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Jan 18, 2015

Stocks This Week: BSE Sensex Zooms 663 points, Nifty 229 points

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RBI Rate Cut pushed stock markets up this week
A surprise rate cut by the apex bank this week provided a big push to the stock markets and sent the key indices soaring to nearly one-and-a-half months high. This week stocks gained were realty, banking, and auto.

The benchmark S&P BSE Sensex gained over 663 points to end at one-and-a-half months high of 28,121.89 points. Similarly, the wide-based CNX Nifty of the NSE crossed 8500-mark for the first time after a month and ended at 8130.80, a gain of 229 points or 2.77 per cent, over the last weekend close.

The RBI on Thursday morning lowered the benchmark repurchase rate (repo) under the liquidity adjustment facility by 25 bps to 7.75 per cent, the first reduction since May 2013, on easing inflation.

On, that day, the BSE Sensex registered its biggest single-day rally in over five years and zoomed a whopping 728.73 points or 2.66 per cent on massive across-the-board buying. Fall in the report rate may provide leeway to banks to cut their lending rates to improve liquidity in hosing and auto-sector, leading to more off-take of money by public and corporate sectors. Soon after the RBI move, clutch of banks lowered their base rates including the biggie SBI, indicated they will follow suit.

Investor wealth reclaimed that Rws100-lakh crore mark for the second time. However, it was for the frist time it remained above that level at close of trading.

During the week, investors got rich by Rs3, 11,737 crore. The BSESensex resumed the week on firm note but fell to a low of 27,203.25 points in the mid-week on drop in the brent crude prices of $45 a barrel, a six year low, amid ebbing hopes of a rate cut after retail inflation slightly rose to 5 per cent in December and Index of Industrial Production (IIP) grew 3.8 per cent in November.

Besides realty, banking and auto shares stocks from capital goods, FMCG, power, consumer durable and IT also attracted good buying interest while metal and refinery counter were at the receiving end. Metal stocks suffered the most following slowdown in Chinese economy. Meanwhile, the trade deficit narrowed to 10 month low in December 2014 on fall in importers while exporter also decline in December 2014 over December 2011.


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