Markets sulk in red after RBI’s status quo stance in sixth bi-monthly monetary policy

In a knee jerk reaction to RBI’s status quo stance in sixth bi-monthly monetary policy, local equity markets after slipping into negative territory continued languishing at the bottom in absence of any buying activity, which dragged both Sensex and Nifty below psychologically crucial 29,900 and 8,750 levels respectively, with losses of over half a percent. Meanwhile, broader indices also succumbing to selling pressure were trading with losses over quarter of a percent. Although RBI’s policy stance was much on expected lines, but no guidance on further rate cut stressed investors, which preferred booking profits after the anticipated move. In its policy stance and Rationale, RBI pointed that the key to further easing remains to be data confirming continuality of disinflationary pressures along with sustained high quality fiscal consolidation. Further, it underscored that in absence of any substantial new developments on the disinflationary process or on the fiscal outlook since January 15, it was appropriate for RBI to await and maintain the current interest rate stance.

On the global front, Asian shares were trading mix at this point of time as euphoria on hopes for an agreement on Greece’s debt situation, petered out. Greece’s new finance minister underscored a proposal to swap his country’s outstanding debt for new growth-linked bonds, hopefully ending a standoff with its international creditors.

Closer home, most of the sectoral indices on BSE were reeling under pressure, nevertheless maximum beating was taken by stocks belonging from Banking, Realty and Power counters. On the flip side, maximum demand was witnessed by stocks from Consumer Durables, Oil & Gas and Fast Moving Consumer Goods counters. In stock-specific action, shares of oil exploration and production (E&P) companies advanced as global crude oil prices rose. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1416:1164; while 108 shares remained unchanged.

The BSE Sensex is currently trading at 28954.39, down by 167.88 points or 0.58% after trading in a range of 28900.41 and 29253.06. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.27%, while Small cap index down by 0.33%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.72%, Oil & Gas up by 1.26%, FMCG up by 0.92% and Metal up by 0.48% while, Bankex down by 2.15%, Realty down by 1.25%, Power down by 0.65%, INFRA down by 0.58% and Capital Goods down by 0.53% were the losing indices on BSE.

The top gainers on the Sensex were Sesa Sterlite up by 4.19%, ONGC up by 1.74%, Tata Motors up by 1.67%, Reliance Industries up by 1.66% and Bharti Airtel up by 1.52%. On the flip side, Axis Bank down by 3.59%, Bajaj Auto down by 3.48%, HDFC down by 2.73%, Mahindra & Mahindra down by 2.09% and SBI down by 1.88% 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 8743.25, down by 54.15 points or 0.62% after trading in a range of 8728.65 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 4.29%, Cairn India up by 3.10%, Grasim Industries up by 2.04%, ONGC up by 1.77% and Reliance Industries up by 1.70%. On the flip side, PNB down by 6.49%, Axis Bank down by 3.65%, Bajaj Auto down by 3.59%, Kotak Mahindra Bank down by 2.92% and HDFC down by 2.78% were the top losers.

Asian markets were trading mix; with Jakarta Composite trading higher by 23.04 points or 0.44% to 5,299.27; Taiwan Weighted trading higher by 61.74 points or 0.66% to 9,448.73;  Hang Seng trading higher by 71.83 points or 0.29% to 24,556.57;  Shanghai Composite trading higher by 75.7 points or 2.42% to 3,204.00. On the flip side, Nikkei 225 was trading lower by 222.19 points or 1.27% to 17,335.85; Straits Times trading lower by 13.74 points or 0.4% to 3,409.61;  FTSE Bursa Malaysia KLCI trading lower by 0.92 points or 0.05% to 1,781.26 and  KOSPI Index trading lower by 0.72 points or 0.04% to 1,951.96.