Rate-sensitive stocks rise ahead of RBI policy decision

Virginia Carson
April 6, 2018

The Reserve Bank kept the repo rate unchanged at 6 per cent as widely expected but lowered retail inflation projection to 4.7-5.1 per cent for the first half of the fiscal.

Citing revival in investment activity and global demand, the central bank said that several factors will help accelerate the pace of economic activity in 2018-19.

A string of positive domestic cues, including forecast of a normal monsoon and encouraging services sector PMI data, added to the buying momentum, brokers said.

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Overseas, Asian and European stocks gained as concerns over trade tensions between the United States and China ebbed.

The 30-share index, moving in a tight range for the better part of the session on scattered deals, hit a low of 33,501.37 and a high of 33,697.51 before finishing at 33,626.97 points, up 30.17 points or 0.09 per cent.

Among the sectoral indices, BSE Metal was down 2.75 per cent, followed by Consumer Durables (-2.55 per cent), Basic Materials (-2.07), Capital Goods (-1.95) and Bankex (-1.63).

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Rate sensitive stocks were at the forefront of the rally after the RBI eased NPA provisioning norms for banks. The RBI said, "On the basis of an assessment of the current and evolving macroeconomic situation1 at its meeting today, the Monetary Policy Committee (MPC) chose to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.0 per cent". In the broader markets, the mid-cap and small-cap indices ended with gains of 0.65 per cent and 0.61 per cent, respectively. Japan's Nikkei fell 0.15 percent.The S&P 500 E-mini futures were down 1.2 percent, pointing to a lower start for Wall Street later in the session.

Among the early gainers were Sobha whose shares went up by seven per cent while Magma Fincorp was down by six per cent.

Nasdaq closed in green, up by 1.43 per cent while FTSE 100 was also up by 0.05 per cent at the closing on Wednesday.

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