Markets trim gains ahead of RBI Policy

The interest rate sensitive BSE auto and banking indices are also trading subdued

The benchmark indices have shed some of their early gains as they wait for the Reserve Bank of India to announce its Monetary Policy for 2015-16. The Sensex is at 28551, higher by 47 points and the Nifty is at 8671, up 11 points.   

The interest rate sensitive BSE auto and banking indices are trading in a subdued manner at 19,643 and 21,423 respectively ahead of RBI's policy meet. However, the realty index is down by a percent at 1,780.


Among the major banking names, Axis Bank has gained 0.6% at Rs 572, Yes Bank has added 0.4% at Rs 849, SBI has gained 0.4% at Rs 275, ICICI Bank has edged higher by 0.2% at Rs 322 and HDFC Bank is flat at Rs 1032.

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(Updated at 10.30am)

The markets have extended the gains of the previous session, amid firm global cues, ahead of the Reserve Bank of India's policy meet later in the day. The Sensex is at 28,609, higher by 105 points and the Nifty is at 8,686, up 26 points. The midcap index is at 10,905, higher by 35 points and the smallcap index is at 11,366, up 66 points.

A late surge had catapulted Dalal Street on Monday, with the Nifty comfortably regaining the 8,600 mark and Sensex crossing 28,500. The markets have build on the gains in early trades.

The Reserve Bank of India is widely expected to maintain status quo on key interest rates at its first bi-monthly Monetary Policy for 2015-16 after announcing two rate cuts since the beginning of this calendar year. The RBI Governor Raghuram Rajan had surprised the markets by announcing a cut in the repo rate by 25 basis points to 7.75% on 15 January 2015 and reduction in repo rate by 25 basis points to 7.5% on 4 March 2015. 

"Two rate cuts have taken place this calendar year but the transmission and impact of the same is yet to seen. The central bank is expected to stand pat with the interest rates; however it can indicate an inclination to reduce interest rates provided that inflation moderates further. Unseasonal rainfall in many parts of the country has given birth to the threat of rise in food inflation, which restricts the RBI’s maneuverability on the interest rate trajectory," points out a morning note from IIFL.

"It seems the central bank will take a pause after the two unscheduled cut in the repo rates this year. Meanwhile, market participants expect RBI to tinker with the liquidity tools, wherein the consensus is calling for some cut in the CRR," it adds.

Despite the upmove seen, technical analysts are still not convinced if the markets will be able to sustain at higher levels.

"The Nifty has now surpassed the 8650 mark; but considering the price structure of the higher degree chart, we are not getting comfort to stay aggressively long in the market. Due to ongoing optimism, the current bounce may extend further towards 8700 - 8780 levels; but it remains to be a strong resistance zone. On the flipside, Monday's low of 8573 would now be seen as immediate support for the index," technical analysts point out in a report.

SENSEX STOCKS

The pharma stocks are having a good session of trade. Sun Pharma has zoomed by 2.2% at Rs 1194 to top the gainer's list on the BSE and Cipla has added 1.1% at Rs 743. Among the other top gainers, L&T has added 1.4% at Rs 1781 and Tata Steel has added 1% at Rs 321.

In the banking space, Axis Bank has added 0.5% at Rs 571, while ICICI Bank and SBI are trading flat at Rs 321 and Rs 274 respectively, ahead of the RBI policy.

On the losers side, BHEL has shed 1.4% at Rs 232. The auto space is having a rough ride in early trades. M&M has slipped by 0.7% at Rs 1233 and Hero Motocorp has lost 0.4% at Rs 2660. 

GLOBAL MARKETS

Most Asian markets which were closed yesterday resumed trading today and edged higher tracking overnight gains on Wall Street. Shares in Japan and China were among the top gainers with both the benchmark indices viz Nikkei and Shanghai Composite up over 1% each. Singapore's Straits Times was up 0.5% while Hong Kong market was closed for trading today.

US stocks ended higher on Monday on expectation that the US Fed would not raise interest rates on account of weaker-than-expected jobs data released last week. The Dow Jones gained 118 points at 17,880.85, S&P 500 gained 14 points at 2,080.62 and the tech-laden Nasdaq ended up 30 points at 4,917.32.