Markets cheer RBI Policy; Sensex up 330 points

Banking names like ICICI Bank, HDFC Bank and SBI among the top gainers

Benchmark share indices extended gains in noon trades led by bank shares after the RBI at its second Quarter Review of Monetary Policy 2013-14 today announced a hike in repo rate by 25 bps which was on expected lines.

At 1420 hrs, the Sensex was up 332 points at 20,902 and the Nifty was up 112 points at 6,213.

In the broader markets, both the mid and smallcap indices, up 0.5-1.3%, underperformed the BSE benchmark index which gained 1.7%.

RBI in its monetary policy review today hiked the repo rate by 25 bps to 7.75%. The MSF rate was cut by 25 bps to 9.25%. CRR was left unchanged at 4%. The central bank cuts the FY14 GDP growth forecast to 5% from 5.5%. Giving a CPI forecast for the first time, the RBI said retail inflation will remain above 9%, adding that both WPI and CPI will remain elevated in the months ahead.

Rupee

The rupee was trading stable at Rs 61.52 compared with previous close of Rs 61.53 per dollar.

Global Markets

Asian shares withered and the dollar lurked just above its recent lows on Tuesday, as investors awaited confirmation the U.S. Federal Reserve will stay the course with stimulus at its policy meeting this week.

MSCI's broadest index of Asia-Pacific shares outside Japan was down about 0.3 percent in late trade and Japan's Nikkei stock average gave up 0.5 percent, but ended off its session lows.

European markets were steady with CAC, DAX and FTSE adding 0.1-0.5%.

Sectors & Stocks

Bankex was the top gainer among the sectoral indices on the BSE up 4% followed by Realty, Consumer Durables, Metal, Auto, PSU, Power, Health Care and Oil and Gas indices up 1-2% each.

In the banking segment, ICICI Bank, HDFC Bank and SBI were up 3-5%.

Maruti Suzuki was up 8% after reporting a better than expected net profit at Rs 670 crore for the quarter ended September 2013 (Q2FY2014), driven by strong growth in exports, favorable exchange rate and cost control measures. Analyst on an average had expected profit of Rs 551 crore for the quarter. The company had reported profit of Rs 227 crore in year ago quarter.

Sun Pharma was up 1.4% after the company said it has addressed the United States Food and Drug Administration’s (USFDA) concerns about quality control breaches at a U.S. subsidiary that was shut down by the regulator for three years because of manufacturing flaws.

Other Sensex gainers include, Tata Steel, Reliance Ind, Tata Motors, Hindustan Unilever among others.

Gail India down 0.2% and TCS flat with a negative bias were the only losers among the Sensex-30.

The market breadth was very positive on the BSE, 1,203 stocks advanced while 1,062 stocks declined.