Markets salute RBI rate hike! Sensex jumps 275 points; Bharti Airtel top gainer, up 4%
Anita Gandhi, Whole Time Director at Arihant Capital markets
The six member MPC committee of RBI raised interest rates by 0.25 bps for the first time in 4.5 years in BJP led NDA govt, keeping CRR & SLR status co. Recent hike in crude prices & better GDP for last quarter of FY 18 suggest inflation trajectory may be on the higher side. Though, this may put some pressure on borrowers, it is positive news for the savers in the economy.
Markets Cheer RBI Policy Move
The Sensex and Nifty extended gains after RBI hiked interest rate by 25 basis points as experts believe the move was already factored in, while Street cheered there was no change to neutral stance of the policy. At 3:00 pm, the Sensex was trading at 35,217, up 314.62 points, while the broader Nifty50 was ruling at 10,691, up 98.30 points.
The Reserve Bank of India on Wednesday hiked interest rate by 25 basis points in its second bi-monthly monetary policy review, as the central bank sees an upward pressure on inflation owing to rising crude prices. With today's move, the repurchase (repo) rate now stands at 6.25 per cent. Consequently, the reverse repo rate stands adjusted to 6 per cent, and the marginal standing facility (MSF) rate and the bank rate to 6.50 per cent.
RBI's cash reserve ratio (CRR) continues to stand at 4 per cent, and statutory liquidity ratio (SLR) at 19.5 per cent. This is the first time under Prime Minister Narendra Modi's regime that the interest rate has been hiked. The RBI had cut interest rate by 25 basis points in August 2017.
RBI policy later today
An increasing number of economists expect the central bank to raise interest rates, a Reuters poll showed, but most still think it will stay put and use this week’s meeting to prepare for a rate increase in August. An unexpected surge in inflation and economic growth rates have brought forward expectations for the next rate hike by more than a year, when just over a month ago, the RBI wasn’t expected to raise rates until the second half of 2019.
Bank of Baroda: Bank of Baroda has hiked its marginal cost-based lending rate (MCLR) by 5 basis points with effect from 7 June, 2018. Bank of Baroda is the latest lender to raise rates in the past few days.
NMDC: State-owned miner NMDC said that it produced 4.53 million tonne (MT) iron ore in the first two months of the ongoing fiscal, 2018-19.
Ahead of the Reserve Bank of India's (RBI's) second monetary policy review 2018-19 on June 6, 2018, the Indian markets, Nifty and BankNifty ended lower on Tuesday. Nifty and BankNifty closed slightly low by 35.35 points at 10,593 and 6.55 points at 26,251 respectively.
But amid positive Domestic Institutional Investors (DIIs), neutral global, future and options (F&O), negative foreign institutional investors (FII) plus weak sentiment is signalling that the short term trend of the domestic market is going to be neutral on Wednesday, .i.e. on June 6, 2018.
L&T Tech (Buy)
Target: Rs 1322
Stoploss: Rs 1293
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Asia stocks edge up as techs lift Wall Street, Italy still a worry
Asian stocks edged up on Wednesday after tech sector strength lifted Wall Street shares, while concerns about Italy’s debt prompted investors to move into lower-risk government debt elsewhere, pushing U.S. Treasury yields down from recent highs.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.1 percent, while Japan's Nikkei .N225 edged down 0.1 percent. Australian stocks rose 0.3 percent.
The Sensex and Nifty ended lower for a third straight session on Tuesday amid caution ahead of the Reserve Bank of India's policy decision, while sentiment was subdued after a survey showed services activity in May shrank for the first time in three months.
The broader Nifty closed down 0.33 per cent or 35.35 points at 10,593.15, while the benchmark BSE Sensex ended 0.31 per cent or 108.68 points lower at 34,903.21. In the broader market, the BSE Midcap index and the BSE Smallcap indices slipped 1.2 per cent and 2.4 per cent, respectively.