Benchmarks pair some early gains in late morning session

Indian equity benchmarks paired some early gains and were trading in a narrow range with a positive bias in late morning session as investors remained on the sidelines and refrained from any buying activity ahead of RBI's monetary policy announcement today. RBI governor Raghuram Rajan had already cut the repo rate, or the key lending rate, to 7.75 percent, the first rate cut in his tenure. Though, there is build-up of expectations for yet another round of rate cut but RBI governor may not oblige so soon, but any kind of surprise can give markets the direction.  However, sentiments took a hit after growth in the eight Indian core sectors, which contribute to 38% of the industrial production slowed to three month low of 2.4% in December from 6.7% in November 2014.  The index of eight core sector, which include coal, crude, natural gas, petroleum refinery, steel, cement, fertilizer and electricity stood at 172.7 in December. Besides, traders have also cautious on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 630 crore on February 02, 2015.

On global front, Asian stocks slipped as data showing China's manufacturing sector in a poor state, along with a less-than-stellar growth data from the U.S., fueled worries over the global economy. China's final HSBC Purchasing Managers' Index (PMI) fell to 49.7, a touch below its 49.8 flash reading, and after dipping to 49.6 in December. A reading below 50 indicates contraction. Back home, Indian rupee strengthened by 15 paise to 61.63 against the dollar in early trade on increased selling of the US dollar by exporters ahead of Reserve Bank of India's (RBI) policy review.

Back on street, stocks from Consumer Durables, Oil & Gas and FMCG counters were supporting the markets’ uptrend, while those from IT, Realty and banking counters were adding to the underlying cautious undertone. In scrip specific development, shares of Tata Motors surged on the back of robust passenger vehicle sales during January 2015. Furthermore, Cummins India rose after the company reported a rise of 22.95% in its net profit after tax at Rs 181.02 crore for the quarter under review as compared to Rs 147.23 crore for the same quarter in the previous year.

The market breadth on BSE was positive, out of 2363 stocks traded, 1280 stocks advanced, while 996 stocks declined on the BSE. 

The BSE Sensex is currently trading at 29126.73, up by 4.46 points or 0.02% after trading in a range of 29076.02 and 29253.06. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.33%, while Small cap index up by 0.33%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.92%, Oil & Gas up by 1.59%, FMCG up by 1.11%, PSU up by 0.58% and Metal up by 0.57% while, IT down by 0.68%, Realty down by 0.44%, Bankex down by 0.44%, TECK down by 0.37% and Capital Goods down by 0.06% were the losing indices on BSE.

The top gainers on the Sensex were Sesa Sterlite up by 3.20%, ONGC up by 2.01%, Reliance Industries up by 1.98%, Tata Motors up by 1.57% and Bharti Airtel up by 1.53%. On the flip side, Bajaj Auto down by 3.15%, Axis Bank down by 1.79%, Mahindra & Mahindra down by 1.42%, Infosys down by 1.37% and HDFC Bank down by 1.24% were the top losers.

Meanwhile, in not so encouraging development for the economy, growth in the eight Indian core sectors, which contribute to 38% of the industrial production slowed to three month low of 2.4% in December from 6.7% in November 2014. The index of eight core sector, which include coal, crude, natural gas, petroleum refinery, steel, cement, fertilizer and electricity stood at 172.7 in December. Its cumulative growth during April to December, 2014-15 was 4.4%.

However, the major drag came from slowdown in steel output, which occupies 6.88% in the overall index. The index declined by 2.4% in December, 2014. Its cumulative index during April to December, 2014-15 increased by 1.6% over the corresponding period of previous year.

Besides, the output for Fertilizer production, with a weight of 1.25% in the overall index declined by 1.6% in December, 2014. Its cumulative index during April to December, 2014-15 declined by 1.4% over the corresponding period of previous year. Additionally, the production of crude oil, which weighs 5.22% declined by 1.4% in December, 2014 over December, 2013. The cumulative index of crude oil during April to December, 2014-15 declined by 0.9% over the corresponding period of previous year.

Moreover, production of Natural Gas production (weight: 1.71%) declined by 3.5% in December, 2014. Its cumulative index during April to December, 2014-15 declined by 5.1% over the corresponding period of previous year.

On the flip side, the index of Coal production, with weightage of 4.38% increased by 7.5% in December, 2014 over December, 2013. Its cumulative index during April to December, 2014-15 increased by 9.1% over corresponding period of previous year.

Meanwhile, Petroleum Refinery production weight: 5.94% increased by 6.1% in December, 2014. Its cumulative index during April to December, 2014-15 increased by 0.2% over the corresponding period of previous year. Notably, significant growth in electricity generation, which occupies the maximum 10.37% weightage in the overall index, was witnessed. The index grew by 3.7% in December 2014 and registered a cumulative growth of 9.7% during April to December, 2014-15 over the corresponding period of previous year.

The CNX Nifty is currently trading at 8806.50, up by 9.10 points or 0.10% after trading in a range of 8786.40 and 8837.30. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Sesa Sterlite up by 3.38%, Cairn India up by 2.97%, ONGC up by 2.19%, Reliance Industries up by 2.05% and Grasim Industries up by 1.96%. On the flip side, Bajaj Auto down by 3.42%, Axis Bank down by 1.62%, Infosys down by 1.55%, Mahindra & Mahindra down by 1.51% and Dr. Reddys Lab down by 1.34% were the top losers.

Asian markets were trading in the red; Nikkei 225 decreased 1.19%, Hang Seng slipped 0.32%, Straits Times shed 0.58%, KOSPI Index dipped 0.13% and FTSE Bursa Malaysia KLCI was down by 0.05%. On the flip side, Shanghai Composite increased 0.42%, Jakarta Composite rose 0.36% and Taiwan Weighted was up by 0.55%.