Sensex Hits 32,000 For First Time Amid Hopes Of RBI Rate Cut

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Sensex Hits 32,000 For First Time Amid Hopes Of RBI Rate Cut

Posted on : Thursday 13th of July 2017

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Indian shares extended their record-breaking rally on Thursday after strong macroeconomic data opened opportunity for the Reserve Bank of India to cut the benchmark interest rate in its next policy meeting. The Sensex surged over 200 points to trade above the 32,000 mark for the first time while the National Stock Exchange (NSE) benchmark Nifty added over 65 points to 9,881, a day after government data showed that inflation for the month of June fell to a record low of 1.54 per cent.

This is the lowest level of inflation since the series began in 2012 and also below the RBI's medium-term target of 4.0 per cent for an eighth successive month.

"The last time we saw such inflation - according to a slightly different CPI series (IW) - was in 1999 and before that in August 1978," Chief Economic Advisor Arvind Subramanian said in a statement.

Gains in the market were led by banking shares, which rallied on hopes of a possible rate cut by the Reserve Bank of India in its policy meet next month. "Given the current inflation trajectory we reiterate our call of a 25 basis points rate cut in August policy," said Shubhada Rao, chief economist at Yes Bank.

The Banking sub-index of Nifty, Nifty Bank gained 0.62 per cent. ICICI Bank, Axis Bank, Yes Bank were the prominent gainers in the banking index, rising between 0.8-1.6 per cent.

Other than banking, FMCG, pharma and IT shares also witnessed buying with their respective sectoral indices rising between 0.6 per cent and 1.1 per cent.

Among Nifty stocks, ICICI Bank was the top gainer, up 2.10 per cent, followed by Indiabulls Housing Finance, ITC, Axis Bank and L&T - up between 1.2 per cent and 1.8 per cent. Out of the 51 stocks in Nifty, 44 shares advanced while 7 shares declined.

Meanwhile, other Asian shares scaled to a two-year high on Thursday as investors wagered policy tightening in the United States would be glacial at best, lifting Wall Street to record peaks and lowering bond yields almost everywhere. MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.2 per cent to its highest since May 2015.

As of 9.40 am, Sensex was up 205 points or 0.64 per cent at 32,010.04 and the Nifty traded 59.15 points or 0.60 per cent higher at 9,875.25.

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