Sensex jumps over 600 Points Today

NEW DELHI: The S&P BSE Sensex rallied over 600 points in trade on Thursday to post its strongest gains registered since May 12, after the Reserve Bank of India (RBI) in a surprise move reduced the policy repo rate by 25 basis points from 8.0 percent to 7.75 percent with immediate effect.

“The rate action by RBI is going to be a very positive surprise for the equity markets. It is logical and earlier, we have had an inflation print below what the market was expecting. We continue to get good news in terms of the oil price for India. So this is extremely helpful,” says Adrian Mowat, JPMorgan.

Reacting to the news, shares in rate sensitive sectors such as banks, realty, capital goods surged in trade after the RBI action. The S&P BSE Banking index was the top gainer among the sectoral indices on the BSE. Bank Nifty on the National Stock Exchange surged to fresh record high of 19410.40.

At 10:00 a.m.; the 30-share index pared some of the morning gains but was still trading at 27828, up 481 points or 1.76per cent. It touched a high of 27947.59 and a low of 27703.70 in trade today.

The Nifty was at 8418 up 140 points or 1.70 per cent. It touched a high of 8453.60 and a low of 8380.55 in trade today.

BSE Banking index was trading 3.6 percent higher, the BSE Realty index was up 2.9 percent, BSE Auto index was up 1.01 percent and BSE Capital Goods index was trading 1.1 per cent higher.

Inflation continued to surprise during the week, with retail inflation for Dec’14 at 5% and WPI inflation at 0.1%. In recent months, inflation has been consistently undershooting projections.

Wholesale inflation rose less than expected in December. The recent recovery of the rupee and further softening of global commodity and crude prices have added to the argument in support of a reduction in interest rates.

A rate would definitely help stimulate the economy that faces the headwinds of slower global growth. The fifth bi-monthly monetary policy statement also stated that once the monetary policy stance shifts, subsequent policy actions will be consistent with this stance.

Key to further easing are data that confirm continuing disinflationary pressures. Also critical would be sustained high quality fiscal consolidation as well as steps to overcome supply constraints and assure availability of key inputs such as power, land, minerals and infrastructure, said the RBI statement.

Source:Economictimes

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