Markets gives up all the early gains; metal and realty drag

Markets have given up all their early gains and were trading flat, as the morning euphoria on hopes of a rate cut by RBI fizzled out. There was sudden sharp selling in the market led by metals and oil stocks that took the benchmarks in red. Industrial production growth slowed to a five-month low of 2.1% in March, while the retail inflation hit a four-month trough of 4.87% in April that raised hopes that Reserve Bank of India will go for a rate cut for third time this year when it reviews the monetary policy on June 2. Caution seems to have crept in the market with global rating agency Moody’s warning that monsoon failure and global financial volatility could pose additional risks to India's growth this year. Traders are yet to overcome from the sharp sell-off of last session and were taking cautious bet, with fear of profit taking at every attempt of recovery. There was some buzz in the PSU stocks as the government has approved stake sales in state-owned Indian Oil (IOC) and National Thermal Power Corporation (NTPC). IOC was trading down by around 2%, while the NTPC was down by around 5%. On the sectoral front, maximum pressure was being witnessed at metal, realty, oil & gas and power counters, while the banking, auto and capital goods counters were still supporting the markets. Broader markets were however keeping their momentum intact.

The BSE Sensex is currently trading at 26877.00, down by 0.48 points or after trading in a range of 26750.01 and 27299.80. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green were outperforming the benchmarks; the BSE Mid cap index was up by 0.83%, while Small cap index gained 0.32%.

The top gaining sectoral indices on the BSE were Bankex up by 0.71%, Auto up by 0.62%, Capital Goods up by 0.61%, Consumer Durables up by 0.39%, INFRA up by 0.31%, while Metal down by 0.62%, Realty down by 0.61%, Oil & Gas down by 0.41%, TECK down by 0.31%, IT down by 0.19% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 2.89%, Mahindra & Mahindra up by 1.89%, Axis Bank up by 1.84%, Hero MotoCorp up by 1.79% and SBI up by 0.79%. On the flip side, NTPC down by 4.38%, Hindalco down by 3.45%, Bharti Airtel down by 2.01%, Vedanta down by 1.67% and Hindustan Unilever down by 1.24% were the top losers.

Meanwhile, the government is pursuing its decision to continue with the pro-market reform measure initiated by the previous government to maintain a reformist image. In its consolidated FDI policy, the government has retained the previous UPA government’s decision of allowing foreign retailers to open multi-brand stores with 51 percent ownership. The congress led UPA in September 2012 had allowed foreign direct investment in multi-brand retail with a 51 percent cap.

Against the fear of change and amid political slugfest over the issue, BJP that had opposed foreign investment in multi-brand retail sector in its election manifesto last year, has not made any changes in the policy. Earlier, last year Commerce and Industry Minister Nirmala Sitharaman had said that FDI will not be allowed in multi-brand retail trade in line with the position the BJP had articulated in its manifesto, however she had added that at the moment there was no move to reverse the notification that the UPA government had issued to open up the multi-brand retail sector, allowing up to 51 per cent FDI.

The policy added that minimum amount to be brought in, as FDI, by the foreign investor, would be $100 million. At least 50% of total FDI brought in the first tranche of $100 million, shall be invested in ‘back-end infrastructure’ within three years. Further, the 51 percent FDI policy leaves it to the states to take their own decisions. “FDI in multi brand retail trading, in all products, will be permitted, subject to the following conditions that Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, may be unbranded.

The new 119-page new Compendium mentions all existing FDI policy decisions as also the changes made over the past one year. These include changes in the foreign direct investment cap in defence and insurance sectors, where limits have been hiked to 49 percent from 26 percent earlier.

The CNX Nifty is currently trading at 8119.70, down by 7.25 points or 0.09% after trading in a range of 8089.80 and 8254.95. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.72%, Axis Bank up by 1.88%, Mahindra & Mahindra up by 1.65%, Hero MotoCorp up by 1.47% and Yes Bank up by 1.28%. On the flip side, NTPC down by 4.52%, Hindalco down by 3.56%, BPCL down by 2.18%, Vedanta down by 1.95% and Bharti Airtel down by 1.79% were the top losers.

The Asian markets are showing a mixed trend, Straits Times was up by 10.23 points or 0.3% to 3,452.56, KOSPI Index gained 17.39 points or 0.83% to 2,114.16, Jakarta Composite increased 19.37 points or 0.37% to 5,224.99, Taiwan Weighted was higher by 43.38 points or 0.45% to 9,724.11 and Nikkei 225 surged by 139.88 points or 0.71% to 19,764.72.

On the flip side, Hang Seng lost 38.85 points or 0.14% to 27,368.33, Shanghai Composite was down by 9.85 points or 0.22% to 4,391.38 and FTSE Bursa Malaysia KLCI was tad lower by 0.64 points or 0.04% to 1,797.9.