Markets trade flat a day ahead of RBI’s policy meet

Markets have started the session on a flat note with positive bias on hopes of rate cut at Reserve Bank of India’s (RBI) policy meet due on June 2, 2015. The RBI is likely to cut its benchmark interest rates by 25 basis points to 7.25%. Sentiments remained up-beat on report that the Indian economy expanded 7.3 per cent in the year ended March, in line with the initial forecast and marginally higher than 6.9 per cent recorded in the previous year. Further some support also came with Finance Minister Arun Jaitley stating said that India has the potential to improve the economic growth to double-digit. Gains remained capped on industry body Assocham's report that around 1,550 projects with investments worth about Rs 26.5 lakh crore remained stuck at different stages as of December-end across 21 states on issues such as land acquisition and lack of funds.

In scrip specific development, Shares of BEML have surged after reporting nearly three-fold rise in net profit at Rs 169 crore for the quarter ended March 31, 2015 (Q4) on the back of higher income from operations. While, shares of sun Sun Pharma have plunged after fourth quarterly earnings posted by the company missed street expectations. The company reported a 44% decline in its final quarter net profit, on the back of the Ranbaxy acquisition.

On the global front, the US markets ended lower on Friday as data showed the economy contracted in the first quarter. The U.S. economy contracted at a 0.7 percent annual rate in the quarter, a sharp turnaround from the earlier estimate of growth of 0.2 percent. The Asian markets were trading mostly lower  on concern about the strength of US economic growth, though the Chinese markets are trading higher on a government report that manufacturing index hit a six months high.

Back home, Traders were seen piling position in Realty, PSU, Oil & Gas, Bankex and Capital Goods, while selling was witnessed in INFRA, Auto, TECK and Consumer Durables. The market breadth on BSE was positive in the ratio of 1006: 848 while 58 scrips remained unchanged.

The BSE Sensex is currently trading at 27835.95, up by 7.51 points or 0.03% after trading in a range of 27737.58 and 27880.15. There were 23 stocks advancing against 6 stocks declining on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.32%, while Small cap index was up by 0.11%.

The top gaining sectoral indices on the BSE were Realty up by 1.31%, PSU up by 0.53%, Oil & Gas up by 0.53%, Bankex up by 0.41%, Capital Goods up by 0.40% while, INFRA down by 0.67%, Auto down by 0.62%, TECK down by 0.24%, Consumer Durables down by 0.21% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 1.88%, Vedanta up by 1.83%, Reliance Industries up by 1.46%, Infosys up by 1.17% and ITC up by 1.15%. On the flip side, Sun Pharma down by 9.69%, Bharti Airtel down by 1.94%, Tata Motors down by 1.35%, Hero MotoCorp down by 0.96% and Mahindra & Mahindra down by 0.52% were the top losers.

Meanwhile, in a good news for the new airlines, the Civil Aviation Ministry would soon submit a draft note on the proposed changes in the controversial 5/20 norm to the Cabinet for approval. As per the present norms Indian carriers needs to be in operation for at least five years and have a fleet of 20 aircraft to be eligible to fly on international routes. By bringing in changes in the more than decade-old rule, the government seeks to address the imbalance between domestic and foreign carriers.

The Ministry of Civil Aviation has however proposed a complicated formula replacing 5/20 norms, in which domestic flying credits would still be needed for new airlines to fly overseas. As per the proposed norms, a new airline would be eligible to apply for international operations once it has operated on domestic routes and deployed capacity equivalent to at least 200 domestic flying credits (DFCs).

On reaching the 300 DFC milestone, the air carrier can approach the government for being designated on a long haul international route of more than 6 hours flying time. Civil Aviation Minister Ashok Gajapati Raju had earlier said that sooner the 5/20 rule was thrown out the better.There is wide difference among the different players of the industry over change of rules as the Federation of Indian Airlines, which has IndiGo, SpiceJet, Jet Airways and GoAir as its members has objected to any relaxations, while new entrants Vistara and AirAsia India strongly pitched for scrapping of the rule.

The CNX Nifty is currently trading at 8441.40, up by 7.75 points or 0.09% after trading in a range of 8405.40 and 8449.05. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Cipla up by 2.28%, BPCL up by 2.13%, Vedanta up by 1.63%, Reliance Industries up by 1.39% and Yes Bank up by 1.37%. On the flip side, Sun Pharma down by 9.43%, Bharti Airtel down by 1.90%, HCL Tech. down by 1.63%, Tata Motors down by 1.59% and Lupin down by 1.21% were the top losers.

Asian markets were trading mostly in the red; Nikkei 225 decreased 72.09 points or 0.35% to 20,491.06, Taiwan Weighted decreased 69.69 points or 0.72% to 9,631.38, Jakarta Composite decreased 29.04 points or 0.56% to 5,187.34, Straits Times decreased 25.66 points or 0.75% to 3,392.11, KOSPI Index decreased 16.34 points or 0.77% to 2,098.46 and FTSE Bursa Malaysia KLCI decreased 11.22 points or 0.64% to 1,736.30.

On the flip side, Shanghai Composite increased 127.58 points or 2.77% to 4,739.33 and Hang Seng increased 181.67 points or 0.66% to 27,605.86.