Markets slump reacting to RBI policy announcements and weak earnings

Indian markets showing a knee-jerk reaction to the Reserve Bank of India’s (RBI) decision to keep Repo Rate and Cash Reserve Ratio (CRR) unchanged in its fifth-bimonthly monetary policy, have slumped in the noon trade. Although there was some stabilization after the apex bank’s indication that “key to further easing are data that confirm continuing disinflationary pressures. The apex bank has, however, cut Statutory Liquidity Ratio (SLR) by 50 basis points for commercial banks. The new SLR rate will be 21.5% and will come in effect beginning February 7, 2015. Some weak result announcements have triggered fall in the markets. The maximum disappointment was being witnessed in the banking pack, which was trailing by over a percent, PNB stocks were under pressure on reporting weak asset quality. The other rate sensitive pack realty too was down on dashed hopes of another rate cut. Trade had remained range bound since morning reacting to weak economic data, while the Core sector growth, which measures the output of eight infrastructure industries, dropped sharply to 2.4% in December from 6.7% in the previous month, the HSBC Purchasing Managers' Index (PMI) for January eased to 52.9 points in January compared with December's two-year high of 54.5. Back on street, oil & gas, consumer durables, FMCG and metal were trying to keep the markets in shape, while banking, realty and healthcare were dragging the indices lower.

The BSE Sensex is currently trading at 28970.33, down by 151.94 points or 0.52% after trading in a range of 28901.07 and 29253.06. There were 11 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined by 0.22%, while Small cap index was lower by 0.23%.

The gaining sectoral indices on the BSE were Oil & Gas up by 1.30%, Consumer Durables up by 1.26%, FMCG up by 0.52%, Metal up by 0.21%, Auto up by 0.07% while, Bankex down by 1.71%, Realty down by 1.19%, Power down by 0.73%, IT down by 0.63%, INFRA down by 0.56% were the losing indices on BSE.

The top gainers on the Sensex were Sesa Sterlite up by 3.20%, Tata Motors up by 2.41%, ONGC up by 2.09%, Bharti Airtel up by 1.79% and Reliance Industries up by 1.62%. On the flip side, Bajaj Auto down by 3.33%, Tata Power down by 2.31%, Axis Bank down by 2.28%, HDFC down by 2.17% and Mahindra & Mahindra down by 2.03% were the top losers.

Meanwhile, a government memorandum has notified that a panel to determine technical eligibility of bidders for coal mines in the upcoming auction will soon be constituted. The six-member panel will be headed by State Vigilance Commissioner, West Bengal, K S Ramasubban. It will have members from Central Electricity Authority, Power Ministry and National Institute of Secondary Steel Technology, Steel Ministry, among others. Five members include Punjab National Bank chairman and managing director SS Kohli. The committee also comprises Major Singh, member planning in the Central Electricity  Authority, and RK Bagchi, director in the steel ministry. Other members are Mohan Chuttani,  economic advisor in the department of industrial policy and promotion and RK  Chopra, director in Coal India's technical arm Center Mine Planning and Design Institute.

As many as 200 companies have registered themselves for the coal block bidding process and the panel will help joint secretary in the coal ministry Vivek Bhardwaj, who is the nominated authority for coal block auction, in evaluating technical qualification of bidders for the auction.

The government has decided to auction 46 coal blocks to private companies in auctions scheduled between February 14-22. Under the schedule II (producing mines) category, 23 blocks will be put on offer, the bids will be evaluated and the selected qualified bidders will participate in the e-auction for the 23 operational mines beginning February 14, while another set of 23 mines will be auctioned between February 25 and March 5 under the Schedule III (ready to produce mines) category. The Coal Ministry has already started the process for allocation of 36 mines to PSUs, of which 35 will go to power PSUs, while the remaining one has been earmarked for a steel PSU.

The CNX Nifty is currently trading at 8752.65, down by 44.75 points or 0.51% after trading in a range of 8729.40 and 8837.30. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Sesa Sterlite up by 3.25% and Cairn India up by 3.05% and Tata Motors up by 2.33% and ONGC up by 2.22% and Grasim Industries up by 2.05%. On the flip side, PNB down by 5.53%, Bajaj Auto down by 3.46%, Kotak Mahindra Bank down by 2.48%, Axis Bank down by 2.43% and DLF down by 2.20% were the top losers.

The Asian markets were showing mixed trend, Hang Seng gained 9.68 points or 0.04% to 24,494.42, Jakarta Composite was up by 18.52 points or 0.35% to 5,294.76, Shanghai Composite increased 48.39 points or 1.55% to 3,176.69, Taiwan Weighted gained 61.74 points or 0.66% to 9,448.73. On the other hand, Nikkei 225 slumped by 222.19 points or 1.27% to 17,335.85, Straits Times was lower by 15.99 points or 0.47% to 3,407.36, FTSE Bursa Malaysia KLCI was marginally down by 0.92 points or 0.05% to 1,781.26 and KOSPI Index was tad lower by 0.72 points or 0.04% to 1,951.96.