Benchmarks continue to hold head above water

After getting a cautious but positive start, benchmarks continued to hold their head above water in late morning session as funds and retail investors remained on the sidelines ahead of RBI’s monetary policy review. Although, the Reserve Bank of India is expected to maintain a status quo on rates in its credit policy today, however the market is keeping an eye on governor Raghuram Rajan’s tone. Sentiments got some support from Finance Secretary Arvind Mayaram’s comment that the economic conditions were becoming favourable for cut in interest rates. Mayaram opined that the wholesale price (WPI) inflation is at the lowest level since October, 2009 and retail inflation (CPI) is less than 8 percent which is the target for this year by an RBI panel report. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 150.10 crore on September 29, 2014.

Among the BSE sectoral indices, good buying was observed in Consumer Durables, Auto and Capital Goods sectors, while selling pressure was seen in IT, Metal and Oil & Gas sectors. In scrip specific development, shares of Sterlite Technologies have surged after the announcement of a Joint-Venture agreement with VISCAS Corporation, a leading Japanese company on September, 29 2014. Furthermore, PC Jeweller rose after e-commerce portal Flipkart joined hands with the company in order to create a platform for online jewellery shopping.

On global front, Asian markets were trading mostly lower amid concern over tensions in Hong Kong and as a Chinese manufacturing gauge missed estimates. Back home, the rupee weakened by nine paise to trade at a fresh seven-month low of 61.62 against the dollar in early trade due to increased demand for the US currency from importers ahead of RBI's policy review. The market breadth on BSE was positive, out of 2184 stocks traded, 1252 stocks advanced, while 855 stocks declined on the BSE.

The BSE Sensex is currently trading at 26620.97 up by 23.86 points or 0.09% after trading in a range of 26639.94 and 26547.44. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.54%, while Small cap index gained 0.56%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.67%, Auto up by 0.79%, Capital Goods up by 0.65%, Realty up by 0.21% and FMCG up by 0.16%, while IT down by 0.55%, Metal down by 0.38%, TECK down by 0.36%, Oil & Gas down by 0.18% and Power down by 0.06% were the losing indices on BSE.

The top gainers on the Sensex were HDFC up by 1.94%, Bajaj Auto up by 1.25%, Maruti Suzuki up by 1.23%, Tata Power up by 0.96% and Dr. Reddys Lab up by 0.90%. On the flip side, Hindalco down by 1.07%, TCS down by 0.87%, Axis Bank down by 0.83%, GAIL India down by 0.81% and Tata Steel down by 0.80% were the top losers.

Meanwhile, Finance Secretary Arvind Mayaram, a day ahead of the Reserve Bank of India’s (RBI) fourth bimonthly policy review has batted for an interest rates cut, saying that the economic conditions were becoming favourable for a more benign monetary policy going forward in this year.

Mayaram opined that the wholesale price (WPI) inflation is at the lowest level since October, 2009 and retail inflation (CPI) is less than 8 percent which is the target for this year by an RBI panel report. However, RBI governor had earlier stated that the real problem is inflation that is persistent. “We have been emphasising again and again in order to break the back of inflation, we got to break this persistence. Once we do it, we can then be much more comfortable”.

Although, the RBI left key interest rates unchanged in its third bi-monthly monetary policy review early August, saying near-term tightening is not expected if inflation continues to ease and is highly unlikely that at its fourth bimonthly policy review the apex bank will cut interest rates, with still persisting high inflation. RBI has set a target for CPI inflation at 8 per cent by January 15 and 6 per cent by January 2016 and the CPI based retail inflation eased to 7.8 per cent in August.

The Finance Secretary while exuding confidence that Indian economy will clock a growth rate in the range of 5.7 to 5.9 percent during the current fiscal year 2014-15, said that Current Account Deficit(CAD) has been brought down substantially and this has also been acknowledged as of the key credit strength by S&P in its recent report.

The CNX Nifty is currently trading at 7,963.00 up by 4.10 points or 0.05% after trading in a range of 7,968.75 and 7,943.75. There were 24 stocks advancing against 26 declining on the index.

The top gainers on Nifty were HDFC up by 1.84%, Kotak Mahindra Bank up by 1.74%, Bajaj Auto up by 1.27%, Maruti Suzuki up by 1.26% and Dr. Reddys Lab up by 0.95%. On the flip side, Hindalco down by 1.31%, Power Grid down by 1.15%, GAIL India down by 1.13%, ACC down by 1.05% and Axis Bank down by 0.83% were the top losers.

Asian markets were trading mostly in the red; Nikkei 225 tumbled by 1.17%, Hang Seng dipped 1.20%, KOSPI Index dropped 0.52%, Straits Times decreased by 0.76% and Shanghai Composite contracted by 0.13%. On the flip side, Taiwan Weighted was up by 0.21%, Jakarta Composite up by 0.07% and FTSE Bursa Malaysia KLCI was up by 0.31%.