Benchmarks reverse gears; slip into negative territory in absence of positive triggers

Reversing gears, Indian equity markets have now slipped into negative territory on profit booking in frontline line blue-chip stocks in absence of positive triggers which could take the markets higher. The sentiments were distrustful after rupee lost against the dollar, extending weakness for the fourth day, on the back of heavy month-end dollar demand from importers, particularly oil firms. Off day’s low, both Sensex and Nifty were trading above the psychological 24,500 and 7,300 levels respectively, with loss of over 1 /10 of a percent. Meanwhile, foreign institutional investors (FIIs) sold shares worth a net Rs 202.61 crore on Tuesday, also weighed on sentiment. Traders were seen piling up positions in Capital Goods, IT and Teck stocks, while selling was witnessed in Metal, PSU and Auto sector stocks. In scrip specific development, Jet Airways (India) shares plunged as much as 9% after carrier posted its highest-ever annual loss in FY14. Further, the Kotak Mahindra Bank was down by 1.09% after being asked by RBI to cut its promoter holding from 43.58% to 40% by September and 30% by the end of 2016.  The market may remain volatile in the near future ahead of the expiry of futures & options (F&O) May contract on Thursday

On the global front, Asian stocks rose in their early trade after China reported industrial profits. Moreover, US markets closed with solid gains, sending the S&P 500 to a record close for the second straight session on prospects of continued policy accommodation from the world’s central banks. Back home, Apollo Hosp, Bombay Rayon, DCM, Escorts, Godrej Industries, Hero MotoCorp, Havells India, HPCL, Indraprastha Gas, JK Tyre, Karur Vysya Bank, Parsvnath Developers and SAIL will be in focus on account of March quarter earnings announcement. The market breadth on BSE was positive, out of 2293 stocks traded, 1373 stocks advanced, while 842 stocks declined on the BSE.

The BSE Sensex is currently trading at 24511.31 down by 38.20 points or 0.16% after trading in a range of 24643.33 and 24488.81. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.19%, while Small cap index up by 0.71%.

The top gaining sectoral indices on the BSE were, Capital Goods up by 1.19%, IT up by 0.82%, Teck up by 0.74%, Consumer Durables up by 0.10% and Healthcare up by 0.05%, while Metal down by 1.48%, PSU down by 0.94%, Auto down by 0.81%, Oil & Gas down by 0.80% and Realty down by 0.79% were the top losers on the sectoral index.

The top gainers on the Sensex were BHEL up by 2.65%, Hero MotoCorp up by 2.07%, L&T up by 1.61%, Bharti Airtel up by 1.41% and Dr Reddys Lab up by 0.85%. On the flip side, Coal India down by 2.37%, NTPC down by 2.07%, Bajaj Auto down by 1.90%, Mahindra & Mahindra down by 1.89% and Tata Power down by 1.62%.

Meanwhile, Finance Ministry has emphasized that despite some improvement on macro-economic front, it will still remain watchful for the Current Account Deficit (CAD) as well as the rupee because global markets are still volatile.

India’s Current Account Deficit (CAD) narrowed sharply to $1.2 billion, or 0.2 percent of GDP in the January-March quarter of FY14 as compared to $18.1 billion, or 3.6 percent of GDP in the same quarter of previous fiscal. The contraction in CAD was mainly driven by significantly narrowing in trade deficit, coupled with a rise in net invisibles' receipts. While, Indian rupee appreciated to around Rs 58 per dollar due to high foreign capital inflows and improvement in CAD.

Furthermore, newly appointed Finance Minister Arun Jaitley has also hinted at some big decisions in the next two months that will revive investor confidence. Finance Minister said that restoring the pace of growth, containing inflation and fiscal consolidation will remain the key focus area for Finance Ministry.  On the inflation versus growth debate, Finance Minister replied that there should be balancing act between inflation and growth.

The Reserve Bank has raised lending rate three times since September’13 in order to tame price rise through cooling demand. Although tight monetary stance helped to crush some prices pressure, the apex bank’s move is adversely impacting the country’s economic growth. The investment and demand is not showing any sign of recovering owing to the prevailing high interest rates in the economy. Indian economy’s growth is likely to remain at sub-5% level in FY14.

The CNX Nifty is currently trading at 7,307.75 down by 10.25 points or 0.14% after trading in a range of 7,344.75 and 7,302.60. There were 22 stocks advancing against 28 declining on the index.

The top gainers of the Nifty were Ambuja Cements up by 3.05%, BHEL up by 2.75%, HCL Tech up by 2.33%, ACC up by 2.23% and UltraTech Cement up by 1.81%. On the flip side, BPCL down by 2.63%, Coal India down by 2.37%, M&M down by 2.13%, NTPC down by 2.04% and Jindal Steel down by 2.02% were the major losers on the index.

Most of the Asian markets were trading in green; Shanghai Composite gained 0.17%, Hang Seng improved 0.83%, Jakarta Composite strengthened by 0.23%, KLSE Composite rose 0.06%, Nikkei 225 spurted by 0.30%, Straits Times increased by 0.04%, Seoul Composite jumped 0.58% and Taiwan Weighted was up by 0.51%.