Sensex, Nifty Gain For Second Straight Session; Banks Surge Ahead Of RBI Policy Decision

The Indian equity benchmarks gained for second straight session on Wednesday led by gains in rate sensitive banking, financial services, real estate and auto shares a day ahead of the Reserve Bank of India's Monetary Policy Committee decision. The Sensex rose as much as 699 points at the day's highest level and Nifty 50 index touched an intraday high of 17,474.

The Sensex advanced 657 points or 1.14 per cent ro close at 58,465.97 and Nifty 50 index climbed 197 points to end at 17,463.80.

The benchmarks staged a gap up opening in trade and extended gains on the back of a short-covering rally after three days of selloff, analysts said.

"Markets extended yesterday’s rebound and gained over a per cent, following supportive global cues. After the gap-up start, the benchmark hovered in a narrow range in the first half however buying interest in select heavyweights helped the index to regain momentum and close around the day’s high as well.  All eyes are on the outcome of MPC’s monetary policy review meet on Thursday and we expect the committee to maintain the status quo on rates, but may change their stance to neutral. Besides, their commentary on growth and inflation would be crucial. On the index front, a decisive break above 17,550 in Nifty would help the index to inch further higher towards the 17,800 zone else profit taking may resume. Participants should align their positions accordingly," said Ajit Mishra, VP - Research, Religare Broking

“Retail investors continue to maintain optimistic stance on investing on market dips. While, on one hand we are seeing FII outflows on the other hand we are seeing positive flows from domestic investors. This is a very positive change amongst investors, it is always advisable to buy on dips for better rupee-cost averaging resulting in good outcomes in long term. It is also encouraging to see positive flows in dynamic category, as most asset-allocation models are maintaining a good mix of Debt and Equity allocation to benefit from market corrections and increasing equity allocations,” said Akhil Chaturvedi, Chief Business Officer at Motilal Oswal AMC.

The Reserve Bank of India is likely to keep interest rates at record lows on the back of relatively low inflation amid a global surge, according a poll by news agency Reuters. Respondents in a Feb. 2-4 Reuters poll were closely split on the timing of the next rise, with slightly more than half, 17 of 32, expecting 25 basis point rise to 4.25 per cent in April.

Buying was visible across the board as thirteen of 15 sector gauges compiled by the National Stock Exchange ended higher led by the Nifty Auto index's over 2 per cent gain. Nifty Bank, Financial Services, IT, Media, Metal, Private Bank, Healthcare and Consumer Durable indices also rose between 1-2 per cent.

On the other hand, Nifty PSU Bank and Oil & Gas indices closed lower.

Mid- and small-cap shares also witnessed buying interest as Nifty Midcap 100 index rose 1.14 per cent and Nifty Smallcap 100 index rose 0.41 per cent.

Coal India was top Nifty gainer, the stock rose nearly 6 per cent to close at Rs 169. Maruti Suzuki, Indian Oil, Shree Cements, Hindalco, IndusInd Bank, Bajaj Auto, HDFC Bank, Hero MotoCorp, Adani Ports, Cipla and Titan also rose between 1.8-4.2 per cent. 

On the flipside, ONGC, Bharat Petroleum, ITC, SBI Life, Tata Steel, Sun Pharma, HDFC Life and Power Grid were among the notable losers.

The overall market breadth was positive as 1,752 shares ended higher while 1,586 closed lower on the BSE.