By Bharath Rajeswaran
(Reuters) -Indian shares erased early losses on Friday, helped by financials, after the Reserve Bank of India (RBI) cut lenders’ cash reserve ratio (CRR) by 50 basis points to ease liquidity conditions, while keeping interest rates unchanged.
The NSE Nifty 50 was down 0.05% to 24,696.2 points, as of 11:20 a.m. IST, while the BSE Sensex traded flat at 81,763.25.
The benchmarks were down about 0.3% each after the RBI kept rates unchanged, but before it lowered the CRR to 4%.
“The CRR reduction will release about 1.16 trillion rupees ($13.71 billion) into the banking system and is a big positive for the banking sector specifically and India’s equity markets as a whole,” said Abhishek Goenka, founder and CEO of IFA Global.
The move led to a 0.3% rise in high-weightage financials, which reversed early losses, while public sector banks advanced 1.2% to top sectoral gains.
Other rate-sensitive sectors such as consumer and autos rose about 0.5%, reversing pre-monetary policy decision losses, while the realty index traded flat after logging an early decline.
Axis Bank, ITC and State Bank of India were among the top five Nifty 50 gainers.
The CRR cut will support credit growth in financials and will be positive for sectors such as infrastructure and housing, said Anirudh Garg, partner and fund manager at Invasset Portfolio Management Services (PMS).
The broader, more domestically-focused smallcaps and midcaps rose about 0.4% each on the day.
Among individual stocks, engineering company Rites gained 3.5% after winning an order worth 1.48 billion rupees.
Software company Newgen Software rose 3% after Jefferies maintained “buy” and set a Street-high price target, citing confidence in the company’s growth prospects.
Garden Reach Shipbuilders gained 2% after signing a contract with Naval Physical and Oceanographic Laboratory for the construction and delivery of a ship.
($1 = 84.6080 Indian rupees)
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sonia Cheema)