Benchmarks rally post RBI rate hike; investors wager on improved macros

Reversing a three-session slump, the BSE Sensex surged almost 276 points today even as the RBI hiked the policy rate after a four-year pause on inflation concerns but maintained its neutral stance.

Investors took heart from the central bank retaining its GDP growth forecast for 2018-19 at 7.4 per cent on hopes of higher investments and consumption, brokers said.

A strengthening rupee and positive trend in global markets further bolstered sentiment, they added.

The RBI hiked the benchmark lending rate for the first time in four-and-a-half-years on inflation concerns arising from a surge in international oil prices. The repo rate, at which it lends to other banks, now stands at 6.25 per cent.

The BSE Sensex, which opened strong at 34,932.49, fell immediately after RBI's policy announcement but soon recovered to touch the day's high of 35,230.54.

It finally ended at 35,178.88, up 275.67 points, or 0.79 per cent.

The gauge had lost 419.17 points in the previous three sessions.

On similar lines, the NSE Nifty, after shuttling between 10,698.35 and 10,587.50, finished 91.50 points, or 0.86 per cent higher at 10,684.65.

Meanwhile, domestic institutional investors (DIIs) bought shares worth a net Rs 474.33 crore, while foreign portfolio investors (FPIs) sold equities to the tune of Rs 157.51 crore yesterday, as per provisional data.

???"The rate hike is in line with market expectations. RBI's retention of GDP growth projection of 7.4 per cent for the FY 2018-19 underlines the fact that economy is making significant progress in spite of global headwinds.

"With the growth in capacity utilisation in the manufacturing sector, expansion in the manufacturing PMI and healthy rural and urban consumption trend, the economy is showing some extremely healthy signs of revival and growth." said ?Gaurav Gupta, Founder and CEO, Adani Finserve.

Telecom stocks were the session's standout performers. The BSE Telecom index rose the most among sectoral indices, while Bharti Airtel topped the Sensex gainers list, surging 4.55 per cent.

Other gainers in the Sensex pack were Tata Motors 3.56 per cent, Sun Pharma 3.21 per cent, Coal India 1.98 per cent, Bajaj Auto 1.78 per cent, Wipro 1.57 per cent, M&M 1.42 per cent, Tata Steel 1.36 per cent, ITC Ltd 1.23 per cent, Hero MotoCorp 1.20 per cent, Infosys 1.18 per cent, L&T 1.17 per cent, Power Grid 1.03 per cent, NTPC 0.78 per cent, Maruti Suzuki 0.69 per cent and RIL 0.59 per cent.

However, ONGC, Asian Paints, HDFC Bank and ICICI Bank lost up to 0.47 per cent.

Sugar stocks continued their upward journey after the Cabinet today approved a Rs 8,500 crore bailout package for the industry.

Uttam Sugar Mills rose 1.54 per cent, Avadh Sugar and Energy 0.53 per cent and Bajaj Hindusthan Sugar 0.71 per cent on BSE.

All sectoral indices closed in the green. Telecom gained 3.02 per cent, consumer durables 2.32 per cent, metal 1.72 per cent, auto 1.57 per cent, realty 1.47 per cent, power 1.45 per cent, capital goods 1.41 per cent, PSU 1.26 per cent, healthcare 1.20 per cent, teck 1.20 per cent, FMCG 1.12 per cent, IT 0.97 per cent and bankex 0.57 per cent.

The rally extended to the broader markets as well, lifting the small-cap index by 1.53 per cent and mid-cap by 1.28 per cent.

In the Asian region, Japan's Nikkei ended 0.36 per cent higher, while Shanghai Composite Index gained 0.05 per cent. Hong Kong's Hang Seng also rose 0.52 per cent.

In the Eurozone, Frankfurt's DAX gained 0.28 per cent and Paris CAC advanced 0.28 per cent in early deals. London's FTSE too was up 0.19 per cent.