Sensex ends in green; bank bill hopes outweigh RBI move

The BSE Sensex rose on Tuesday led by lenders such as State Bank of India, as hopes parliament will pass the banking amendment bill outweighed disappointment after the Reserve Bank of India kept interest rates and the cash reserve ratio unchanged.

State Bank of India rose 1.21 percent, after falling as much as 2.8 percent earlier in the day, while ICICI Bank ended up 0.4 percent.

The Nifty recovered from day's lows to close in the green at around 5900 and the Sensex too was up 120 points, ending the day at 19,364. Markets analysts are watching whether the government is going to continue with the reforms momentum.

On the economic front, the RBI today decided to keep repo rate unchanged at 8 percent, in-line with expectations. And contrary to the expectations, the central bank also decided to maintain the cash reserve ratio unchanged at 4.25 per cent. However, in its mid-quarter monetary policy review, the RBI signalled a pro-growth stance.

In what comes as big disappointment for the government as well as Vedanta's Anil Agarwal, sources indicate that the law ministry is against divestment of the government's residual stake in Hindustan Zinc under the Metal Corporation Act of 1976.

In stock specific action, Bharti Airtel was the top gainer today it rose more than 4.23% followed by BHEL which was up 4.14%.

Tata Steel saw an upmove of 3.76%. Hindalco and Sun Pharma also made it to the gainers list-up more than 2 percent.

Maruti Suzuki was the major loser on the Sensex; it slipped 1.64%. ONGC, Bajaj Auto, Reliance and HDFC Bank were the other losers.

In some key global news, China's foreign direct investment inflows fell 3.6 percent in the first eleven months of 2012 from a year earlier. China drew USD 100.0 billion in FDI between January and November. Inflow for November alone also down 5.4 percent on year-ago levels at USD 8.3 billion.

The differences over fiscal cliff resolution narrowed significantly last night. According to sources president Barack Obama made a counter-offer to republicans proposing leaving lower tax rates in place for everyone except those earning USD 400,000 and above... That's up from the USD 250,000 threshold the president was demanding earlier. However Obama's offer is still far from republican proposal of USD 1 million cut off.

The NSE benchmark surpassed the 5900 level due to support from banks, capital goods, metals and technology stocks.

The 30-share BSE Sensex rose 105.73 points to 19,350.15 and the 50-share NSE Nifty was up 35.70 points to 5,893.60.

Steel producer Tata Steel and state-controlled power equipment maker BHEL extended gains to 4 percent.

Top telecom operator Bharti Airtel too rallied 4 percent on short covering.

Housing finance company HDFC, engineering conglomerate Larsen & Toubro, commercial vehicle maker Tata Motors and country's largest lender State Bank of India were up 1.25 percent each.

Drug producer Sun Pharma and aluminium major HIndalco Industries climbed 2.5 percent each.

Software sevices exporters TCS and Infosys moved up 0.33 percent while their rival Wipro gained 1.4 percent.

Meanwhile, private sector lender HDFC Bank, cigarette major ITC and private oil & gas producer Reliance Industries were down 0.4 percent each.

Top car maker Maruti Suzuki dropped nearly 2 percent.

Indian equity benchmarks recouped losses in afternoon trade, helped by recovery in banks on hopes of rate cut in next policy meet of RBI that is scheduled for January 29.

The 30-share BSE Sensex was up 122.38 points to 19,366.80 while the 50-share NSE Nifty rose 34.70 points to 5,892.60.

Country's largest lender State Bank of India, which fell more than 1.5 percent immediately after RBI policy, trimmed its losses on hopes of repo rate cut in next policy meet.

Today the Reserve Bank of India kept the policy rates and cash reserve ratio unchanged, citing risks to inflation remain. The bank feels inflation may edge higher over next two months.

Experts expect repo rate easing in the next few quarters.

''RBI acknowledges that growth remains significantly below its recent trend along with the fact that WPI inflation also has been moderating at a pace faster than anticipated. Easing of commodity prices such as crude would also help lower inflationary pressures unless there is some surprise on the currency front. The current status quo only strengthens our view that we would see repo rate easing in the next few quarters," Lakshmi Iyer, Senior Vice President and Head, Fixed Income at Kotak Mutual Fund said.

Meanwhile, private sector lenders ICICI Bank and HDFC Bank were marginally lower.

Telecom operator Bharti Airtel topped the buying list, rising nearly 4 percent. Capital goods majors Larsen & Toubro and BHEL gained 1.6 percent and 3 percent, respectively.

Among metals stocks, Tata Steel, Sterlite Industries, Hindalco and Jindal Steel were up 1.7-2.5 percent. Healthcare shares like Cipla and Sun Pharma went up 1.8-2.4 percent.

Housing finance company HDFC was up 1 percent while commercial vehicle maker Tata Motors and utility vehicle major M&M rose 1.5 percent each.

Oil & gas producers Reliance Industries and ONGC declined 0.16 percent and 0.5 percent, respectively.

Equity benchmarks witnessing caution ahead of the Reserve Bank of India's (RBI) policy review, swiftly turned red after the rates were left unchanged. Bank Nifty fell 1.5% and bond yields hardened by 0.33% following RBI's `no-action' mode.  However, it recouped its losses soon after to trade almost flat.

A CNBC-TV18 poll showed majority of the participants were betting in favour of a CRR cut after November inflation showed a decline. Major banking stocks like HDFC Bank, SBI,  ICICI Bank and Axis Bank were trading with 1%, 2.20%, 1.70% and 2.33% cuts. Experts said bond yields may go down to sub 8% yields by Budget, if all other parametres remain constant.

At 11.03 am the Sensex was down 58.75 points or 0.31% at 19185.67, and the Nifty was down 22.30 points or 0.38% at 5835.60.

Meanwhile, Tata Motors gained 1.9 percent, up for a fourth day, after stronger-than-expected November sales at Jaguar Land Rover (JLR) reduced concerns about the outlook for the key unit of the Indian auto maker.

Sun Pharmaceutical Industries gained 2 percent after it said on Monday Caraco Pharmaceutical Laboratories (Caraco), its wholly-owned subsidiary, has acquired URL generic business from Takeda Pharmaceutical Company.

S. Korea's Doosan Heavy Industries & Construction Co Ltd said on Tuesday it won a 600 billion order from NTPC Ltd to provide two boilers for use at a power plant in Chhattisgarh, India. The stock was trading up 0.49%.

Key equity indices were up slightly ahead of the Reserve Bank of India monetary policy review. It is widely expected that the central bank will keep policy rates unchanged and cut cash reserve ratio by 25 basis points to ease liquidity in the system.

The Sensex was up 66 points at 19,310 and the Nifty was up 18 points at 5876.

There was not much activity in small and midcap shares in early trade.

Brokers said the market is consolidating its gains, and that near term outlook remains positive on hopes that the government will be able to keep up the pace of reforms.

Jet Airways and BHEL figure among the key gainers, up around 2 percent each. JP Power was the top loser, down 6 percent. Other laggards included IPCA Lab, Oriental Bank, Union Bank and IRB Infra, all down about 1 percent each.

In sectorwise trends, capital goods and realty shares were the outperformers in early trade, while banking and IT shares lagged.

After a flat close yesterday, Indian equity markets have opened on a quiet note, though appear steady. At 09.27 am the Sensex was up 62.08 points or 0.32% at 19306.50, and the Nifty was up 16.05 points or 0.27% at 5873.95.

The market seems to have priced in a CRR cut, which the Reserve Bank is expected to announce in its monetray policy review in a few hours from now.  Udayan Mukherjee, managing editor of CNBC-TV18 said expectations are not very high. "A CRR cut, modest one, has been priced in. A repo rate cut is certainly not priced in," he said.

Top gainers on the Sensex were BHEL, up 1.90%, Sun Pharma (up 1.70%), Mahindra and Mahindra (1.24%).

Top losers include Wipro, Maruti, HDFC Bank with 0.5%, 0.44% and 0.13% cut respectively. Midcap and Smallcap indices were trading in the green.