Sensex gains 216 pts, Nifty Bank underperforms on caution ahead of MPC meet outcome
It was a good start to the truncated week as equity benchmarks ended 0.7 percent higher on Tuesday after a long weekend, driven by good September auto sales data, hope of reduction in GST tax slabs and firm Asian markets. But the Nifty Bank index underperformed as investors turned cautious ahead of outcome of two-day Monetary Policy Committee meeting due on Wednesday.
The 30-share BSE Sensex was up 213.66 points at 31,497.38 and the 50-share NSE Nifty rose 70.90 points to 9,859.50.
The market gained for the third consecutive session today but that is unlikely to continue amid consolidation ahead of MPC meeting outcome and September quarter earnings season, experts feel.
They majorly expect the Reserve Bank of India to keep the policy rate unchanged on Wednesday, citing higher inflation risks and weak credit demand.
“We expect the RBI to stay on hold at the upcoming meeting as rising incoming inflation and projections of further acceleration in inflation ahead will mean that there would be limited space for further easing,” Morgan Stanley said in its research note.
Jayant Manglik, President, Retail Distribution, Religare Securities also feels the RBI has limited room, citing uptick in inflation, monsoon trend and global interest rate scenario.
He advises that traders should maintain caution especially in a rate-sensitive pack and prefer only hedged positions.
Asian markets ended mostly higher after US equities closed at record highs while European markets were mixed as political concerns eased slightly and investors digested new data releases.
Back home, the BSE Midcap index gained 0.77 percent and Smallcap added 0.5 percent despite tepid market breadth. About 1,433 shares advanced against 1,277 declining shares on the BSE.
On the economic data front, manufacturing activity expanded in September for the second consecutive month, driven up by increase in output and new orders, a survey said today. The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) stood at 51.2 in September, little changed from its August reading.
All sectoral indices barring PSU Bank ended in green. The Nifty Metal and FMCG indices outperformed, rising over a percent while Auto index was up 0.83 percent and Nifty Bank gained 0.2 percent.
ICICI Bank, IndusInd Bank, HDFC Bank, Yes Bank and Kotak Mahindra Bank gained 0.2-0.6 percent but PSU Bank index lost 0.6 percent on caution ahead of RBI policy meeting outcome. SBI was down 1 percent. Overall banks were also cautious on worries over Reliance Communications’ debt after the RComm-Aircel merger deal called off.
Reliance Communications share price plunged 11 percent. Reliance Capital was down 4.3 percent.
Auto sales data was strong in September, led by festive demand. Tata Motors was up 3.6 percent while Bajaj Auto and Mahindra & Mahindra gained 0.8-1.6 percent but Maruti Suzuki, TVS Motor, Ashok Leyland and Eicher Motors saw profit booking post sales data.
Metals stocks like Vedanta, Tata Steel, Hindustan Zinc and Nalco gained 1-6 percent on rising global metals prices.
Among index heavyweights, Reliance Industries, HDFC and ITC rose 1-2 percent while L&T fell 0.6 percent.
In the broader space, Future Consumer, Titan Company, Godrej Consumer, Dabur, Voltas, Havells, Edelweiss Financial, LIC Housing Finance and JM Financial gained 1-4 percent.
SBI Life Insurance Company closes off day’s high at Rs 707.55, up 1 percent over issue price of Rs 700 per share. It had debuted with a 5 percent premium.
ICICI Prudential Life was up 6 percent after the listing of SBI Life.
Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
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