Midcap index hits record high post RBI rate cut

HDIL, Indiabulls Real Estate, Unitech, PC Jeweller, Jaiprakash Associates and Dewan Housing rallied more than 5% each.

The National Stock Exchange (NSE) CNX Midcap index and the BSE, S&P BSE Midcap index have touched their respective record high after the Reserve Bank of India (RBI) unexpectedly cut interest rates by 25 basis points to 7.75% to help revive growth in economy.

At 1226 hours, S&P BSE Midcap index was up 1.2% or 131 points at 10,603 on BSE. It hit a lifetime high of 10,631 points during intra-day trade. The NSE, CNX Midcap was up 1.3% at 12,777 after hitting a record high of 12,816 so far.

Amara Raja Batteries, Bajaj Corp, Dewan Housing Finance, Federal Bank, Gruh Finance, MindTree, Indiabulls Housing Finance, Orient Cement, TVS Motor Company, Clariant Chemicals, HSIL and Cholamandalam Investment & Finance Company from the BSE midcap index hit their respective record highs.

Kunal Shah, Fund Manager, Debt at Kotak Mahindra Old Mutual Life Insurance believe that if global commodity prices remain soft and fiscal consolidation continues RBI can cut rates by another 50-75bp from current level in calendar year 2015.

Chandrajit Banerjee, Director General, CII said that the 25 bps reduction in repo rate has come as a positive surprise in the new year and would be a huge mood lifter for investors who have been grappling with subdued demand conditions.

"Going forward, CII hopes that while maintaining a delicate balance between growth and inflation, the RBI would shift its stance in favour of growth, given that the trend in inflation is clearly subdued. CII would call for a further cut in policy rates by at least 25 basis points in the forthcoming monetary policy," added Mr Banerjee.

After a rate cut announcement, Bank Nifty the banking share index, was up 4.2% or 789 points in early trade and touched a record high of 19, 410. The realty stocks are zoomed after this announcement on the hope that this action will certainly drag interest rate down and will help out the in reducing the interest burden on outstanding loans.

Housing Development and Infrastructure (HDIL), Indiabulls Real Estate, Unitech, PC Jeweller, Jaiprakash Associates, Kirloskar Engineering, Monsanto India, Hindustan Construction Company, GMR Infrastructure, Allahabad Bank, Indiabulls Housing Finance, Puravankara Projects and Dewan Housing Finance are among the midcap shares that rallied more than 5% each.