Markets trade higher after RBI announces measures to inject liquidity in banking system

28 Jan 2025 Evaluate

Indian benchmark indices made a positive start on Tuesday after two straight sessions of losses. Sensex and Nifty are trading higher with decent gains in early deals led by buying in Bankex and IT stocks. Some support came as India's central bank announced a host of measures to inject liquidity in the banking system, including bond purchases and dollar/rupee swaps. The Reserve Bank of India will buy government bonds worth Rs 60,000 crore ($6.96 billion) in three tranches and conduct a 56-day variable rate repo auction worth Rs 50,000 crore on February 7. However, upside remained capped as a cautious undertone prevailed amid concerns that the emergence of a low-cost Chinese artificial intelligence model and tariff worries after U.S. President Donald Trump said he'll soon impose tariffs on foreign-produced semiconductors. 

On the global front, Asian markets are trading mixed, following the mixed cues from Wall Street overnight, as traders are reluctant to make any significant moves with most of the major markets in the region are closed for Lunar New Year holidays. There has been a sell-off in the tech shares after China's low-cost startup DeepSeek's AI Assistant overtook rival ChatGPT to become the top-rated free application available on Apple's App Store in the U.S., sparking fears that U.S. AI leaders could lose their dominance. Markets in China, South Korea, Taiwan and Indonesia are closed for the Lunar New Year holidays.

Back home, aircraft MRO industry stocks came in limelight after ratings agency Crisil said the Indian aircraft maintenance, repair and overhaul (MRO) industry is expected to see a 50 per cent topline growth to Rs 4,500 crore in FY26 amid fresh demand triggered by airline operators’ expanding fleet size. In stock specific development, Union Bank of India traded higher on posting a Q3 net profit of Rs 460 crore, up from Rs 359 crore Y-o-Y.

The BSE Sensex is currently trading at 75681.40, up by 315.23 points or 0.42% after trading in a range of 75622.88 and 75847.91. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 1.19%, while Small cap index was down by 2.56%.

The few gaining sectoral indices on the BSE were Bankex up by 0.91%, IT up by 0.62% and TECK up by 0.56%, while Healthcare down by 2.49%, Industrials down by 2.11%, Power down by 1.89%, Capital Goods down by 1.75% and Utilities down by 1.75% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 2.00%, Infosys up by 1.89%, Axis Bank up by 1.78%, Bajaj Finance up by 1.64% and HDFC Bank up by 1.37%. On the flip side, Sun Pharma down by 3.90%, NTPC down by 2.17%, Ultratech Cement down by 1.39%, Power Grid down by 1.32% and Mahindra & Mahindra down by 1.08% were the top losers.

Meanwhile, in order to inject liquidity into the banking system, the Reserve Bank of India (RBI) has said that it will purchase government securities worth Rs 60,000 crore in three tranches and announced several steps. As part of measures to manage liquidity conditions, the central bank also announced a USD/INR Buy/Sell Swap auction of $5 billion for tenor of six months to be held on January 31, 2025.

To inject liquidity, the RBI said open market operations (OMO) purchase auctions of Government of India securities for an aggregate amount of Rs 60,000 crore in three tranches of Rs 20,000 crore each to be held on January 30, 2025, February 13, 2025, and February 20, 2025.

Besides, 56-day Variable Rate Repo (VRR) auction for a notified amount of Rs 50,000 crore to be held on February 7, 2025. It said ‘The Reserve Bank will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions.’

The CNX Nifty is currently trading at 22877.90, up by 48.75 points or 0.21% after trading in a range of 22874.75 and 22973.45. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Infosys up by 2.06%, ICICI Bank up by 1.80%, Axis Bank up by 1.80%, Bajaj Finance up by 1.64% and HDFC Bank up by 1.57%. On the flip side, Sun Pharma down by 4.34%, Hindalco down by 2.60%, NTPC down by 2.56%, Dr. Reddy's Lab down by 2.41% and Cipla down by 1.78% were the top losers.

Asian markets are trading mostly in red; Hang Seng rose 40.22 points or 0.2% to 20,237.99 and Straits Times was up by 14.55 points or 0.38% to 3,811.26, while Nikkei 225 slipped 402.99 points or 1.02% to 39,162.81.


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