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Sensex, Nifty edge higher after RBI's unconventional rate cut

File photo of Bombay Stock Exchange (BSE) building in Mumbai. Photograph:( Reuters )

Reuters Bengaluru, Karnataka Aug 08, 2019, 10.09 AM (IST)

Indian shares rose marginally on Thursday, tracking gains in broader Asia, after the Reserve Bank of India's (RBI) cut interest rates by an unconventional 35 basis points, highlighting its concerns of a slowing domestic economic growth.

The broader Nifty was up 0.1 per cent at 10,866.75 as of 0407 GMT, while the benchmark BSE Sensex rose 0.11 per cent at 36,741.69.

Asian shares rallied after China limited the fall in the yuan. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.8 per cent.

The RBI repo rate cut to 5.4 per cent on Wednesday also seemed to bring some cheer to investor sentiment in the local markets, which is grappling a slowdown in consumption and a credit squeeze among shadow banks.

"The expected rate cut has happened and there are signs that the regulator is clearing the NBFC (non-banking financial company) mess," said Anand James, chief market strategist at Geojit Financial Services.

"We are coming off global challenges and there are signs of things changing." IT and auto stocks led gains among sectors. 

The Nifty IT index was up about 1 per cent, tracking the stronger dollar, after China's move to set its official yuan midpoint below the key seven to the dollar threshold for the first time since the global financial crisis.

The Nifty auto index was up 0.73 per cent after industry executives met with government officials and sought tax cuts and easier access to funds to revive the ailing sector, which contributes 7 per cent to the country's GDP.

Hero Motocorp rose as much as 5 per cent to 2,629 rupees a share in early trading, its highest in more than five weeks, boosting the index the most.

HCL Technologies shares were also up 3.6 per cent, after the IT services company guided to a constant currency revenue growth of between 14 per cent and 16 per cent for this financial year.

Among losers, Cipla fell 2.8 per cent after the generic drugmaker reported a quarterly profit that missed estimates.
 

Story highlights

The broader Nifty was up 0.1 per cent at 10,866.75 as of 0407 GMT (9.30 am IST), while the benchmark BSE Sensex rose 0.11 per cent at 36,741.69.