Markets firm as RBI eases CRR, repo rates by 25 bps

Realty, Bankex, Auto lead sectoral indices on BSE

Markets surged after the Reserve Bank of India at its policy meet today announced a reduction in repo rate and cash reserve ratio by 25 basis points. However, selling pressure at higher levels wiped off most of the gains only to rebound later led by rate sensitive shares.

The central bank said that it has reduce the policy repo rate, the rate at which RBI lends money to scheduled banks, under the liquidity adjustment facility (LAF) by 25 basis points from 8% to 7.75% with immediate effect.

RBI has also decided to reduce the CRR of scheduled banks by 25 basis points from 4.25% to 4% of their net demand and time liabilities (NDTL) effective the fortnight beginning February 9, 2013.

At 11:25am, the 30-share Sensex was up 67 points at 20,170 and the 50-share Nifty was up 29 points at 6,103.

Asian stocks were marginally up led by banks. However, the Hang Seng and Straits Times was trading flat with negative bias. Shanghai COmposite was up 0.3% and the Nikkei was also up 0.3%.


Shares of rate sensitive sectors such as banks, auto and realty have moved higher after the Reserve Bank of India (RBI) has cut the repo rate and cash reserve ratio (CRR) by 25 basis points (bps) each.

State Bank of India, ICICI Bank and Kotak Mahindra Bank from banking, Sobha Developers, Oberoi Realty and HDIL from realty and Ashok Leyland, Maruti Suzuki India and Hero MotoCorp are trading higher by 1-3% on the Bombay Stock Exchange. However, HDFC Bank was the loser among Sensex shares.

The BSE Small-cap and Mid-cap indices were up between 0.3-0.6% each. Market breadth was positive with 1,217 gainers and 1,039 losers on the BSE.