Riding on the back of the postponement of General Anti Avoidance Rules (GAAR) by two years and in the hopes of reduction in key interest rates like repo rate by the RBI, the BSE benchmark index Sensex has jumped the psychological barrier of 20,000 points, when it opened today. The market closed at 19,986 points up by 80 points.
“The upward trend in the market is going to be there for the next 4-5 weeks. If RBI
does not bring down the key interest rates, even then also the market will not be impacted much. There could be some corrections for one or two days,” said Anurag Vishnoi, Equity Research Head, Trustline Commodities, told this citizen journalist
The market is expecting that RBI will bring down the key interest rate i.e. repo rate during its January 29 meeting as the wholesale inflation the major cause of higher rates has seen some significant reduction.
The pro-market action by the RBI will reduce the borrowing cost for businesses and help revive economic growth that has slowed to its lowest in nearly a decade.
Apart from this the Sensex also got bullish due to gains in software and automobile stocks. The index had last traded above this level on January 7, 2011. After closing of the market on Monday India's largest software firm Tata Consultancy Services (TCS
) posted a better-than-expected 23% increase in its October-December net profit. The company also said that it was set to exceed its revenue growth target.
Automobile shares were also higher on bargain buying and in the hopes of a brisk business
during the year as there are growing chances that the central bank will bring down the borrowing charges that in turn will encourage people to buy new vehicles.