Markets bounce back after reacting negatively to RBI's policy decision

Markets have bounced back after showing a knee-jerk reaction to the Reserve Bank of India's (RBI) decision to keep the key policy rates unchanged in its first bi-monthly monetary policy for 2015-16. It noted that transmission of policy rates to lending rates has not taken place so far despite weak credit off take and the front loading of two rate cuts. RBI Governor Raghuram Rajan said the policy is geared more towards systemic changes. Back on street, the market mood remained a bit cautious but both the major indices were trading with modest gains in early noon session. There wasn’t any sign of panic as the status quo was much on the expected lines, after the RBI had cut interest rate twice since January. The CNX Nifty and S&P Sensex were hovering around their important psychological level of 8,650 and 28,500 respectively. On the sectoral front, while the rate sensitive banking and auto suffered some early losses due to the RBI’s decision but were on course of recovery. However, the last session’s high flier realty was witnessing serious profit taking. On the other hand metal, consumer durables and capital goods were trying to maintain the balance, moving higher by around half a percent.

The BSE Sensex is currently trading at 28527.76, up by 23.30 points or 0.08% after trading in a range of 28365.00 and 28641.08. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were outperforming the benchmarks; the BSE Mid cap index was up by 0.42%, while Small cap index was higher by 0.58%.

The top gaining sectoral indices on the BSE were Metal up by 0.85%, Consumer Durables up by 0.65%, IT up by 0.56%, FMCG up by 0.49%, Capital Goods up by 0.47% while, Realty down by 1.67%, Bankex down by 0.28%, INFRA down by 0.18%, Auto down by 0.02% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 2.93%, NTPC up by 2.07%, GAIL India up by 1.73%, Mahindra & Mahindra up by 1.32% and Sesa Sterlite up by 1.28%. On the flip side, Tata Motors down by 1.37%, Sun Pharma Inds down by 1.15%, Axis Bank down by 0.97%, Hero MotoCorp down by 0.89% and Bharti Airtel down by 0.75% were the top losers.

Meanwhile, the government’s revised target of direct tax collection is likely to be missed with the Income Tax Department so far collecting Rs 6,85,972 crore during the year gone by against the projected target of Rs 7,05,000 crore for fiscal 2015, creating a shortfall of Rs 19,028 crore as per the data internally released by the Department on April 4.

The department revised the direct tax collection to Rs 7,05,000 crore for the fiscal 2014-15 against the initial projection of Rs 7,36,000 crore in view of the sluggish economic growth. While, new gross domestic product or GDP series has projected that the economy would grow 7.4 per cent in 2014-15, up from 6.9 per cent from a year ago it does not quite match up with other high frequency indicators.

Mumbai, which accounts for one-third of the nation’s total tax collections, is likely to report a lower collection than its target of Rs 2.30 lakh crore for FY15. Though, Delhi and Bangalore zones have been able to meet the targets. New Delhi alone has collected Rs. 1,02,083 crore in tax, up from Rs. 86,619 crore in the previous fiscal. Many large corporations paid higher advance tax this fiscal, especially in the fourth quarter.

Though, the Income Tax Department is hopeful of meeting the target once figures from across the country come, but even if tax collection indeed falls short of the revised target, it won’t be a new trend. For several years now, the revenue department has often been over optimistic on tax collections.

The CNX Nifty is currently trading at 8662.60, up by 2.70 points or 0.03% after trading in a range of 8613.40 and 8693.60. There were 26 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 2.78%, NTPC up by 1.87%, HCL Tech up by 1.71%, Mahindra & Mahindra up by 1.40%, GAIL India up by 1.39%. On the flip side, Tata Motors down by 1.42%, IDFC down by 1.28%, Sun Pharma Inds down by 1.27%, Axis Bank down by 1.18% and Ambuja Cement down by 1.03% were the top losers.

The Asian markets were trading in green, KOSPI Index was tad higher by 0.6 points or 0.03% to 2,047.03, Straits Times gained 10.15 points or 0.29% to 3,463.06, FTSE Bursa Malaysia KLCI was up by 10.51 points or 0.57% to 1,853.45, Jakarta Composite increased by 36.53 points or 0.67% to 5,516.56, Taiwan Weighted gained 41.58 points or 0.43% to 9,641.90, Shanghai Composite added 71.64 points or 1.85% to 3,935.57 and Nikkei 225 surged by 242.56 points or 1.25% to 19,640.54.