Sensex closes above 60k, Nifty tops 17,800

Benchmark indices ended higher on Friday, led by IT stocks.

Market opened on a positive note, thanks to strong global cues. Indices edged up further during the day after the Monetary Policy Committee of the Reserve Bank of India chose to maintain a status quo on key rates. Gains were also sustained by heavyweights such as Reliance along with PSU Bank and Oil & Gas stocks. The volatility index softened 3.11 per cent to close below 16 at 15.65.

After recording an intraday high of 60,212.3, the BSE Sensex at closed 60,059.06, up 381.23 points or 0.64 per cent. It recorded an intraday low of 59,830.93. The Nifty 50 which narrowly missed the 18,000-mark with an intraday high of 17,941.85, closed at 17,895.20, up 104.85 points or 0.59 per cent. It hit an intraday low of 17,840.35

Breadth remains positive

The market breadth remained positive with as many as 1,847 stocks advancing on the BSE, as compared to 1,458 stocks that were declined while 148 remained unchanged. Furthermore, 414 stocks hit the upper circuit as compared to the 140 stocks that were locked in the lower circuit. Besides, 315 stocks touched a 52-week high level and 11 touched a 52-week low.

S Ranganathan, Head of Research at LKP securities said, "With the RBI continuing with its accommodative policy, Indices remained firmly bullish through the day led by the IT Index as the street awaits TCS earnings and guidance. Reliance led from the front today with the broader markets seeing action across pockets like exchanges and select Midcap names. State-run Banks were sought after today in afternoon trade ahead of a Press Conference by the Civil Aviation Ministry."

IT stocks gained further ahead of Q2 FY 2022 results. Tata Consultancy Services will be the first major company to announce Q2 results today.

Reliance, Wipro, Infosys, Tata Motors and Tech Mahindra were the top gainers on the Nifty 50 while Coal India, SBI Life, NTPC, Maruti and Shree Cement were the top losers.

RBI maintains status quo

The RBI decided to maintain the status co as repo rate stands at 4 per cent and the reverse repo rate at 3.35 per cent. Amidst uneven growth recovery and concerns over a spike in inflation, it also continued with its accommodative stance to support growth.

“The MPC voted unanimously to maintain status-quo about policy repo rate and by a majority of 5:1 to maintain the accommodative stance,” said RBI Governor Shaktikanta Das, who chairs the MPC, adding that the stance remains accommodative to revive and maintain growth.

According to Nilesh Shah, Group President & MD, Kotak Mahindra Asset Management Company, the RBI policy is mean to achieve multiple objectives.

“Keep Growth Supported, Inflationary expectations under check, Financial Markets stable, Liquidity adequate and appropriate, Yield curve in shape and ensure smooth passage of Govt s borrowing Program. They have reassured the markets that monetarily policy normalisation will be gradual and calibrated,” said Shah.

Churchil Bhatt, EVP Debt Investments, Kotak Mahindra Life Insurance Company Limited, said, “The MPC decided to persist with its accommodative policy stance and opted for a “resolute pause” in Policy Rates to provide support to “durable growth” with a firm footing. While the MPC retained its FY2022 GDP growth forecast at 9.5 per cent, it revised its FY2022 projection lower by 40 bps to 5.3 per cent on the back of lower food inflation.”

Well received by the market

According to experts, market has reacted well to the announcement as no curveballs were thrown this session.

Jimeet Modi, Founder and CEO Samco Group, said that RBI’s strategy going forward is likely to be “a classic textbook one” with liquidity management, the first check on their agenda, followed by a hike in reverse repo.

“The liquidity VRRR auction calendar till December is a welcome move which definitely gives further clarity on the liquidity tapering front. If the Fed’s stance in Nov goes as expected, then December could be the time the RBI finally begins to reduce the gap between the repo and reverse repo rates. In sum and substance, these times policy didn’t throw any curveballs, hence was well received by the market,” said Modi.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, "Some initiatives to absorb the surplus liquidity in the system have been well received by the money market which has pushed up the 10-year yield to 6.3 per cent. In brief, no hawkish message from the central bank: Policy will support growth; inflation will be under control."

Rahul Sharma, Co-Founder, Equity99 on RBI's Policy Announcement said, “We expect the policy will be benefited for market and Banks will show good performance also NBFC stocks will perform as RBI has been decided to introduce the Internal Ombudsman Scheme to further strengthening the internal grievance redress mechanism of NBFCs.”

According to Naveen Kulkarni, Chief Investment Officer, Axis Securities, the backdrop of low-interest rates amidst the festive season will push consumption in housing and its ancillary sectors.

FMCG, Realty down on profit-booking

On the sectoral front, IT, PSU Bank and Oil & Gas recorded higher gains, Realty, FMCG, Pharma and financial services dragged on profit-booking.

Nifty IT closed 1.96 per cent higher while Nifty PSU Bank was up 1.65 per cent. Nifty Oil & Gas was up 0.81 per cent while Nifty Auto was up 0.43 per cent.

Meanwhile, Nifty Realty was down 2.21 per cent. Nifty FMCG was down 0.58 per cent. Nifty Pharma and Nifty Healthcare Index were down 0.33 per cent and 0.37 per cent. Nifty Financial Services was down 0.34 per cent.

Broader indices

Broader indices also closed in the green.

Nifty Midcap 50 was up 0.45 per cent at closing while Nifty Smallcap 50 was up 2.02 per cent. The S&P BSE Midcap was up 0.15 per cent while the S&P BSE Smallcap was up 0.83 per cent.