Benchmarks move in green territory after RBI keeps policy rates unchanged

Indian equity benchmarks pared losses and were trading marginally in green in afternoon session after the RBI at its bi-monthly policy today kept key policy rates unchanged and reduced the statutory liquidity ratio by 50 basis points to 22.5%. Further, firm Asian cues coupled with strong economic data at the domestic front have provided support to the major indices. Sentiments also got some support as the output growth of eight core industries grew by 4.2% in the month of April on yoy basis as compared to 2.5% in March, indicating that the demand in country is increasing. Though, most of the major indices were trading in green, there was considerable weakness in defensive sector stocks such as FMCG, IT and teck. Metal and realty indices were the star-performers and were trading up 2.28% and 1.07%, respectively followed by capital goods up by around 0.70%. Further, shares of companies having insurance subsidiaries have surged amid hopes that govt would hike FDI limit in insurance sector from 26% to 49%. Reliance Capital has surged around 2.2% to Rs 594.2 and Max India has jumped around 2.7% to Rs 547, among others.

Spice Jet has edged around 2.5% higher to Rs 18.30 following a promotional offer launched on select routes. The reduction of jet fuel prices also helped sentiments. Zee Entertainment has soared by nearlly 3.30% to Rs 275 after RBI allowed up to 100% FII investment in the company as compared to 49% earlier.

On global front, Asian equity indices were trading in green with Hang Seng up by 0.66% and  Taiwan Weighted up by 0.52% as China's HSBC Manufacturing Index rose to a four-month high. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 7,350 and 24,500 levels respectively. The market breadth on BSE was positive, out of 2,571 stocks traded, 1,470 stocks advanced, while 1,017 stocks declined on the BSE.

The BSE Sensex is currently trading at 24,713.96 up by 29.11 points or 0.12% after trading in a range of 24,795.31 and 24,626.97. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading up; the BSE Mid cap index was up by 0.44%, while Small cap index up by 0.47%.

The gaining sectoral indices on the BSE were Metals up by 2.28%, Realty up by 1.07%, Capital Goods up by 0.71%, Consumer Durables up by 0.56% and Oil and Gas up by 0.45%. While, FMCG down by 1.06%, IT down by 0.63%, Tech down by 0.44%, Healthcare down by 0.17% and Infrastructure index down by 0.07 were the losing indices on BSE.   

The top gainers on the Sensex were SSLT up by 3.99%, Tata Steel up by 3.35%, Coal India up by 3.33%, NTPC up by 2.04% and Hero Motocorp up by 1.13%. On the flip side, Dr Reddy Lab down by 2.00%, ITC down by 1.72%, HUL down by 1.31%, Wipro down by 1.16% and Gail India down by 0.87%.

Meanwhile, industry body Assocham has pitched for a stable tax regime, steps for early rollout of Goods and Services Tax (GST), slashing of tax rates and measures to revivie special economic zone (SEZ) in the coming union budget to boost Indian economic growth.

Industry chamber has stated that first union budget by the new government should reflect its tax policy direction to stimulate economic growth, contain inflation and create conducive environment for investment especially in manufacturing and infrastructure which generates large-scale employment. The growth in manufacturing sector declined by 0.7% yoy in FY14 compared with de-growth of 0.2% in FY13 owing to the weak domestic demand.

Assocham further asserted that new government should introduce tax incentives in the coming budget to promote in-house R&D and national and corporate energies to create world-class Indian brands which can contribute significantly to import substitution and value added exports.

Furthermore, industry chamber has also sought for extension of tax benefits to telecom and power sectors, slashing of excise duty and service tax rates to 10 percent from 12 percent, bringing down personal and corporate income tax rates and creation of a conductive tax regime for attracting investments. Regarding the indirect tax, Assocham said that as indirect tax has always been an effective tool to drive economic and social growth, the government should replace indirect tax structure with GST in order to integrate India into a single economy and provide a unified tax policy for the country. Assocham further suggested the immediate withdrawal of Minimum Alternate Tax (MAT), Dividend Distribution Tax (DDT) and restoring the SEZ policy to its present form for providing impetus to the special economic zones.

The CNX Nifty is currently trading at 7,367.40 up by 4.90 points or 0.07% after trading in a range of 7,393.30 and 7,342.15. There were 28 stocks advancing against 22 declining on the index.

The top gainers of the Nifty were SSLT up by 3.64%, Coal India up by 3.28%, Tata Steel up by 2.87%, Grasim up by 2.33% and DLF up by 2.15%. On the flip side, HCL Tech down by 2.67%, Dr Reddy Lab down by 1.95%, ITC down by 1.53%, HUL down by 1.38% and Gail down by 1.34% were the major losers on the index.

Asian equity indices were trading mixed; Hang Seng up by 0.66% to 23,233.44, Taiwan Weighted up by 0.52% to 9,123.46, Shanghai Composite up by 0.30% to 2,045.35, Nikkei 225 up by 0.68% to 15,037.77 and Jakarta Stock Index up by 0.46%. While, Straits Times down by 0.14% to 3,297.66