Markets Not Affected By CRR Hike

Monday, April 21, 2008 | | |

Across-the-board buying helped the market extend further gains Monday. Metal shares gained momentum, followed by technology shares and capital goods. Second rung stocks also attracted investors.

Banking stocks, which were expected to take a hit on account of the CRR hike, were back in action. An extended weekend and strong global cues helped eclipse the surprise move by RBI.

After market hours on Thursday, the RBI said it would raise the cash reserve ratio, the amount that banks have to park with it, to 8 percent, its highest in almost 7 years to cool inflation from three-year peaks.

"Time would have healed the sting of the CRR move. Investors had a lot of time over the weekend to digest the news, and with overseas markets in a cheerful mood, the market latched onto the positive news," said an analyst with a local brokerage.

At 11:45 am, Bombay Stock Exchange's Sensex was up 1.42 per cent or 234 points at 16,715.22. The index touched a high of 16,778.59 in trade so far.

National Stock Exchange's Nifty advanced 1.47 per cent or 73 points to 5031.10 after rising to a high of 5053.40 so far.

Investors fancied Tier II and III stocks driving the BSE Midcap and Smallcap indices up 1.99 per cent and 2.27 per cent respectively.

Jaiprakash Associates, up 4.28 per cent, topped the list of Sensex gainers. Tata Steel (3.89%), Wipro (2.81%), HDFC Bank (2.76%), Grasim Industries (2.63%), Bharti Airtel (2.58%) and Hindalco Industries (2.31%) were the other gainers.

There were no losers in the 30-share index.

Elswhere in Asia, stocks rose sending the region's benchmark indices to a seven-week high, on speculation credit-market losses in banks may be winding down. Japan's Nikkei climbed 2 per cent, Hong Kong's Hang Seng added 2.49 per cent and Singapore's Straits Times gained 1.94 per cent.