Bank and Cap goods pull up Sensex; Nifty near 4900

The markets are comfortably holding on to the 16,000 mark trading at 16,124 at present. The Nifty is also up 45 points at 4893.

Banking shares, as measured by the NSE banking index, gained for the second day after RBI deputy governor said he sees room for interest rate adjustments.

The Bankex has gained 1.5 percent with HDFC Bank up 1.4 percent, State Bank of India up 2.4 percent, ICICI Bank up 1.3 percent and Axis Bank up 1.9 percent.

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However JP Morgan is not sure if it is rate cuts that India needs next. It notes the 10 percent depreciation of the rupee in nominal (NEER) terms over the past three months is equivalent to 100 basis points of rate cuts, calling it “something that should bring pause to those who still believe substantial rate cuts are warranted.”

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The bank adds that easing monetary policy would not necessarily lead to faster growth, saying the “elevated” macro-economic and regulatory uncertainty, as well as supply constraints, are “far more” responsible for the investment slowdown.

The capital goods sector is the highest index gainer today up 2 percent with names like Bhel up 1.9 percent and Crompton Greaves gaining 4 percent.

Reliance Industries, the heavyweight in the index is up 1.23 percent gicing dtrong support to the Sensex.

The biggest losers were Opto Circuits, DLF and HPCL losing between 1 and 1.5 percent. Tata Motors is also down 1.23 percent.

Ridham Desai, managing director, Morgan Stanley feels that the domestic market is likely to do well in the next 12 months. Though most experts are bearish on the market, few of them see dips as buying opportunity.

He told CNBC TV18 in an interview, “Already we are at valuations, which suggest that the market should do quite well in the next twelve months. The probability of course is lower but you cannot rule out events. My own view is that investors should start shopping for stocks. Keep a little bit of ammunition in the gun to fire at if the market decline on a tail risk but I think it is time to shop for stocks.”