Markets shrug off RBI neutral stance; L&T up 1%, NTPC up 3%

Marginal recovery in rate sensitive shares in late trades helped markets recoup intra-day losses to finally end flat even as the Reserve Bank of India at its policy meet early today maintained status quo on key rates.

The 30-share Sensex ended up 12 points at 28,517 while the 50-share Nifty ended nearly unchanged at 8,660.

Meanwhile, foreign institutional investors were net buyers in equities worth Rs 937 crore on Monday, as per provisional stock exchange data.

The Indian rupee was trading lower at 62.37 compared to the previous close of 62.19 to the US dollar after the appreciation of the US currency overseas.

"Even though the street was expecting no change, rate sensitive shares witnessed profit taking while traders who could have possibly taken a contrarian call may have liquidated their positions. The near term resistance for the Nifty is at 8,717 which is the 50DMA. Further, profit taking was also seen in pharma shares which have rallied in the past few sessions," said Alex Mathew, Head-Research, Geojit BNP Paribas Financial Services.

Reserve Bank Governor Raghuram Rajan on Tuesday held repo rate unchanged at 7.5 per cent, as expected. Further, the CRR or cash reserve ratio, which is the amount of deposits lenders must keep with the RBI, was also left unchanged at 4 per cent.

It may be recalled that the RBI Governor Raghuram Rajan had surprised the markets by announcing a cut in the repo rate by 25 basis points to 7.75% on 15 January 2015 and reduction in repo rate by 25 basis points to 7.5% on 4 March 2015.

BSE Realty Index was the top loser down 1.6% followed by Bankex and Healthcare indices. Auto and FMCG indices reversed early losses to end higher while Consumer Durables, Metal and Power indices gained 0.7-2.2% each.

Financial shares ended mixed on concerns of slowdown in incremental credit growth amid high interest rates. HDFC Bank ended up 0.4% while ICICI Bank, Axis Bank and SBI ended down 1-1.7% each.

Shares of housing finance and realty shares were down on worries that home loan growth could take a hit as new home buyers would refrain from housing finance to fund new home purchases. Mortgage lender HDFC ended marginally lower while realty shares such as NBCC, Oberoi Realty, Pheonix, Godrej Property, Unitech, Indiabulls Real Estate, Sobha Developers, DLF, Prestige Estates ended down upto 3% each.

Auto stocks ended mixed on concerns that customers would postpone their vehicle purchases in the wake of high cost of auto loans. Tata Motors and Hero MotoCorp ended down 0.9-1.3% each while M&M gained 2.7% and Bajaj Auto rebounded after a decline in yesterday’s trade on reporting a 22% drop in motorcycle sales at 2,09,937 units in March. The stock ended up 3.4%.

State-run NTPC ended up 3% as the state-owned firm is planning to reduce its coal import bill to 'zero' in the next five years and will rely on the fossil fuel made available by Coal India and the company's own mines.

Buying interest was seen in metal stocks with Sesa Sterlite, Tata Steel and Hindalco up between 2-5% each.

Larsen & Toubro ended up 1% after the engineering major today said its construction arm has bagged orders worth Rs 5,492 crore across various segments in March.

Among other shares, SKS Microfinance surged nearly 9% in an otherwise weak market after the Reserve Bank of India (RBI) raised the borrowing limits relating to total indebtedness of the borrower.

However, the broader markets outperformed the benchmarks after the BSE Mid-cap index gained 0.7% and Small-cap index ended up 1.2%.

The overall breadth of the BSE midcap ended positive as 1,653 stocks are advancing while 1,097 stocks are declining.

Asian stocks which resumed trading today ended higher with shares in China gaining the most with the Shanghai Composite up 2.5% while the Nikkei ended up 1.2%. Among other shares in the region, Straits Times ended up 0.4%.

European shares edged higher, tracking gains on Wall Street, with prospects of merger and acquisitions and hopes that the US Fed won't hike interest rates soon. The CAC-40, DAX and FTSE-100 were up 1-1.4% each.