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Sensex rallies 276 points after RBI rate hike, improved macros encourage investors

The BSE Sensex, which opened strong at 34,932.49, fell after RBI’s policy announcement but soon recovered to settle at 35,178.88, up 275.67 points, or 0.79%.

business Updated: Jun 07, 2018 12:46 IST
Press Trust of India
Press Trust of India
Press Trust of India, Mumbai
BSE Sensex,Sensex today,NSE Nifty
The BSE Sensex had lost 419.17 points in the previous three sessions.(Aniruddha Chowdhury/Mint)

Reversing a three-session slump, the BSE Sensex surged almost 276 points on Wednesday, 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% 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%.

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%.

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% 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 on Tuesday, as per provisional data.

“The rate hike is in line with market expectations. RBI’s retention of GDP growth projection of 7.4% 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, 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%.

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

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

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%, Avadh Sugar and Energy 0.53% and Bajaj Hindusthan Sugar 0.71% on BSE.

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

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

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

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

First Published: Jun 06, 2018 09:45 IST