Benchmarks pare initial gains in morning deals

After making a flat opening and showing some upmove, benchmarks have pared their initial gains and slipped into negative territory in morning deals, tracking muted momentum seen in Asian markets. Sentiments got dampened with intensified selling in steel stocks on a report that India's steel consumption grew by 3.4 percent to 5.8 million tonnes in April 2014 over the same month a year ago, however, witnessed a sharp 12.9 percent decline over the preceding month.

Losses on down side remained capped, as markets got some support with Reserve Bank of India (RBI) Governor Raghuram Rajan expressing optimism on India’s growth rate going beyond the 5 percent mark soon.  Rajan has also expressed confidence that whichever government takes over, will lay a clear path to revive growth. Further, Capital inflows by foreign funds and appreciating rupee also soothed the sentiments.

On the global front, the US markets once again turned lower in last session, offsetting the modest gains posted in the previous session. While traders remained concerned about the crisis in Ukraine amid reports of continued clashes between Ukrainian armed forces and pro-Russian militants, there were some weak earnings that pressured the markets. Most of Asian markets were trading in red after the report that China’s services industry expanded at a slower pace in April, also the strength in yen against the dollar was pulling the Japanese market down. Back home, on the sectoral front, Consumer Durables, Capital Goods and Health Care witnessed the maximum gain in trade, while Metal, Bankex and Realty were the top losers on the BSE.

The market breadth on BSE remains positive with advances to declines in the ratio of 631:489. BSE Sensex and NSE Nifty were comfortably trading near their psychological 22,400 and 6,700 levels respectively.

The BSE Sensex is currently trading at 22496.12, down by 12.30 points or 0.05% after trading in a range of 22532.82 and 22458.77.There were 13 stocks advancing against 17 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.37% and Small cap index up by 0.19%.

The top gaining sectoral indices on the BSE were, Consumer Durables up by 1.63%, Capital Goods up by 0.47%, Health Care up by 0.45%, FMCG up by 0.43% and Power up by 0.25%, while Metal down by 0.43%, Bankex down by 0.34% and Realty down by 0.13% were the losers.

The top gainers on the Sensex were Cipla up by 0.78%, BHEL up by 0.73%, ITC up by 0.62%, Sun Pharma up by 0.60% and Gail India up by 0.49%. On the flip side, Hindalco Inds was down by 1.12%, HDFC was down by 0.79%, Axis Bank was down by 0.63%, Bharti Airtel was down by 0.59% and Tata Steel down by 0.54% were the top losers on the Sensex.

Meanwhile, expressing optimism on India's economic growth, the Reserve Bank of India (RBI) Governor Raghuram Rajan has asserted that Indian economy’s growth rate will pick up in the near future. The Governor added that Indian economy, which has been growing at a flat growth rate at around 5 percent over the past two fiscal years will witness beyond 5 percent growth soon.

Reiterating his views that long term economic growth is linked with the curbing inflation, Raghuram Rajan emphasized that stimulating growth and controlling inflation are not opposed to each other. The RBI had already said that prevailing high inflation in the country continue to pose challenge to economic growth over the medium to long term through impacting people savings. Only in case of low and stable inflation level, the monetary policy can contribute significantly to revive consumption and investment in the country.

The Reserve Bank of India (RBI) has raised lending rate three times since September’13 to tame price rise through cooling demand. Although tight monetary stance helped to quell some prices pressure, the apex bank’s move is adversely impacting the country’s economic growth. At present, Indian economy is struggling and its growth has slowed down to a decade low at 4.5 percent in FY13 and 4.6 percent during the first three quarter of FY14. The Central Statistics Office (CSO) has expected that Indian economy to grow at 4.9 percent in FY14.

The CNX Nifty is currently trading at 6,713.25 down by 2.05 points or 0.03% after trading in a range of 6,718.75 and 6,700.75. There were 23 stocks advancing against 27 declines on the index.

The top gainers of the Nifty were Cairn up by 1.34%, HCL Tech up by 1.18%, Lupin up by 1.07%, BPCL up by 0.92% and GAIL up by 0.80%. On the flip side, Hindalco down by 1.26%, HDFC down by 0.82%, Tata Steel down by 0.77%, Jindal Steel down by 0.70% and Axis Bank down by 0.57% were the top losers on the index.

Most of Asian equity indices were trading in red; Shanghai Composite dropped 7.66 points or 0.38% to 2,020.38, Hang Seng slipped 237.96 points or 1.08% to 21,738.37, KLSE Composite contracted by 0.78 points or 0.04% to 1,859.65, Nikkei 225 tumbled by 338.59 points or 2.34% to 14,118.92, Straits Times declined 14.82 points or 0.46% to 3,230.74, Seoul Composite dipped by 18.60 points or 0.95% to 1,940.84 and Taiwan Weighted was down by 24.31 points or 0.27% to 8,888.08.

On the flip side, Jakarta Composite was up by 6.32 points or 0.13% to 4,840.79.