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BW Businessworld

Sensex Edges Up; Caution Prevails On RBI's Rate Stance

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The BSE Sensex posted slight gains on 30 January, 2013 as Reliance Industries Ltd recovered from a four-session losing streak, while ICICI Bank Ltd rose a day ahead of its quarterly earnings.

Still, sentiment remained weak even after the Reserve Bank of India lowered its key policy rate on 29 January as the central bank struck a cautious note on further easing, citing concerns about the high current account and fiscal deficits and inflationary risks.

Market participants are now focusing on the government's actions ahead of the budget presentation in late February, while earnings from companies, such as IDFC Ltd this week, will determine the short-term direction of the market.

"On the fiscal side, the government has to definitely act, but on the current account we also need to see what is the action plan," said Vaibhav Sanghavi, Director at Ambit Capital.

"We believe that the government is determined to take actions on reform front and the RBI will also support."

The Sensex rose 0.07 per cent, or 14.10 points, to end at 20,005, closing slightly above the psychologically important 20,000 mark after briefly hitting a two-year high on Tuesday.

The Nifty rose 0.1 per cent, or 5.85 points, to end at 6055.75.

Reliance Industries rose 1.9 per cent on value buying after falling 4.3 percent in the last four trading sessions on concerns that an expected increase in gas prices may be less favourable to private companies.

ICICI Bank gained 1 percent for a fourth day, marking a cumulative gain of 4.1 per cent, as investors bet on good earnings when India's biggest private sector lender unveils results on Thursday.

Axis Bank rose 1.75 per cent, marking a third day of gains, on the back of strong demand in its share sale of up to $1 billion.

Shares in Tata Steel ended 1.8 per cent higher after Citigroup retained its 'buy' rating and raised its target price to Rs 508 from 430, citing "inexpensive" valuations, a bottoming out of earnings in Tata Steel Europe and more resilient volumes than other Indian steelmakers.

Separately, Morgan Stanley added Tata Steel to its regional and emerging markets focus lists, saying the company offers "a good restructuring story" due to its rising capacity, improved sales volumes and the commissioning of a new coke oven battery.

However, among stocks that fell, Steel Authority of India Ltd declined 0.73 per cent after Citigroup downgraded it to 'sell' from 'neutral', citing the recent out-performance in shares.

Crompton Greaves Ltd shares fell 1.34 per cent, after the company reported a loss of Rs 189 crore in the quarter ended December.

Shares in Idea Cellular Ltd ended 0.53 per cent lower after the mobile phone carrier posted a weaker-than-expected October-December net profit.

Morgan Stanley said it could lower EBITDA estimates for Idea in fiscal 2013 by around 4 percent.

The investment bank added Bharti Airtel Ltd could also miss EBITDA estimates for the October-December quarter. Bharti Shares fell 1.4 per cent.