Sensex jumps 362 points on RBI loan recast; Nifty ends at 11\,200

NEW DELHI: The Reserve Bank of India's one-time loan-restructuring announcement and an assurance to take necessary steps to revive the Covid-battered economy gave a boost to the stock market bulls on Thursday even as the central bank decided to keep key interest rates steady.

The RBI in its August monetary policy review maintained status quo on the back of a rise in retail inflation, however, it announced a slew of measures to aid the stressed sectors in the economy.

The 30-share pack Sensex rose over 500 points following RBI outcome but lost some ground in the late trade. The index closed at 38,025, up 362 points. Broader Nifty rose 98 points to 11,200. This jump led m-cap of BSE-listed firms to reclaim Rs 150 lakh crore level, a more than five-month high.

"Markets managed to gain nearly a per cent amid volatility, thanks to supportive global markets and favourable local cues. The bias was upbeat from the beginning and the benchmark extended gains as the day progressed, taking cues from the RBI’s announcements to aid the stressed sectors and further boost the financial system," said Ajit Mishra, VP - Research, Religare Broking.

"The buoyancy in the global markets is helping the index on every dip and this scenario may continue. However, we still feel that it would be difficult for the index to sustain at the higher levels, without the participation from the banking pack thus traders should keep a close eye on the banking index for cues. The major hurdle is intact at 11,350 in the Nifty. Traders should limit their leveraged trades and prefer index majors over the others for short term trading."

— Ajit Mishra, VP - Research, Religare Broking


Banking stocks, which were in focus during the day, ended mixed. Private banks advanced up to 3 per cent while PSU banks were mostly in the red. Shadow banks saw some buying after the RBI's Rs 10,000 crore additional liquidity facility for NBFCs and HFCs.

“Banks are the weakest link in this market because moratorium ends in August and then you go in for restructuring, etc. I think markets initially liked the restructuring. It was expected but I am not so enthused about it because it creates lingering problems for the banking sector and when the economy actually starts recovering, then credit flow becomes an issue,” said Sandip Sabharwal, an independent market analyst.

He believes outperformance will come from other sectors, possibly FMCG companies which are indicating a robust outlook or maybe some select pharma companies. He added that IT stocks are more or less priced in.

Nifty snip 6xAgencies
Nifty top 5 gainers & losers

Investors, however, seem to think otherwise. Nifty IT was the biggest sectoral gainer, up 1.78 per cent, followed by Nifty FMCG that added 1.37 per cent.

Tata Steel was the biggest bluechip gainer, jumping 3.82 per cent to Rs 400.55, riding on higher sales of steelmakers during July. Buying on Tata Steel and other metal stocks took Nifty Metal up 1.37 per cent.

Broader market also saw good demand by investors as 1,579 stocks closed with gains while 1,079 names ended in the red. Over 160 stocks hit their 52-week high levels, most of them from small and micro-cap categories.

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BSE Midcap was up 0.77 per cent, driven by up to 9 per cent gain in Tata Consumer, M&M Financial, Varroc Engineering and Torrent Pharma.

BSE Smallcap climbed 0.99 per cent thanks to 10-19 per cent jump in Aarti Drugs, Birlasoft, Vimta Labs, Astral Poly, SH Kelkar and Hamna Auto.

Manappuram Finance and Muthoot Finance, two industry leaders in loan against gold, saw dramatic movements during the day. Both stocks spiked after the RBI increased loan-to-value ratio but plunged after clarification that this was not valid for NBFCs. Eventually, Manappuram Finance dropped 2.79 per cent and Muthoot Finance tanked 5.38 per cent to Rs 1,189.75.

Investors were not too enthused about the overwhelming response to HDFC QIP that was subscribed four times despite floor price set at a premium. The stock closed up just 0.49 per cent to Rs 1,785.65.

Major Asian markets ended the day in red. MSCI's broadest index of Asia-Pacific shares outside Japan hit an early-session six-and-a-half-month peak but fell back to be flat after drops in China and Hong Kong.

“European stocks edged lower as the Bank of England warned of a slower economic recovery from the Covid-19 crisis and investors digested a raft of earnings. This is despite German industrial orders surged 27.9 per cent month-on-month in June, smashing economists’ expectations for a 10.1 per cent rise, led by strong demand for domestic goods,” said Deepak Jasani, Head of Retail Research at HDFC Securities.

Let’s prepare for tomorrow