Sensex rebounds, RBI slows down rate hike, Adani Enterprises rise 19%

Mumbai: Benchmark Sensex rebounded 377 points while Nifty closed above the 17,850 level on buying in IT, financial and oil stocks after the RBI slowed down the pace of interest rate hikes on Wednesday.

Ending its two-day slide, the 30-share BSE Sensex rose by 377.75 points or 0.63 per cent to close at 60,663.79 with 24 of its constituents posting gains.

The broader Nifty of the NSE spurted by 150.20 points or 0.85 per cent to settle at 17,871.70, riding on a rally in Adani Enterprises, Adani Ports and HDFC Life. The index opened higher and gained further to test the crucial hurdle at 17,900 in the day. Buying in index majors Reliance Industries, Infosys and TCS played a key role in the rebound.

Vinod Nair, Head of Research at Geojit Financial Services said, "Bulls took charge of the markets as the RBI’s MPC meeting delivered a smaller rate hike in line with market expectations. The RBI has taken a more optimistic view on domestic growth by increasing the GDP forecast while cautiously keeping CPI inflation at 5.3 per cent for FY24".

US Federal Reserve chair Jerome Powell signalling that a strong jobs report would not by itself sway its stance on interest rate hikes also eased concerns over a sharp increase in interest rates.

Among Sensex stocks, Bajaj Finance rose the most by 3.14 per cent. Ultratech Cement, Reliance Industries, Infosys, Wipro, HCL Tech, TCS, Bajaj Finserve, Tata Motors, Tech Mahindra, Titan and Maruti were among the major gainers.

L&T declined the most by 1.62 per cent, followed by Bharti Airtel, Axis Bank, Kotak Bank and Hindustan Unilever.

Shares of most of Adani group companies, hit by allegations of stock manipulation and accounting fraud by a US short seller, rallied after rating agencies allayed fears over debt taken by the group entities.

Adani Enterprises rallied for a second day, closing sharply higher by 19.76 per cent after hitting the upper circuit limit.

Adani Ports & SEZ also rose for the second day gaining 8.34 per cent. Adani Transmission rebounded by 5 per cent, Adani Wilmar by 4.99 per cent, and Adani Power by 4.99 per cent. However, Adani Green and Adani Total Gas closed lower by over 4 per cent.

Meanwhile, the Reserve Bank of India slowed the pace of interest-rate increases for the second straight time when it on Wednesday expectedly increased borrowing costs by 25 basis points.

The RBI also projected retail inflation to ease to 5.3 per cent in the next fiscal from 6.5 per cent this year on assumptions of lower imported inflation. It also upped its GDP growth estimate to 7 per cent from 6.8 per cent for FY23 and pegged the growth at 6.4 per cent for the next fiscal.

Industry experts said that the 25 basis points hike in key policy rate was in line with expectations, and hopefully is the last in the current cycle of the rate increase, which started in May 2022 in view of rising inflation.

Madan Sabnavis, Chief Economist, Bank of Baroda, said the major takeaway is that there will be a prolonged pause for sure before any further action is taken by the RBI and will be data-driven.

Ajit Mishra, VP - Technical Research, Religare Broking Ltd said, "Markets resumed recovery after two days of subdued move and gained nearly a per cent, supported by upbeat global cues".

In the broader market, BSE Midcap spurted by 245 points or 1 per cent while the Smallcap advanced 0.76 per cent or 212.88 points.

Among sectoral indices, BSE Commodities rose by 2.28 per cent, BSE IT by 1.51 per cent, BSE Healthcare by 1.2 per cent, BSE Metal by 1.04 per cent, and BSE Teck by 1.09 per cent. Among losers, Telecom declined by 0.43 per cent and Capital Goods by 0.33 per cent.

Shares were mixed in Asia on Wednesday after US stocks rallied following comments by the Federal Reserve chair.

Hong Kong, Sydney and Seoul rose while Tokyo and Shanghai declined. US futures edged lower while oil prices were little changed.

Foreign Institutional Investors (FIIs) were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 2,559.96 crore, according to exchange data.