Sensex snaps 6-day fall, up 248 points on RBI status-quo

The market cheered RBI policy on Wednesday with the Sensex snapping six-day losing streak, rising more than a percent.

The Sensex surged 247.72 points to close at 20,859.86, and the Nifty climbed 78.10 points to 6,217.15, led by rate sensitive stocks.

Reserve Bank of India governor Raghuram Rajan surprised the street by keeping policy rates unchanged on hopes that inflation will fall going ahead.

The consensus was that the central bank would hike repo rate by 25 basis points.

Rajan said there is no room for complacency on the back of high CPI inflation and the central bank will act outside policy if food inflation does not soften. WPI inflation for November was at 7.52 percent and CPI at 11.24 percent.

With the Reserve Bank governor Raghuram Rajan putting action in the 'wait and watch mode', he introduced a certain degree of volatility and uncertainty into the market, Manishi Raychaudhuri, MD & Asian Equity Strategist at BNP Paribas Securities said.

After the RBI policy, now all eyes are on outcome of two-day Federal Reserve meeting that will end tonight. The market is looking for whether the Fed will start scaling back its monthly USD 85 billion fiscal stimulus in December or continue with the stimulus for some more time.

The broader markets also closed one percent higher. Nearly 1500 shares advanced as against 950 shares declined on the BSE.

03:30pm Market Update
The market staged strong performance on Wednesday after the RBI kept policy rates unchanged, saying there is no room for complacency on the back of high CPI inflation and will act outside policy if food inflation does not soften.

The Sensex rose 271.45 points to close at 20,883.59, and the Nifty climbed 78.10 points to 6,217.15 (as per provisional data). About 1487 shares have advanced, 953 shares declined, and 169 shares are unchanged.

BSE Realty Index gained nearly 4 percent followed by Capital Goods, Oil and Gas, Power, Bank and Healthcare indices with 1-3 percent gain.

03:20pm Stocks In News
AIA Engineering up 0.7 percent as the company entered into settlement agreement with MI and paid USD 6 million on December 16 to MI in consideration of the dismissal of the litigation and mutual release from claims among the parties.

Orchid Chemicals surged 20 percent on unconfirmed talks of Hospira looking to buy stake in company. While clarifying the same news, Orchid says it is not looking to sell any stake.

03:15pm Kalindee Rail gains 7%

Texmaco raised stake in Kalindee Rail to 37.33 percent from 24.9 percent via open offer.

Texmaco's open offer for Kalindee Rail was at Rs 71 apiece.

Kalindee Rail Nirman (Engineers) was trading at Rs 68.80, up 6.58 percent while Texmaco Rail and Engineering was up 2.7 percent at Rs 40.

03:10pm Hindustan Zinc in focus
Shares of Hindustan Zinc rose 1 percent to Rs 131.60 apiece on the BSE. Mines ministry has sent revised CCEA note on Hindustan Zinc and Balco stake sale to finance ministry and law ministry for comments, reports CNBC-TV18 quoting sources.

It is learnt that the revised note proposes residual stake sale via auction.

Finance ministry will finalise comments over next one week.

03:05pm CARE Ratings expects RBI to cut repo rates by March

The RBI has surprised the market by not increasing the rates and leaving them unchanged. The premise is that inflation is likely to come down in the coming months. However, it has indicated that it would react in case either inflation increases or the tapering programme in USA causes any need for policy action.

The rating agency says if the inflation comes down over the next 3 months, RBI could lower rates in March and bring the repo to 7.5 percent. Based on today's policy the government-Securities rate would range between 8.6-8.8 percent - the market will wait to take clues from Fed announcements, the agency adds.

03:00pm Lupin up over 1%
Lupin's subsidiary has launched generic Trizivir tablets in US market.

Lupin said it decided to launch Trizivir tablets as US court ruled in favour the company. "We are entitled to 180 days of marketing exclusivity for Trizivir.

Lupin is trading at Rs 891.10, up 1.16 percent on the BSE.

02:50pm Trent on fire
Shares of Trent rallied 9 percent as Tesco is in talks with company to buy stake in Trent hypermarket.

Tesco is seeking a nod to buy around 50 percent stake in the  Trent hyper market joint venture, which would be around a USD 110 million. Abhishek Ranganathan of PhillipCapital India Research sees this JV as a positive for the organised retail sector. He, however, maintains the current earnings estimate on Trent and is waiting for the final approvals before tweaking the estimates.

02:40pm Cabinet likely to consider incentives for sugar mils

The cabinet is likely to consider providing incentives to beleaguered sugar mills next week, Food Minister KV Thomas told reporters on Wednesday.

Farm Minister Sharad Pawar said this month India was considering giving sugar mills as much as USD 1.17 billion in interest-free loans to help them pay cane growers, plus additional incentives to encourage them to produce raw sugar.

Mills started cane crushing almost a month behind schedule citing a freefall in sugar prices and rising rates of cane. The delay has halved country's sugar output so far in the season beginning October, reports Reuters.

02:30pm The market maintained its strong momentum in last hour of trade with the 30-share BSE benchmark holding its 200-point rally after RBI left repo rate unchanged.

The Sensex jumped 244.13 points or 1.18 percent to 20,856.27, and the Nifty soared 77.70 points or 1.27 percent to 6,216.75.

IndusInd Bank , Power Grid Corporation, State Bank of India , Aurobindo Pharma , ICICI Bank and Infosys are the most active shares.

BHEL , Bajaj Auto , Larsen and Toubro , Hero Motocorp , HDFC , DLF , Punjab National Bank and IndusInd Bank are the leading gainers among largecaps while Jindal Steel is the only loser, falling 2 percent.

RBI governor Raghuram Rajan pleasantly surprised the market by keeping key rates unchanged. The consensus was that RBI would hike repo rate by 25 basis points.

The central bank left repo rate unchanged at 7.75 percent and CRR at 4 percent of net demand and time liability (NDTL). Consequently, the reverse repo rate under the liquidity adjustment facility (LAF) will remain unchanged at 6.75 percent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.75 percent.

The statement, however, conveyed the message that this policy is a "closed one" and an action may be taken even on off policy dates if inflation does not behave. "There is merit in waiting for more data to reduce uncertainty," the RBI governor justified.

01:50pm BNP does not expect 6400 on the Nifty

With the Reserve Bank governor Raghuram Rajan putting action in the 'wait and watch mode', he introduced a certain degree of volatility and uncertainty into the market, says Manishi Raychaudhuri, MD & Asian Equity Strategist at BNP Paribas Securities. He says till the next set of data points come through in first half of January; the market would continue to behave this way.

The RBI today kept rates unchanged today . The governor, however, said action may be taken even on off policy dates if inflation does not behave.

With the domestic policy behind us, global factors once again become important. He says the US Federal Reserve wants to make sure of growth certainty before embarking upon the journey of tapering. He feels Fed will begin tapering only in March. But the good news is, whenever Fed may begin tapering, its impact on emerging markets won't be of the same magnitude as seen during the summer. A lot of concerns that were plaguing countries like India and Indonesia do not exist now.

He expects some degree of decline in earnings estimate coming from Indian corporates. He feels this consolidation phase will continue for sometime. He does not see the Nifty going to 6400.

01:40pm Movers and Shakers BHEL , GAIL , Hero Motocorp , Bajaj Auto , Larsen and Toubro , DLF , Punjab National Bank and IndusInd Bank are the top gainers among frontliners, rising 3-5 percent.

However, Jindal Steel is the only loser, falling over a percent on reports that Coal ministry has deallocated JSPL-Monnet Ispat Urtan north block.

Among midcaps, Trent , HDIL , Oriental Bank of Commerce, Allahabad Bank , and Jammu and Kashmir Bank surged 5-9 percent while TTK Prestige , Sun Pharma Advanced Research, Redington , Financial Technologies and India Tourism lost 2-5 percent.

01:30pm Inflation to moderate in December

Inflation will moderate in December, a senior finance ministry official said, as a softening in seasonal vegetable prices is expected to cool food inflation.

"We will see that the prices will have moderated greatly and therefore, the inflation numbers are likely to come down at end of December," Arvind Mayaram told reporters on the sidelines of a G20 conference.

The Reserve Bank of India (RBI) unexpectedly kept the country's policy interest rate on hold on Wednesday, despite calling current inflation too high, citing the prospect of easing retail prices and its concerns about the weak domestic economy.

Headline inflation quickened to 7.52 percent in November, a 14-month high, after food prices rose at the fastest clip since June 2010, reports Reuters.

01:15pm Anant Raj and Brigade Enterprises surge post block deals

Shares of Anant Raj gained 4.5 percent; more than 19 lakh equity shares changed hands at an average price of Rs 52 apiece.

Brigade Enterprises jumped 8 percent after two big block deals. Nearly 33 lakh shares (3 percent equity) exchanged hands at a price of Rs 55-58 apiece.

01:00pm The market cheered status quo policy with the Nifty reclaiming 6200-mark supported by rate sensitive stocks like banks, capital goods.

The Sensex spiked 233.56 points or 1.13 percent to 20,845.70, and the Nifty rallied 75.70 points or 1.23 percent to 6,214.75. Advancing shares outnumbered declining ones by a ratio of 1249 to 825 on the BSE.

Reserve Bank of India surprised the street by keeping key rates unchanged. The central bank says there is no room for complacency on the back of high CPI inflation and will act outside policy if food inflation does not soften.

Forward Markets Commission has asked Jignesh Shah, founder of Financial Technologies, to cut its stake in MCX to 2 percent from the current 26 percent. FMC says it did not satisfy the "fit and proper" criteria to hold a bigger stake in the bourse.

Meanwhile, FMC allowed Blackstone to increase stake in MCX to 5 percent from 2 percent.

MSCI has decided to reduce HDFC Bank's weightage to 5.4 percent as against 7.05 percent that will be effective from January 20. This is after the RBI barring further FII investment in the bank as the investment has breached the 49 percent mark.

12:57pm ICICI Bank 's view on RBI policy

Chanda Kochhar, MD and CEO of ICICI Bank welcomed the RBI move of keeping the policy rates unchanged in view of continued risks to growth and keeping in mind the possibility of softening food inflation and the lagged effect of earlier rate increases.

"The policy also recognises the improvement in India's external balances, while acknowledging the risks of tapering by the US Federal Reserve. In view of the current macro situation, the Reserve Bank of India 's commitment to managing adequate systemic liquidity and its balanced approach to growth and inflation should be seen as positives for economic recovery and stability," she elaborated.

12:47pm Biocon hits 3-year high

Shares of Biocon rallied as much as 5.4 percent to touch three-year high of Rs 414 apiece after the company and Quark Pharmaceuticals collaborated to develop Novel siRNA based therapeutics.

Meanwhile, Morgan Stanley is overweight on the stock and raised target price by 23 percent to Rs 482 apiece, citing improving base business and progression of biosimilar portfolio for global markets.

12:37pm PSU banks outperform private banks

Shares of public sector lenders outperformed the private banks after the RBI decided to keep the policy rates unchanged.

PSU lot - State Bank of India, Allahabad Bank , Bank of Baroda , Bank of India, Canara Bank , IDBI Bank , Indian Bank , IOB , Oriental Bank of Commerce, PNB , Syndicate Bank and Union Bank surged between 3-6 percent.

Private banks like Axis Bank , HDFC Bank , ICICI Bank, YES Bank, Federal Bank , Karur Vysya Bank and Kotak Mahindra Bank gained 1-4 percent.

12:27pm Nomura View on RBI Policy

Though taking a wait-and-see approach by RBI, Nomura believes the RBI is implicitly moving towards CPI inflation as its new nominal anchor; hence, future policy direction will be guided by the outlook on CPI inflation.

The brokerage house also believes that although CPI inflation will moderate from current levels (11.2 percent Y-o-Y in November), it is likely to remain above 9 percent, while core CPI is also likely to remain elevated given the recent rise in rural wages.

Nomura expects cumulative hikes of 50 basis points to the repo rate in H1 2014, taking it to 8.25 percent.

12:17pm Expect food inflation to ease going ahead, says Rangarajan

In an interview to CNBC-TV18 C Rangarajan, Chairman, PMEAC said that Reserve Bank of India's (RBI) priority now is price stability and therefore it is keeping continuous watch on inflation before tweaking rates.

Despite soaring inflation, Raghuram Rajan surprised the market by keeping key rates unchanged today. In its mid-quarter monetary policy meet, the Reserve Bank of India left repo rate unchanged at 7.75 percent and CRR at 4 percent of net demand and time liability (NDTL). ( Read More )

Rangarajan further added that vegetable prices in December have come down sharply and going ahead, it is likely to ease further.

12:07pm Bulls are in a party mood with the Sensex rising 200 points after the RBI governor Raghuram Rajan surprised the street by leaving policy rates unchanged today.

The consensus was that the central bank would raise repo rate by 25 basis points due to higher inflation.

RBI preferred to hold the rates, sighting the expected fall in vegetable prices, Kunal Shah, fund manager - debt at Kotak Mahindra Old Mutual Life Insurance said.

He believes that current below the potential growth rate, good monsoon and government's commitment on fiscal deficit should bring down inflation down in future, if not drastically but to sub-10% levels. "Nonetheless RBI has re-iterated that inflation remains the concern and if headline and core inflation doesn't subside in future RBI will act accordingly, he adds.

The Sensex climbed 205.61 points or 1 percent to 20,817.75, and the Nifty rose 63.30 points or 1.03 percent to 6,202.35. About 1160 shares have advanced, 739 shares declined, and 132 shares are unchanged.

11:50am Market Update
The market maintained its positive momentum. The Sensex rallied 198.53 points or 0.96 percent to 20,810.67, and the Nifty rose 63.50 points or 1.03 percent to 6,202.55.

RBI governor Raghuram Rajan has kept policy rates unchanged today that has surprised the street because experts had expected 25 basis points hike in repo rate.

In its mid-quarter monetary policy meet on wednesday, the Reserve Bank of India left repo rate unchanged at 7.75 percent and CRR at 4 percent of net demand and time liability (NDTL). Consequently, the reverse repo rate under the liquidity adjustment facility (LAF) will remain unchanged at 6.75 percent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.75 percent.

The statement, however, conveyed the message that this policy is a "closed one" and an action may be taken even on off policy dates if inflation does not behave. Speaking to the press soon after the policy announcement, Raghuram Rajan said the policy should not be construed as RBI being soft on inflation.

11:40am Stocks In News
Lupin gained 0.3 percent. US Court said the company's generic version of Trizivir does not infringe any patent. Lupin has already received approval for the drug and is first to file on it. It will be entitled to 180 days exclusivity. The drug is expected to contribute USD 20-25 million in the exclusivity period to the company.

MCX surged 4 percent after Forward Markets Commission allowed Blackstone to increase stake in the company 5 percent from 1.99 percent.

Sun Pharma Advanced Research Company plunged 5 percent after the US Food and Drug Administration did not approve the company's new drug application on Venlafaxine. USFDA has asked for additional studies on efficacy and safety.

Trent shot up 9 percent after a disclosure on exchanges that Tesco will invest USD 110 million in india and is also in talks with to buy stake in Trent hypermarket.

11:30am RBI governor Raghuram Rajan

He says the RBI will wait for more data to take action on policy rates. The central bank will not react to every spike in inflation which is temporary, he adds.

The RBI is better positioned to handle US taper programme, he says. The outcome of two-day meeting will be announced by Federal Reserve today. Experts' opinion are divided over tapering.

11:17am The market rallied more than a percent after the RBI surprised the street by keeping policy rates unchanged in its mid-quarter monetary policy review.

The Sensex advanced 246.07 points to 20,858.21, and the Nifty rose 79.35 points to 6,218.40. About 1081 shares have advanced, 583 shares declined, and 100 shares are unchanged.

Bank Nifty rallied more than 2 percent as RBI kept cash reserve ratio, repo rate, marginal standing facility rate and bank rate unchanged.

It was a surprise for the market as all experts had expected the RBI to hike repo rate at least by 25 basis points due to higher inflation levels.

RBI governor Raghuram Rajan says high level of CPI inflation leaves no room for complacency. Hence, the central bank will act outside policy if food inflation does not soften.

Volatility in global financial markets has receded, but the volatility in financial markets may rise when US taper starts.

Country's largest lenders State Bank of India, ICICI Bank and HDFC Bank gained between 1-3 percent while housing finance company HDFC rose 2.8 percent.

Capital goods majors Larsen and Toubro , and BHEL rallied more than 2 percent while state-run oil & gas explorer ONGC and petrochemical major Reliance Industries climbed 1.7 percent each.

However, ITC , Sesa Sterlite, Tata Motors , Jindal Steel and Wipro are under pressure.

09:45am SBI on RBI's discussion paper on NPAs

Soundara Kumar, deputy MD of  State Bank of India says although these measures could put pressure on banks in their ability to deliver and to recognise non-performing loans, it is a good move by RBI.

The Reserve Bank today proposed a slew of measures, including incentives to lenders for coming together and tackling an account timely and penalising borrowers with higher interest rates in future for not cooperating for a resolution . The RBI discussion paper is open for public comments till January 1.

"It is a positive for the banks. There is going to be a total change of culture, there will be strict discipline. This is something that we really require in the banking system today."

She added that this move will not only require a mindset change but also technology changes. The existing personnel will need to be trained more to recognise the accounts (NPAs) at the stress stage itself. She is confident that the bank if capable of handling the changes needed with the help of existing staff.

However, she emphasises more clarity is required on time line front.

09:30am Market Expert
Market has already factored in a 25 basis points repo rate hike and the Reserve Bank will most likely do just that. But the important thing to watch out for will be the RBI commentary on inflation, says Tirthankar Patnaik, EVP - Institutional Sales, Religare Capital Markets. He expects RBI to maintain its hawkish stance in the near term.

He says for the fiscal year end, repo rate will be 8 percent and the marginal standing facility will be at 9 percent.

Patnaik believes if the US Federal Reserve does not move on taper today, market will resume uptrend. He feels the actual tapering will start only in March.

09:15am The market is volatile in early trade on Wednesday with the Nifty hovering around 6150 level as investors are cautious ahead of announcement of RBI policy.

The Sensex rose 36.34 points to 20,648.48, and the Nifty advanced 11.40 points to 6,150.45.

Shares of Reliance Industries , HDFC, Larsen and Toubro , TCS , State Bank of India and Tata Motors are leading gainers. Pharma stocks continued to see buying interest.

However, the laggards are ICICI Bank , HDFC Bank , ITC , Bharti Airtel and Infosys .

The big event for the day is RBI policy. Every expert on the street expects the central bank to hike repo rate - at which banks borrow money from RBI - by 25 basis points due to disappointment on inflation front.

Citi sees 25 basis points increase in policy rates and expects repo rate to stabilise at 8 percent while JP Morgan says the RBI may also contemplate a 50 bps hike.

Meanwhile, Indian rupee breached the 62-mark against the dollar in early trade. It opened higher by 19 paise at 61.82 as compared to Tuesday's close of 62.01.

According to Pramit Brahmbhatt, CEO of Alpari India, currency markets will be subdued ahead of RBI's policy. However markets are more keenly awaiting Fed's monetary statement, he adds.

"Weak equity-strong dollar internationally and dollar demand at this level will keep rupee subdued. RBI intervention might provide some relief,\\\\\\\\" Brahmbhatt said.

He sees the range for the day between 61.60-62.70/USD.

On the global front, Asian markets are cautious ahead of US Fed's monetary policy outcome tonight, but Nikkei rose more than a percent following strong export data.

US markets ended slightly lower ahead of Fed taper decision and European markets too closed lower.

The much anticipated two-day meeting of the Federal Open Market Committee began on Tuesday. Investors are waiting to see if the Federal Reserve will announce a scaling back of its USD 85 billion monthly bond-buying program. An announcement is expected tonight.