Market gains on RBI’s nod for housing projects
Sensex which shot up to an 11 month high shrugged off the trade deficit data for June
Mumbai: The equity markets extended their gains for the second consecutive day following fresh buying in infrastructure, banking and realty sector stocks after the RBI on Tuesday allowed banks to issue long term bonds to finance infrastructure projects without providing for minimum regulatory reserve requirements.
Additionally, the central bank has also decided to give infrastructure status for affordable housing projects.
The Sensex soared 321.07 points or 1.27 per cent to end the trading session at 25,549.72 while the Nifty closed the day at 7,624.40, gaining 97.75 points or 1.30 per cent. Among the BSE sectoral indices, the realty index was the biggest gainer of the day up 4.28 per cent followed by banking index, which gained 2.50 per cent.
According to India Forex Advisors, the latest move by the RBI would reduce the cost of funds for the banks, as they will not have to set aside funds for reserve requirements. “As, banks cost of funds will reduce, they can pass this benefit to customers. So cost of loans for the housing sector may reduce,” it said.
The Sensex which shot up to an 11 month high shrugged off the trade deficit data for June 2014 released during market hours.
“The trade data was only marginally negative. Following RBI’s move, we saw a lot of institutional buying in infrastructure, realty and banking sector stocks,” said Alex Mathew, head of research, Geojit BNP Paribas Financial Services. The provisional data from the stock exchange showed that overseas investors purchased shares worth Rs 621.68 crore on Wednesday.