Markets surrender all gains on profit-booking; Nifty holds above 7,950 mark

Local equity markets surrendering all their gains witnessed after RBI’s in-line with expectation status stance in its fourth bi-monthly monetary policy review, were trading with losses in the range of 0.10%-0.20%, which dragged Sensex below the psychologically crucially 26,550 level even as Nifty held above 7,950 mark. Profit-booking, which crept at higher levels in the holiday truncated week amidst negative global cues, mainly weighed on frontline equity indices. However, broader indices keeping their head above water, were trading with decent gains in the range of 0.10%-0.35%.

On the global front, European stocks reversed most of their early gains on Tuesday as investors booked profits ahead of euro-zone inflation data that could be crucial to the European Central Bank's next move. Eurozone consumer price inflation is expected to slow to 0.3% year-over-year in September, well below the ECB's target of close to 2%.

Closer home, with the reversal of trend, most of the sectoral indices on BSE were reeling under pressure, nevertheless much of brunt was witnessed by stocks from Realty, Information Technology and Power counters. On the flip side, stocks from Consumer Durable, Auto and Capital Goods counters were the prominent gainers of the session. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1459:1242; while 112 shares remained unchanged.

The BSE Sensex is currently trading at 26543.68, down by 53.43 points or 0.20% after trading in a range of 26514.96 and 26851.33. There were 13 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.10%, while Small cap index up by 0.34%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.02%, Auto up by 0.18%, Capital Goods up by 0.16%, Oil & Gas up by 0.04% while, Realty down by 2.15%, IT down by 0.85%, Power down by 0.66%, TECK down by 0.63%, Bankex down by 0.54% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma Inds. up by 1.85%, Sesa Sterlite up by 1.68%, HDFC up by 1.47%, Maruti Suzuki up by 1.33% and Bajaj Auto up by 1.14%. On the flip side, TCS down by 1.73%, Axis Bank down by 1.67%, Hindustan Unilever down by 0.89%, ICICI Bank down by 0.88% and Tata Motors down by 0.81% were the top losers.

Meanwhile, in a bid to maintain financial and price stability, the Reserve Bank of India (RBI), in its fourth bi-monthly monetary policy review, as widely expected, kept its key policy repo rate unchanged at 8%. Consequent to which the reverse repo rate under the LAF stood unchanged at 7.0%, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0% respectively.

India’s apex bank also kept both the statutory liquidity ratio (SLR) and the cash reserve ratio (CRR) unchanged. However, it underscored that it would cut the ceiling on bonds that must be held-to-maturity from the current 24% to 22% in stages starting in the bi-weekly cycle beginning in January 10, 2015 and expects to complete the process by September 2015.

Further, it also reduced the liquidity provided under the export credit refinance (ECR) facility from 32% of eligible export credit outstanding to 15% with effect from October 10, 2014 and decided to continue to provide liquidity under overnight repos at 0.25% of bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day term repos of up to 0.75% of NDTL of the banking system through auctions.

In its policy stance and rationale, it expressed upside risk to its target to bring consumer inflation down to 6% by January 2016, which continued to warrant policy preparedness to contain pressures if the risks materialized. However, the central bank highlighted that its immediate target in containing the consumer price index (CPI) inflation at 8% by January 2015, looked achievable. Additionally, it also retained growth projection for current fiscal at 5.5% and said that future policy stance will be influenced by inflation outlook.

Notably, the repo rate has been unchanged since January, when the RBI increased it by a quarter percentage point. So far, Rajan has hiked the rates thrice since assuming charge as the Governor in September last year.

The CNX Nifty is currently trading at 7950.55, down by 8.35 points or 0.10% after trading in a range of 7932.05 and 8030.90. There were 20 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 3.11%, Sesa Sterlite up by 1.92%, HDFC up by 1.76%, Maruti Suzuki up by 1.49% and Sun Pharma Inds up by 1.46%. On the flip side, DLF down by 5.59%, TCS down by 1.83%, Power Grid Corpn down by 1.72%, Axis Bank down by 1.70% and Ultratech Cement down by 1.57% were the top losers.

Asian markets was set for negative close; with Hang Seng decreased 296.23 points or 1.28% to 22,932.98; Nikkei 225 decreased 137.12 points or 0.84% to 16,173.52; Straits Times decreased 21.8 points or 0.66% to 3,267.92; Jakarta Composite decreased 6.83 points or 0.13% to 5,135.18; KOSPI Index decreased 6.51 points or 0.32% to 2,020.09. On the flip side, FTSE Bursa Malaysia KLCI gained 0.11 points or 0.01% to 1,846.45; Shanghai Composite advanced by 6.16 points or 0.26% to 2,363.87 and Taiwan Weighted added 6.16 points or 0.07% to 8,966.92.

European markets were trading mostly higher; with Germany’s DAX were trading lower by 4.43 points or 0.05% to 9,418.48; UK’s FTSE 100 edged lower 7.75 points or 0.12% to 6,638.85; while France’s CAC was trading higher by 15.44 points or 0.35% to 4,373.51.