The monetary bazooka fired by the Reserve Bank will keep market spirits alive in the near-term

FPJ News Service mumbai

Financial sector stocks extended their rally on Monday principally driven by the RBI’s promising monetary policy, and the resultant jumbo rate cut.The 30-share BSE Sensex closed 256.22 points higher at 82,445.21. During the day, it climbed 480.01 points to 82,669. The 50-share NSE Nifty surged 100.15 points to 25,103.20.

Reflecting the firm undercurrent, domestic institutions and FIIs bought equities worth Rs 3,504 crore and Rs 1,993 crore, respectively. Kotak Mahindra Bank, Bajaj Finance, Axis Bank, Power Grid, IndusInd Bank, Maruti, Bajaj Finserv and NTPC were the biggest gainers.

“Financial stocks extended their rally in Indian markets, driven by the RBI’s supportive aggressive policy of rate and CRR cut. These actions have boosted investor confidence, and are expected to enhance liquidity in the near to medium term, especially in midcaps. The positive US jobs data and renewed optimism over US-China trade talks lifted global sentiment. Domestically, even large caps expressed renewed momentum led by FIIs inflows,” said Vinod Nair, head of research at Geojit Investments.

According to Manoj Purohit of BDO India, the offshore investor fraternity adopted a vigilant approach this week while investing in the India capital market. The apex bank and the capital market regulator are leaving no stone unturned to bring the foreign market participants at ease while they view India as one amongst the preferred jurisdictions to invest from a long-term perspective.

Recently, the SEBI extended the implementation deadline by six months for key disclosure norms concerning ODIs and FPIs with segregated portfolios to provide additional time for smooth implementation. The repo rate cut and the steps to remove short-term investment limits and concentration limits for investments by FPIs in corporate debt securities attracted investors. The regulations permit investments by FPIs, including investments by related FPIs, up to 50% of any issue of a corporate debt security. This move will surely provide liquidity and penetration to the bond market, and attract Indian-fixed-income instruments to overseas investors.

In Asian markets, Kospi, Japan’s Nikkei 225 index, Shanghai’s SSE Composite index and Hang Seng settled in positive territory.