 per cent, 0.85 per cent and 0.58 per cent, respectively; it seemed that banks have priced in RBI's move.
NTPC and Tata Power surged 4.75 per cent and 2.7 per cent, respectively. From the metal space, Sterlite Industries shot up 3.7 per cent.
Maruti gained 2 per cent as strike at Suzuki Powertrain, Suzuki Motorcycle called off today. However, workers' strike at Maruti’s main plant is still on.
However, Reliance Industries, TCS, Infosys, TCS, BHEL, Tata Steel, M&M and Bharti Airtel witnessed selling pressure in the second half of trade; lost 0.4-1.4 per cent. HUL and Wipro lost over 2 per cent.
About 606 shares gained as against 817 shares declined. Total traded turnover was more than Rs 1.67 lakh crore - quite high as compared to previous few sessions.
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