RBI measures boost market sentiments; Banks lead

Markets continued to trade firm in the afternoon session this Tuesday on back of significant buying witnessed in rate-sensitive shares after the central bank once again tightened gold import duty to squeeze current account deficit.

 

The Reserve Bank of India (RBI) on Monday asked all nominated banks and agencies to export at least one-fifth of every lot of imported gold in all forms, and locally make it available only for jewellers.

 

The central bank said banks need to retain 20% of the imported gold in customs bonded warehouses, and will only be able to further import gold after exporting at least 75% of the gold from those warehouses.

 

Mirroring the optimism, 30-share Sensex surged 167 points to trade at 20,325.81 while Nifty gained 53 points at 6,084.80.

 

Global risk appetite also improved  after China’s premier said the economy won’t grow any slower than 7 percent and U.S. housing data damped concern the Federal Reserve will rein in stimulus. 

 

Chinese Premier Li Keqiang said the slowest economic growth policy makers will tolerate is 7 percent, Beijing News reported today, citing comments at a recent meeting with economists and businesspeople. 

 

Meanwhile, sales of previously owned U.S. homes unexpectedly dropped 1.2 percent in June, data showed yesterday, bolstering the case for the Fed to keep stimulating the world’s biggest economy.

 

In Asia, Japan’s Nikkei rose 0.8% to 14,778.51, China’s Shanghai Composite soared 1.8% to 2,042.63, Singapore’s Straits Times added 0.5% to 3,252.30 while Hong Kong’s Hang Seng gained 2.4% to 21,947.56.

 

Domestically, among the sectoral indices, banks, realty, consumer durables, oil & gas and metal indices gained on the BSE.

 

The key gainers included counters such as BHEL rising 2.4%, Sterlite Industries gained 2.1%, Dr Reddy’s Lab was up 2%, SBI gained 1.6% while HUL added 1.5% on the BSE.

 

The laggards were Sun Pharma shedding 1.2%, HDFC declined 0.8%, Bharti Airtel dropped 1%, Bajaj Auto and Tata Motors fell 0.4% each on the BSE.

 

The key notable movers included counters such as Manappuram Finance which is locked in upper circuit for fourth consecutive day, up 5% at Rs 14.19 on BSE after Baring Private Equity Partners India (Baring PE India) increased its holdings in the company to 11.56% through open market purchases

 

Shares of gems and jewellery companies are in demand in noon deals, erasing their entire early morning losses and trading higher by up to 17% after the Reserve Bank of India (RBI) streamlined its gold import policy.

 

Titan Industries, Tribhovandas Bhimji Zaveri (TBZ), Rajesh Exports, PC Jewellers and Shree Ganesh Jewellery House (India) are trading higher in the range of 3-17% on back of heavy volumes on the bourses.

 

Broader markets traded firm with mid-caps and small-caps gaining 0.3-0.4 per cent on the BSE.

 

The market breadth was positive. Out of 2112 stocks traded so far, 1047 shares advanced while 928 declined on the BSE.