Benchmarks end slightly in the red ahead of RBI policy meet

Erasing all the early gains, benchmark equity indices ended the volatile day of trade slightly in the red on Monday, as investors opted to be on sidelines ahead of the Reserve Bank of India’s (RBI) monetary policy review. Though the street is expecting the governor to keep the rates unchanged this time. After a positive start, markets traded in very tight band throughout the session, but selling pressure which crept in the last hour of trade mainly led to slightly negative close of domestic markets. Sentiments remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 1133.64 crore on September 26, 2014.

However, losses remained capped with Finance Secretary Arvind Mayaram saying that growth rate in the current fiscal will be in range of 5.5-5-9 per cent, exceeding Standard and Poor’s estimate of 5.5 per cent. Some support also came in from report that with chances of mopping up better revenues than estimated, the Government has cut down its market borrowing by Rs 8,000 crore at Rs 5.92 lakh crore. Lower borrowings will mean that more money will be available for banks to lend to the private sector and individuals. Also, private equity investment in India is likely to touch a staggering $12 billion in 2014 primarily on account of reform measures taken by the government at the Centre.

On the global front, European markers were trading lower in early deals ahead of key economic data due for release later today. Asian markets remained volatile following political unrest in Hong Kong, the worst since China took control 20 years ago. Japanese shares ended up 0.5% led by exporters’ shares following the weakness in the yen.

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 61.43 per dollar at the time of equity markets closing compared with its previous close of 60.14 due to month-end dollar demand from importers. Selling in metal and mining stocks too dampened the sentiments as latest data reaffirmed slowdown in China, the world's largest consumer of steel, copper and aluminum, while banking counters too succumbed to selling pressure ahead of RBI’s credit policy.

However, some support to the markets came in from buying in pharma stocks, led by Sun Pharma as apprehensions of an import alert on its Halol plant have largely diminished now. Moreover, stocks related to power counter edged higher, as the Coal Ministry has asked Power Ministry to review the fuel import plan for this fiscal, as the target set is not commensurate with the plants' capacity addition envisaged for FY 2015.

The NSE’s 50-share broadly followed index Nifty dipped  by around ten points but managed to hold the psychological 7,950 support level, however Bombay Stock Exchange’s Sensitive Index -- Sensex slipped by around thirty points to hold its psychological 26,600 mark. Broader markets however, outperformed benchmarks and ended the session with a gain of over a percentage point. The market breadth remained in favour of advances, as there were 1,855 shares on the gaining side against 1,087 shares on the losing side, while 100 shares remained unchanged.

Finally, the BSE Sensex declined by 29.21 points or 0.11%, to 26597.11, while the CNX Nifty lost 9.95 points or 0.12% to 7,958.90.

The BSE Sensex touched a high and a low of 26715.77 and 26518.01, respectively. The BSE Mid cap index was up by 1.01%, while the Small cap index gained 1.49%.

The top gainers on the Sensex were Sun Pharma up by 3.36%, TCS up by 3.17%, GAIL India up by 2.36%, Infosys up by 1.90% and Hindalco up by 1.33%. On the flip side, Sesa Sterlite down by 1.65%, Tata Steel down by 1.61%, Coal India down by 1.48%, ITC down by 1.44% and Bajaj Auto down by 1.42% were the top losers in the index.

On the BSE Sectoral front Healthcare up by 2.21%, IT up by 1.84%, Consumer Durables up by 1.79%, TECK up by 1.50% and Infrastructure up by 0.24% were the top gainers, while Metal down by 1.11%, FMCG down by 0.92%, Bankex down by 0.91%, PSU down by 0.59% and Auto down by 0.44% were the top losers in the space.

Meanwhile, a day after addressing UN General Assembly, Prime Minister Narendra Modi at Madison Square Garden assured the Indian-American community that his government was determined to put the economy on an upward trajectory and create the country as magnet of investment. He also stressed the growing importance of trade and commerce which led to international relation and drove the economies. Further, he underscored that for growth to pick up it was important for the economy to focus on key sectors like agriculture, manufacturing and services and pointed that the decline of growth of even one of the sector would impact the country’s economy immensely. Nevertheless, he also cautioned that the economy would not be able to burn the brunt of even slight disruptions if it were to wholly rest on one of the sector.Additionally, Prime Minister also emphasized upon the need to develop country’s tourism sector, adding that India had not taken the advantage of the huge potential that tourism holds and has not even scratched the surface in achieving its potential in the tourism sector. He also asserted that the country could become the centre of attraction for the world if it moved in the direction of economic development and growth, in the direction of providing more and more people with employment.

The guests on the Prime Minister's table were Representative Ed Royce, External Affairs Minister Sushma Swaraj, Nooyi, Asia Scholar Visakha Desai, the Indian ambassador. The other eminent guests included Assistant Secretary of State for South and Central Asia Nisha Desai Biswal; Director General of the US and Foreign Commercial Service Arun Kumar; American physician nominated by U S President Barack Obama to serve as the 19th Surgeon General of the United States Vivek Murthy, New President of Indian-American Doctors' Association Ravi Jahagirdar, Chairman of the Mississippi Board of Mental Health Sampat Shivangi and Former Chairman, Chief Executive Officer and President, AppNet Ken Bajaj.

The CNX Nifty touched a high and low of 7,991.75 and 7,934.70 respectively.

The top gainers of the Nifty were Sun Pharmaceuticals Industries up by 3.64%, TCS up by 3.35%, GAIL (India) up by 2.41%, Power Grid Corporation of India up by 2.19% and Hindalco Industries up by 2.07%. On the other hand, Jindal Steel & Power down by 3.89%, DLF down by 2.68%, Kotak Mahindra Bank down by 2.18%, Tata Steel down by 1.74% and Coal India down by 1.55% were the top losers.

European markets were trading in red, France’s CAC 40 was down by 0.48%, Germany’s DAX was down by 0.28% and United Kingdom’s FTSE 100 was down by 0.24%.

Asian markets ended mixed on Monday, with Hong Kong shares falling amid the biggest police crackdown on protesters since the city returned to Chinese rule. China’s industrial profits fell 0.6% in August from a year earlier, reversing from July’s 13.5% annual rise, the latest in a series of weak data from the world’s second-largest economy. Industrial companies made profits of 3.83 trillion yuan between January and August, 10% higher than the same period last year. The monthly decline adds to recent weak figures that have fueled fears that China is at risk of a sharp slowdown if it does not make fresh stimulus measures. China’s factory output grew at its weakest pace in nearly six years in August while growth in other key sectors such as retail sales and imports also cooled.

Indonesia rupiah fell to a seven-month low after the passage of a law scrapping direct elections for local officials spurred outflows from country’s stock market. Fitch Ratings stated that Indonesian banks are well positioned to face challenging environments, because of their well-capitalized position and the strengthened supervisory oversight of the country’s financial regulator.