Benchmarks end flat ahead of RBI’s policy review

Indian equity benchmarks ended the Monday’s trade on quiet note as investors remained on sidelines ahead of the Reserve Bank of India’s (RBI) monetary policy review due tomorrow. Though, after a cautious start, domestic markets gained ground and traded mostly in the green as sentiments remained up-beat on reports that India has overtaken China to become the world’s fastest growing economy by clocking 7.5 percent GDP for the March quarter. Finance Minister Arun Jaitley has said that India has the potential to improve the economic growth to double-digit. Meanwhile, HSBC report stating that India’s manufacturing PMI increased to a four-month high of 52.6 in May from 51.3 in April too aided the sentiments.

Some support also came with report that, beating its own financial target, the government has contained the fiscal deficit at 3.99 per cent of GDP in 2014-15 to Rs 5.01 lakh crore. However, markets could not hold up to the early gains and ended flat as investors opted to book most of their profit at higher levels. Traders remained concerned with 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.

On the global front, European counters have made a weak start and were trading mostly in the red in early deals on persistent fears about Greece’s financial situation and downbeat US data also sapped investors’ confidence. Asian markets ended on pessimistic note after separate surveys of Chinese factory activity failed to banish concerns about a slowdown in the world's second-largest economy.

Back home, appreciation in Indian rupee supported the sentiments. The partially convertible rupee was trading at 63.71 per dollar at the time of equity market closing against the Friday’s close of 63.81 on the Interbank Foreign Exchange. Some support also came with reports that foreign portfolio investors bought shares worth a net Rs 2284.30 crore during the previous trading session on May 29, 2015. Meanwhile, stocks related to capital goods majors edged higher led by gains in L&T and BHEL on the achieving fresh orders. On the flip side, selling witnessed in pharma space led by Sun Pharma, which edged lower by 9% after the company reported lower than expected earnings. The company reported a 44% decline in its final quarter net profit, on the back of the Ranbaxy acquisition.

The NSE’s 50-share broadly followed index Nifty slipped marginally but managed to hold the psychological 8,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over twenty points to finish near the psychological 27,850 mark. Broader markets struggled to get any traction and ended the session slightly in the red. The market breadth remained in favor of advances, as there were 1,210 shares on the gaining side against 1,528 shares on the losing side while 116 shares remain unchanged.

Finally, the BSE Sensex gained 20.55 points or 0.07% to 27848.99, while the CNX Nifty lost 0.25 points to 8,433.40.

The BSE Sensex touched a high and a low of 27959.43 and 27737.58, respectively. The BSE Mid cap index was down by 0.03%, while Small cap index down by 0.01%.

The top gainers on the Sensex were Larsen & Toubro up by 3.03%, Reliance Industries up by 2.76%, Hindustan Unilever up by 2.31%, Maruti Suzuki up by 2.24% and Cipla up by 1.81%. On the flip side, Sun Pharma down by 8.99%, Bharti Airtel down by 2.12%, Tata Motors down by 1.96%, ONGC down by 1.79% and HDFC Bank down by 1.42% were the top losers.

The gaining sectoral indices on the BSE were Capital Goods up by 1.97%, Realty up by 1.61%, FMCG up by 1.04%, Oil & Gas up by 0.69% and Power up by 0.38% while, Healthcare down by 2.81%, INFRA down by 0.82%, Bankex down by 0.55%, Auto down by 0.34%, TECK down by 0.33% and Consumer Durables down by 0.14% were the losing indices on BSE.

Meanwhile, government has beaten their own target of containing Fiscal deficit, gap between government's expenditure and revenue, at 3.99 per cent of GDP, lower than the downwardly revised estimate of 4.1 per cent provided in the government's first full Budget of FY15-16. The Finance Ministry has stated that 'As a result of prudent policies and commitment to fiscal consolidation, the fiscal deficit at the end of 2014-15, stands at Rs 5,01,880 crore which is 98 per cent of the projected figure in Revised Estimate for 2014-15.'

The government has set the fiscal deficit target for the current fiscal at 3.9 per cent of the GDP or Rs 5,55,649 lakh crore with the assumption that the size of the economy at current prices would be Rs 141.08 lakh crore in 2015-16. As per the fiscal consolidation road map outlined in the Budget 2015-16, fiscal deficit is to be brought down to 3.9 per cent of GDP in the current fiscal, then to 3.5 per cent in 2016-17 and further to 3 per cent by 2017-18.

The fiscal deficit in the first month of 2015-16 was Rs 1.27 lakh crore or 23 percent of Budget Estimates for the whole financial year, compared to 21.4 percent of Budget Estimates in April last fiscal. The fiscal deficit for the whole fiscal has been pegged at Rs 5.55 lakh crore.

The CNX Nifty touched a high and low of 8,467.15 and 8,405.40 respectively.

The top gainers on Nifty were Larsen & Toubro up by 2.87%, Reliance Industries up by 2.86%, Maruti Suzuki India up by 2.26%, Hindustan Unilever up by 2.11% and Tata Power Company up by 1.81%. On the flip side, Sun Pharmaceuticals Industries down by 9.11%, HCL Technologies down by 3.80%, Bharti Airtel down by 2.54%, Lupin down by 2.52% and Tata Motors down by 1.80% were the top losers.

Most of European Markets were trading in the red; Germany's DAX was down by 0.17% and UK's FTSE was down by 0.19% while, France's CAC up by 0.03%.

Asian markets closed mostly in red on Monday, while Shanghai surged after official data indicated a pick-up in Chinese manufacturing activity in May. Singapore’s Straits Times was closed today on account of ‘Vesak Day’ holiday. Growth in China’s giant factory sector edged up to a six-month high in May but export demand shrank again, prompting companies to shed jobs and keeping alive worries about a protracted economic slowdown. In a sign that China’s worst downturn in at least six years is hurting its services companies, too, a similar survey showed growth in that sector slipped to a low not seen in more than five years. The official manufacturing Purchasing Managers’ Index (PMI) edged up to 50.2 from April’s 50.1. Indonesian Inflation rose to a seasonally adjusted 7.15%, from 6.79% in the preceding month. Japanese manufacturing activity expanded in May for the first time in two months as domestic orders and output rose, suggesting the economy may be grinding higher again after faltering in April. The Markit/JMMA final Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 50.9 in May, unchanged from the preliminary reading but higher than a final 49.9 in April.