Markets cheer RBI's CRR cut

After a flat positive opening, the Indian markets extended their gains following the RBI's mid-quarter credit policy review announcement today. The central bank has cut its key policy rates, CRR, by 50 bps to 5.5% for the first time since Jan 2009. After maintaining a high interest rate regime for a while, the RBI has slashed the CRR to increase liquidity in the markets and boost economic growth. However, it has kept the repo rate unchanged, stating that it will wait till the food inflation and the prices of manufactured goods cool off.

Other Asian shares too continued to trade positively on the hope that the deal between Greek with its private creditors will help the country's debt burden.

The European markets opened on a negative note, with all the European indices down between 0.6-1%.

All the BSE sectoral indices are trading positively with gains between 0.8%-3.12% each. Bankex, Capital Goods and Metals are leading with gains of 3.12%, 2.69% and 1.69% respectively.

Barring a few companies, all the Sensex shares are trading positively. Hindalco Industries, ICICI Bank, L&T, SBI and Tata Power are among the major gainers, leading with gains between 2%-5% each. Among the losers, GAIL India, HUL, Maruti Suzuki and Sun Pharma were all trading down by 0.5%-1.5%.

The market breadth, which indicates the overall health of the market, is positive. On the BSE, 1502 shares rose, 1085 shares fell and 134 shares remained unchanged.

We expect the markets to remain positive for the rest of the day.