Sensex Ends 327 Points Higher As RBI Liquidity Measures Cheer Markets

After opening the day on a cautious note, Indian share markets witnessed positive trading activity throughout the session and ended near day's high.

Benchmark indices rose for the seventh straight day after the Reserve Bank of India (RBI) announced liquidity boosting measures.

News on foreign money inflows front also added to gains. Reportedly, Australia's largest investment funds, collectively managing assets of more than Rs 38 trillion on Thursday met the National Investment and Infrastructure Fund (NIIF) to explore investment opportunities in India.

At the closing bell, the BSE Sensex stood higher by 327 points (up 0.8%).

The NSE Nifty closed higher by 80 points (up 0.7%).

ICICI Bank and Axis Bank were among the top gainers today.

The SGX Nifty was trading at 11,950, up by 121 points, at the time of writing.

The BSE Mid Cap index ended down by 0.4%. The BSE Small Cap index ended down by 0.3%.

On the sectoral front, gains were largely seen in the banking sector and finance sector.

Asian stock markets ended on a mixed note. As of the most recent closing prices, the Hang Seng ended down by 0.3% and the Nikkei ended down by 0.1%.

US stock futures are trading higher today, indicating a positive opening for Wall Street indices. Nasdaq Futures are trading up by 33 points (up 0.3%), while Dow Futures are trading up by 109 points (up 0.4%).

The rupee is trading at 73.13 against the US$.

Gold prices are trading up by 0.9% at Rs 50,640 per 10 grams.

Moving on to stock-specific news...

NTPC was among the top buzzing stocks today.

The state-owned power distribution company on Thursday said it has incorporated a subsidiary for its renewable energy business.

"NTPC has incorporated a wholly-owned subsidiary, in the name of NTPC Renewable Energy with the Registrar of Companies, NCT of Delhi & Haryana on October 7, 2020, to undertake renewable energy business," the company said in a BSE filing.

Earlier this year in August, NTPC had received approval from Niti Aayog and the Department of Investment and Public Asset Management to set up a wholly-owned company for its renewable energy business.

Note that the creation of a new subsidiary comes at a time when NTPC is targeting a generation of nearly 30% or 39 gigawatts (GW) of its overall power capacity from renewable energy sources by 2032.

This is also consistent with India's ambitious target of having 175GW clean energy by 2022.

NTPC is planning to have 10GW of solar energy by 2022, which entails an investment of around Rs 500 billion.

NTPC share price ended the day up by 0.7%.

Speaking of the power sector, it is interesting to note that the power exchanged in India is about 4.5% of the overall power production, as can be seen in the chart below:

This is abysmally low by global standards. This shows that there is a big upside in the market share of power exchanges in India.

Moving on to news from the finance sector, financial sector stocks including banks, non-banking financial companies (NBFCs) and housing finance companies witnessed buying interest today after the Reserve Bank of India (RBI) announced liquidity boosting measures.

Shares of LIC Housing Finance, M&M Financial Services, Indiabulls Housing Finance, PNB Housing Finance, HDFC and Repo Home Finance gained in the range of 4-9% in intra-day trade today.

Back in 2018, the RBI had put in place a framework for the co-origination of loans by banks and a category NBFCs for lending to the priority sector, subject to certain conditions.

In today's policy, the central bank decided to extend the scheme to all NBFCs, including HFCs, in respect of all eligible priority sector loans, and allow greater operational flexibility to the lending institutions.

That apart, in recognition of the role of the real estate sector in generating employment and economic activity, the RBI has decided to rationalize the risk weights applicable to individual housing loans, based on the size of the loan as well as the loan-to-value ratio (LTV), and link them to LTV ratios only for all new housing loans sanctioned up to March 31, 2022.

As predicted, the MPC kept rates on hold while keeping policy stance accommodative to help revive the economy out of its worst slump in four decades.

The central bank kept repo rates unchanged at 4% and the reverse repo rate at 3.35%.

The RBI also assured bond markets that it stands ready to take whatever measures are necessary to ensure adequate liquidity in the banking system.