Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued to trade firm in late morning session as India's central bank, Reserve Bank of India (RBI), cut its key lending rates by 25 basis points, expecting inflation to soften further in the coming fiscal. Explaining its decision, RBI said that the structural reforms embedded in this budget will help improve supply over the medium term, even though the delay in meeting the 3% fiscal deficit target may add to aggregate demand in the short run. Some support also came in with foreign portfolio investors (FPIs) bought shares worth a net Rs 772.92 crore on March 3, 2015. However, investors remained cautious with Chief Economic Adviser Arvind Subramanian’s statement that the ambitious 8.1-8.5 percent economic growth projected for the next fiscal in Finance Minister Arun Jaitley's Budget is more like a 'statistical and not a real number'.

On global front, Asian stock markets were mostly lower after Wall Street declined and investors looked ahead to U.S. economic data and China's announcement of its annual growth target. Also, Benchmark U.S. crude rose 11 cents to $50.63 per barrel in electronic trading on the New York Mercantile Exchange. Back home, Indian rupee hit a one-month high after the RBI delivered another unexpected rate cut, while emerging Asian currencies barely moved ahead of US economic data and a European Central Bank meeting later this week.

Back on street, barring Metal, all other BSE sectoral indices were trading significantly in the green. Among them, realty index was the star-performer and was up 2.51 percent, followed by Banking 1.71 percent and Auto 1.12 percent, while only Metal index was down 0.34 percent. In scrip specific development, shares of Larsen & Toubro (L&T) have gained after bagging orders worth Rs 2,215 crore across various business segments in the last two months. Furthermore, Bharti Airtel rose on entering into a strategic collaboration with China Mobile under which the two companies will work towards the growth of the LTE ecosystem and evolving mobile technology standards.

The market breadth on BSE was positive, out of 2389 stocks traded, 1381 stocks advanced, while 915 stocks declined on the BSE. 

The BSE Sensex is currently trading at 29902.72, up by 308.99 points or 1.04% after trading in a range of 29840.33 and 30024.74. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.67%, while Small cap index up by 0.64%.

The gaining sectoral indices on the BSE were Realty up by 2.51%, Bankex up by 1.71%, INFRA up by 1.12%, Auto up by 1.12% and FMCG up by 0.96%, while Metal down by 0.34% was the only losing index on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.83%, Tata Motors up by 2.79%, ICICI Bank up by 2.38%, SBI up by 1.92% and HDFC up by 1.91%. On the flip side, Coal India down by 1.01%, Hindalco down by 0.73%, GAIL India down by 0.51%, Wipro down by 0.47% and Sesa Sterlite down by 0.43% were the top losers.

Meanwhile, in a surprise move and prompt reaction to the Budget 2015-16, the Reserve Bank of India (RBI) has cut repo rate by 25 basis points or 0.25 percent to 7.5 percent, giving its affirmation to the fiscal consolidation measures announced by the government in the Budget.

Dr. Raghuram G Rajan in his statement has said that, while maintaining the interest rate stance in its sixth bi-monthly monetary policy statement of February 3 in the absence of new developments on inflation or on the fiscal outlook till then, the Reserve Bank indicated that it will keenly monitor the revision in the consumer price index (CPI) with regard to the path of inflation in 2015-16 as well as the Union Budget for 2015-16. Inflation in January 2015 at 5.1 per cent as measured by the new index was well within the target of 8 per cent for January 2015.

The RBI pointed that there are many important and valuable structural reforms embedded in this Budget, which will help improve supply over the medium term. In the short run, however, the postponement of fiscal consolidation to the 3 per cent target by one year will add to aggregate demand. At a time of accelerating economic recovery, this is, prima facie, a source for concern from the standpoint of aggregate demand management, especially with large borrowings intended for public sector enterprises. However, some factors mitigate the concern, the government has emphasized its desire to clean up legacy issues which gave a misleading picture of the true extent of fiscal rectitude, and has also moderated the optimism in its projections. To this extent, the true quantum of fiscal consolidation may be higher than in the headline numbers.

Further it said that given low capacity utilisation and still-weak indicators of production and credit off-take, it is appropriate for the Reserve Bank to be pre-emptive in its policy action to utilise available space for monetary accommodation.  Consequently, it decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.75 per cent to 7.5 per cent with immediate effect; while keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL).

The CNX Nifty is currently trading at 9082.00, up by 85.75 points or 0.95% after trading in a range of 9059.65 and 9119.20. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 3.92%, DLF up by 3.21%, Tata Motors up by 3.06%, PNB up by 3.04% and Bank Of Baroda up by 2.59%. On the flip side, Ambuja Cement down by 2.14%, Coal India down by 1.12%, Hindalco down by 0.98%, GAIL India down by 0.75% and ACC down by 0.72% were the top losers.

Asian markets were trading mostly in the red; Nikkei 225 declined 0.56%, Hang Seng slipped 0.32%, Jakarta Composite decreased 0.29%, Shanghai Composite shed 0.19% and KOSPI Index was down by 0.15%. On the flip side, FTSE Bursa Malaysia KLCI increased 0.06, Straits Times rose 0.15% and Taiwan Weighted was up by 0.17%.