Markets take a heart from RBI’s policy decision; climb to day’s high

Steadily gaining ground after RBI’s second Bi-Monthly Monetary Policy Statement, 2014-15, markets have climbed to day’s high point on sustained buying activities by funds and retail investors amidst mostly positive regional counter-parts. Markets drew a heart from RBI’s status quo stance from key policy rates and its dovish tone for policy rationale and guidance. While, keeping the key repo rate unchanged at 8%, RBI underscored that if the economy stays on this course, further policy tightening will not be warranted, but on the other hand, if disinflation, adjusting for base effects, was faster than currently anticipated, this would provide headroom for an easing of the policy stance. At day’s high, both Sensex and Nifty were trading above the crucial 24,800 and 7,400 levels respectively, with gains of over half a percent.

On the global front, despite positive handover, European shares got off to negative start Tuesday as traders remained cautious ahead of this week's European Central Bank (ECB) policy meeting. Closer home, stocks from Metal, Realty and Oil & Gas counters were the top gainers, while those from Fast Moving Consumer Goods and Healthcare counters were the only losers on the index. Meanwhile, Steel stocks gained after positive manufacturing data in a private survey in China, the world's biggest consumer and producer of the metal. Tata Steel, Steel Authority of India, JSW Steel all rallied in the range of 1%-2%. The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1209:663; while 28 shares remained unchanged.

The BSE Sensex is currently trading at 24844.26, up by 159.41 points or 0.65% after trading in a range of 24867.21 and 24626.97. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices continued to add ground; the BSE Mid cap index was up by 0.67%, while Small cap index up by 0.90%.

The gaining sectoral indices on the BSE were Metals up by 3.56%, Realty up by 1.34%, Oil & Gas up by 1.32%, PSU up by 1.21%, Realty up by 1.07% and Consumer Durables up by 1.03%. While, FMCG down by 0.69% and Healthcare down by 0.14% were the losing indices on BSE.   

The top gainers on the Sensex were SSLT up by 5.49%, Tata Steel up by 3.85%, Coal India up by 3.75%, BHEL up by 2.41% and Hero Motocorp up by 2.32%. On the flip side, Dr Reddy Lab down by 1.82%, ITC down by 1.17%, HUL down by 1.11%, Wipro down by 0.82% and M&M down by 0.74%.

Meanwhile, the government has slashed the import tariff on gold to $408 per 10 gram from $424 and silver to $617 per kg from $650 per kg, in line with global rates of the precious metals, which could lead to some softening in the prices. Tariff value or the base price is set to determine the customs duty on the precious metal and to prevent under invoicing. The government revises import tariff value on a fortnightly basis taking into account the volatility in global metal prices.

During the recent months, global gold prices have been declinilng as positive US economic data backed the latest Federal Reserve’s move to keep on reducing monetary stimulus which has dimmed the precious metal's appeal. Taking global cues, domestic gold rates in the national capital Delhi declined to 11-month low at Rs 27,400 per 10 grams.

Gold is the second largest import item for India after crude oil. The government had taken various measures like high customs duty of 10% and 80/20 rule to curb gold shipments to check country’s widening current account deficit (CAD). Gold and silver imports fell by 40.02% to $33.46 billion in FY14 due to these stern Government’s norms. Low gold imports also helped India to contain current account deficit (CAD) at 1.7 percent of GDP or $32.4 billion in FY 14 as compared to $87.8 billion, or 4.7 percent of GDP in FY13.  

The CNX Nifty is currently trading at 7,407.80, up by 45.30 points or 0.62% after trading in a range of 7,419.10 and 7,342.15. There were 34 stocks advancing against 15 declining on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were SSLT up by 5.50%, Grasim up by 4.26%, Tata Steel up by 4.10%, Coal India up by 3.98%, and Ambuja Cements up by 3.54%. On the flip side, HCL Tech down by 2.22%, Dr Reddy Lab down by 1.94%, IndusInd Bank down by 1.48%, ITC down by 1.00% and HUL down by 0.95 % were the major losers on the index.

Most of Asian equity indices were trading in green; Hang Seng advanced 0.60%, Taiwan Weighted up by 0.52%, Shanghai Composite inched up by 0.01%, Nikkei 225 surged 0.66% and Jakarta Stock Index rose by 0.39%. While, Straits Times down by 0.15%.

European shares got off to negative start; with United Kingdom’s FTSE 100 declining by 0.15%, France’s CAC 40 sliding by 0.08%, while Germany’s DAX was trading higher by 0.01%