Benchmarks trade slightly in green ahead of RBI's policy decision

Extending their northward journey, Indian equity benchmarks have made a positive start ahead of Reserve Bank of India’s (RBI) first bi-monthly monetary policy of the fiscal year 2016. The RBI has cut interest rate twice since January and is unlikely to further reduce it this time and will maintain status quo waiting for more cues on price trends. However, gains remained capped with domestic ratings agency Crisil saying that credit quality improvement will continue to be gradual in FY 2016 as well, but underlined that large companies are a cause of worry. Meanwhile, Finance minister Arun Jaitley clarifying the tax notice sent to foreign investors said that India didn’t aspire to be a tax haven and every tax demand could not be equated with an act of "tax terrorism" by the government.

On the global front, the US markets despite a slow start ended higher in last session on expectation that the Federal Reserve could hold off longer on raising US interest rates after weak monthly jobs report. The Asian markets were trading mostly in the green at this point of time with some of the indices surging by over a percent and the Shanghai Composite is trading at its highest levels since March 2008, while the Japanese market too inched higher as the yen weakened.

Back home, on the sectoral front, software, capital goods and technology witnessed the maximum gain in trade, while realty, healthcare and infrastructure remained the top losers on the BSE sectoral space. The broader indices too were trading with traction in early deals, while the market breadth on the BSE was positive; there were 1193 shares on the gaining side against 750 shares on the losing side while 77 shares remain unchanged.

The BSE Sensex is currently trading at 28550.18, up by 45.72 points or 0.16% after trading in a range of 28512.52 and 28641.08. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.27%, while Small cap index up by 0.41%.

The gaining sectoral indices on the BSE were IT up by 0.71%, Capital Goods up by 0.61%, TECK up by 0.51%, Metal up by 0.44% and Oil & Gas up by 0.34% while, Realty down by 1.06%, Healthcare down by 0.56%, Infrastructure down by 0.33% and FMCG down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 2.05%, TCS up by 1.20%, Reliance Industries up by 1.13%, Larsen & Toubro up by 1.04% and Tata Steel up by 0.77%. On the flip side, Sun Pharma down by 1.41%, Hero MotoCorp down by 0.83%, Dr. Reddys Lab down by 0.78%, ITC down by 0.66% and Bharti Airtel down by 0.37% were the top losers.

Meanwhile, in not so encouraging sign for the economy, growth in India's pivotal services industry lost some momentum in March as input prices rose at the fastest pace in nearly a year with HSBC Services Purchasing Managers' Index (PMI) easing to 53.0 in March from February's eight-month high of 53.9. However, March was eleventh straight month of expansion for the index as reading above 50 indicates growth.

Nevertheless the survey, providing signs of much of the weakness seen in 2014 being left behind suggested that India’s service sector ended the first three months of 2015 with a strong performance. The survey although suggested of slightly weaker pace of expansion than in the prior month was indicative of sustained new business growth. Further, output rose in four of the six broad areas of the service economy, the exceptions being financial intermediation and hotels & restaurants.

In yet another positive sign, the month witnessed an increase in the level of new business placed with Indian services companies. Although solid, the rate of expansion eased since the prior month.

Manufacturers, meanwhile, recorded a stronger increase in order book volumes. Also, the employment rose during March, which was an improvement from the broadly unchanged levels recorded in the prior month. In the manufacturing economy, staffing levels stabilized.

Worryingly, however, cost inflationary pressures in the private sector as a whole firmed up. The input prices faced by services firms rose further in March. The rate of cost inflation was solid and the strongest since June 2014 due to increased petrol and transport prices. Also, output charges were raised in response to higher costs.

Notably, despite the slow pace of expansion, service providers remained upbeat towards the prospects for business activity in 12 months’ time, with over 25% of survey members anticipating output growth over the course of the next year, citing strengthening demand conditions.

The CNX Nifty is currently trading at 8670.45, up by 10.55 points or 0.12% after trading in a range of 8655.30 and 8693.60. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 2.06%, Bank of Baroda up by 1.93%, HCL Tech up by 1.89%, Tech Mahindra up by 1.49% and PNB up by 1.18%. On the flip side, Sun Pharma down by 1.74%, Idea Cellular down by 0.85%, Hero MotoCorp down by 0.77%, Zee Entertainment down by 0.72% and Dr. Reddys Lab down by 0.71% were the top losers.

Asian markets were trading mostly in the green terrain; FTSE Bursa Malaysia KLCI increased 9.93 points or 0.54% to 1,852.87, Straits Times rose 17.17 points or 0.5% to 3,470.08, Taiwan Weighted gained 33.81 points or 0.35% to 9,634.13, Jakarta Composite jumped 37.23 points or 0.68% to 5,517.26, Shanghai Composite soared 69.56 points or 1.8% to 3,933.49 and Nikkei 225 was up by 245.87 points or 1.27% to 19,643.85. On the flip side, KOSPI Index was down by 0.69 points or 0.03% to 2,045.74.