New Delhi: Shares nudged higher on Tuesday, as RBI announced a 50 bps cut in the cash reserve ratio (CRR), the share of deposits banks must maintain with the central bank, leaving other key rates unchanged.
On opening gains were led by energy major Reliance Industries and engineering conglomerate Larsen & Toubro.
The Reserve Bank of India (RBI) said on Monday the growth outlook and business climate have weakened but warned of upward risks to inflation, reinforcing expectations it will keep interest rates on hold.
The main 30-share BSE index was up 0.25% at 16,793.10 by 10:21 am, with half of its components in the green.
The benchmark has gained more than 8% since the start of the new year after sliding a quarter in 2011. Foreign funds, who were net sellers of about $500 million last year, have bought shares worth more than $1 billion this month.
“Even if the RBI cuts the CRR, it will have only sentimental value,” Thunuguntla said.
Beaten-down Reliance Industries rose 1.35% after the company said its up to $2.1 billion buyback would open on 1 February.
Larsen & Toubro rose 1.8% and state-run Bharat Heavy Electricals gained 1.3% on hopes for improved order inflows.
India should implement a bidding procedure for supply of equipment for power projects with 4,000 megawatts capacity, the federal heavy industries minister said on Monday and added bids for large power projects should be “rejigged” to allow domestic gear makers participate in the procedure.
L&T reported a better-than-expected 18% rise in quarterly net profit on Monday, mainly on account of higher treasury income and larger dividend payouts from its units.
Top carmaker Maruti Suzuki fell more than 1%, a day after it posted a 64% drop in quarterly profit, reflecting a slump in vehicle sales and a weaker rupee, which made imports costlier.
The 50-share NSE index was up 0.21% at 5,056,85. In the broader market, there were almost equal number of gainers for every loser, with 135.6 million shares changing hands.
Many Asian markets were closed on Tuesday for the Lunar New Year holidays, but Japan’s Nikkei rose on hopes that a Greek debt deal can still be reached even after European finance ministers rejected an offer by Greece’s private creditors.
Stocks on the move
• Software company KPIT Cummins Infosystems rose nearly 10% after its board approved a 1-for-1 bonus share issue.
• Shree Cement Ltd rose 1.5% after it said quarterly profit more than doubled.