Benchmarks pare gains tracing muted start of European equities; caution ahead of Q4GDP weighs

Local equity markets have given up most of their gains tracing a muted start of European markets and also on account of growing amount of caution in market-participants ahead of Q4GDP data and RBI’s monetary policy review on Tuesday for outlook on inflation and expectations on the new government's budget. Up with modest gains of close to two tenth of a percent, while Sensex was trading above the crucial 24,250 mark, Nifty was just trading shy of the crucial 7,250 level respectively. Meanwhile, broader indices too mirroring larger peers, trimmed their early gains and were trading with gains in the range of 0.50%-0.80%.

On the global front, European shares got off to sluggish start as investors preferred staying light ahead of next week's crucial European Central Bank policy meeting. Street is expecting of the ECB preparing a package of policy options for its June 5 meeting that includes cuts in all its interest rates.

Back home, while stocks from Realty, Oil & Gas and Healthcare counters are sustaining the uptrend of the markets, those from Banking, Auto and Consumer Durable counters were eating into bourses’ gains. Meanwhile, defence stocks were making merry at Dalal Street as the new government spearheaded by Narendra Modi has swung into action. Stocks like BEL, BEML, Pipavav Defence,  BHEL  and  L&T rallied 3-11 percent intraday on commerce minister has given nod to cabinet note on hiking defence FDI cap. On the flip side, the caution ahead of RBI’s policy next week has kept banking index lower. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1508:1089; while 113 shares remained unchanged.

The BSE Sensex is currently trading at 24278.51, up by 44.36 points or 0.18% after trading in a range of 24,353.59 and 24167.94. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading higher; the BSE Mid cap index was up by 0.49%, while Small cap index up by 0.81%.

The gaining sectoral indices on the BSE were Realty up by 2.31%, Oil & Gas up by 1.45%, Healthcare up by 1.11%, Capital Goods up by 1.10% and FMCG up by 0.93%. While, Bankex down by 0.67%, Auto down by 0.20%, Consumer Durables down by 0.14% and IT down by 0.11% were the losing indices on BSE.   

The top gainers on the Sensex were Hindustan Unilever up by 3.93%, ONGC up by 2.94%, Cipla up by 2.02%, Bharti Airtel up by 1.91% and NTPC up by 1.91%. On the flip side, HDFC down by 2.10%, SBI down by 1.67%, Tata Motors down by 1.18%, Axis Bank down by 1.12% and Wipro down by 0.94%.

Meanwhile, with an aim to cut fuel subsidy bill, Oil Ministry has stated that the monthly diesel price hikes of 40-50 paise a litre are likely to continue till under-recoveries (losses) on diesel are completely wiped out.

Earlier, in January 2013, the Cabinet had decided to increase diesel prices in small proportion monthly, until the difference between the retail price and the cost of production is bridged. Since the Cabinet move last year, diesel prices had raised by a cumulative Rs 8.33 a litre in 14 installments.

Presently, state-owned oil companies such as Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp currently lose Rs 4.41 on every litre of the fuel sold. However, under-recoveries on diesel for companies have been on a declining trend over the past one year due to monthly increase in diesel prices and appreciation in rupee value. If the Indian rupee appreciated to 56 to a dollar, all the losses will be wiped out and the diesel will be automatically deregulated.

Oil Ministry had also stated that the oil subsidy burden for new government will be the lowest since 2011-12. It expects that under-recoveries on sensitive petroleum products would fall 20 percent from Rs 1,39,869 crore during FY14 to Rs 1,11,000 crore in FY15.  The Ministry’s calculations are based on the crude oil prices at $105-108 a barrel and the rupee at about 58/dollar.

The CNX Nifty is currently trading at 7,248.75, up by 13.10 points or 0.18% after trading in a range of 7,272.50 and 7,118.45. There were 33 stocks advancing against 16 declining on the index.

The top gainers of the Nifty were HUL up by 4.18%, ONGC up by 2.91%, Jindal Steel up by 2.39%, CIpla up by 2.16% and Bharti Airtel up by 2.13%. On the flip side, HDFC down by 2.58%, SBI down by 1.67%, Tata Motors down by 1.23%, Axis Bank down by 1.20% and ACC down by 1.00% were the major losers on the index.

Asian equity indices were trading mixed; Shanghai Composite up by 0.02%, Hang Seng advanced 0.17%. While, Jakarta Index declined 1.01%, Straits Times down by 0.04%, Nikkei 225 descended by 0.34%, and Taiwan Weighted slid 0.36%.

European markets got off to a muted start; with Germany’s DAX  down by 0.01% and  France’s CAC 40 down by 0.02%, while FTSE 100 up by 0.22%.