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Benchmark share indices extended gains in noon trades led by bank shares after the RBI at its second Quarter Review of Monetary Policy 2013-14 today announced a hike in repo rate by 25 bps which was on expected lines.
At 12:50PM the Sensex was up 213 points at 20,784 and the Nifty was up 74 points at 6,175.
RBI in its monetary policy review today hiked the repo rate by 25 bps to 7.75%. The MSF rate was cut by 25 bps to 9.25%. CRR was left unchanged at 4%. The central bank cuts the FY14 GDP growth forecast to 5% from 5.5%. Giving a CPI forecast for the first time, the RBI said retail inflation will remain above 9%, adding that both WPI and CPI will remain elevated in the months ahead.
Asian shares were trading mixed as investors turned cautious and booked profit ahead of the outcome of the U.S. Federal Reserve's policy meet this week, at which it is widely expected to stay the course on stimulus.
Japan's Nikkei stock average was down 0.5% after rising sharply on Monday. The benchmark index was trading firm in early trades bolstered by data showing consumer spending in Japan jumped in September as shoppers frontloaded purchases before a sales tax increase next year. Shanghai Composite was down 0.6%. However, Straits Times and Hang Seng were trading marginally higher.
The rupee was trading stable while government bond yields fell after the Reserve Bank of India's (RBI) monetary policy announcement. The rupee firmed up in noon trades against the US dollar and was quoting at Rs 61.44 compared with previous close of Rs 61.53 per dollar.
“Bond yields fell because the hike in the repo rate was on expected lines and there was also a cut in the MSF rate. Besides that the increase in liquidity was provided through term repos of 7-days and 14-days tenure to 0.50% of banks NDTL from 0.25% earlier,” said S Srinivasaraghanva, head of treasury at Dhanlaxmi Bank.
Bankex was the top gainer among the sectoral indices on the BSE up 2.4% followed by Realty, Consumer Durables, Metal, Auto, Power, Healthcare, Oil and Gas indices up 1-2% each.
In the banking segment, ICICI Bank, HDFC Bank and SBI were up 1-.38% each.
Maruti Suzuki was up 6% after reporting a better than expected net profit at Rs 670 crore for the quarter ended September 2013 (Q2FY2014), driven by strong growth in exports, favorable exchange rate and cost control measures. Analyst on an average had expected profit of Rs 551 crore for the quarter. The company had reported profit of Rs 227 crore in year ago quarter.
Sun Pharma was up 1.3% after the company said it has addressed the United States Food and Drug Administration’s (USFDA) concerns about quality control breaches at a U.S. subsidiary that was shut down by the regulator for three years because of manufacturing flaws.
Other Sensex gainers include, Reliance Ind, Tata Motors, Hindustan Unilever among others.
Among other shares, Ceat is trading higher by 3% at Rs 175, extending its previous day’s 6% rally, after reporting twenty-fold jump in consolidated net profit at Rs 77 crore for the quarter ended September 2013 (Q2) on back of strong volume growth and lower raw material cost. The company engaged in auto tyres and rubber products had profit of Rs 3.8 crore in a year ago quarter.
The broader markets are trading higher with the BSE Midcap up 0.8% and Smallcap index up 0.2%.
The market breadth in BSE was neutral with 1,017 shares advancing and 1,041 shares declining.
