Markets trade in red ahead of RBI’s policy announcement

Indian equity benchmarks have made a weak start and are trading lower with a cut of around half percent ahead of the RBI monetary policy review later during the day. Sentiment was down-beat on report that output in the eight key infrastructure industries declined in April for a second month in a row, by 0.4%. Further, the market participants were keenly awaiting the progress of monsoons. The southwest monsoon, the lifeline of millions of farmers is now expected to hit the Kerala coast only around June 5, almost four days behind the usual onset on June 1. Meanwhile, the session is also negative for broader indices, which succumbing to selling pressure, are trading with losses in the range of 0.18-0.35%. Traders were seen piling position in Healthcare, while selling was witnessed in Metal, FMCG, INFRA Realty and Power sectors stocks.

In scrip specific development, shares of Tata Motors have surged after the company’s total commercial and passenger vehicles sales (including exports) rose 5% to 39,496 units in May 2015 over May 2014. While, shares of ITC have declined on reports stating ban on sale of loose cigarettes, shares of Bajaj Auto and Hero Motocorp have plunged on account of weak auto sales numbers for the month of May.

On the global Front, US stocks ended with modest gains, recovering part of last week's losses in a session marked by cautious trading as investors reacted to mixed economic data. Asian markets were trading mostly in red as investors await word on Greece debt.

Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,400 and 27,150 levels respectively. The market breadth on BSE was negative in the ratio of 715: 945 while 72 scrips remained unchanged.

The BSE Sensex is currently trading at 27716.01, down by 132.98 points or 0.48% after trading in a range of 27629.23 and 27902.53. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.18%, while Small cap index lost 0.35%.

The top gaining sectoral indices on the BSE was Healthcare  was up by 0.13%, while Metal down by 0.84%, FMCG down by 0.76%, INFRA down by 0.55%, Realty down by 0.54% and Power down by 0.50%.

The top gainers on the Sensex were Bharti Airtel up by 1.47%, Tata Motors up by 0.87%, Mahindra & Mahindra up by 0.33%, SBI up by 0.23% and Axis Bank up by 0.12%. On the flip side, Hero MotoCorp down by 2.86%, ITC down by 1.70%, HDFC down by 1.45%, Tata Power down by 1.38% and Wipro down by 1.18% were the top losers.

Meanwhile, boosting further signs of recovery in the Indian economy after a good GDP data, Indian manufacturing activity rose at its fastest pace in four months in May as domestic demand rocketed despite rising costs for firms and consumers. The HSBC Manufacturing Purchasing Managers' Index, compiled by Markit, rose to 52.6 in May from April's 51.3 and pp to a four-month high, signaling a further improvement in business conditions. An index monitoring new business, which highlights underlying demand, jumped to 54.3 in May from 51.9.

Manufacturing sector gathered pace in May, with levels of production and new orders rising at the fastest rates since the opening month of 2015. It was the nineteenth month running that manufacturing output increased, with the rate of growth marked and the fastest since January.

The report noted a further increase in input costs and, consequently, charges were raised following a decline seen in the preceding month. Following a reduction seen in the previous month, output prices were raised in May. Underpinning higher output was improved demand from the domestic and foreign markets. The total volume of new work received increased for the nineteenth successive month and at the quickest pace since January. Growth was led by capital goods producers.

Though, despite the uptick in growth, manufacturing employment was broadly unchanged in May, while stock holdings were accumulated. Pre-production inventories increased for the twelfth straight month, albeit modestly. Holdings of finished goods also rose stock building attempts reflected the need to fulfill existing orders.

The report ahead of a possible interest rate cut by the Reserve Bank of India (RBI) in its policy review wills the India Inc. in an upbeat mood, as both output and new order growth accelerated to four-month highs, though rise in export orders lost traction and outlook remains unclear with stagnant jobs market.

The CNX Nifty is currently trading at 8393.05, down by 40.35 points or 0.48% after trading in a range of 8364.80 and 8445.35. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 1.42%, Lupin up by 1.25%, Zee Entertainment up by 0.94%, Tata Motors up by 0.89% and HCL Tech. up by 0.58%. On the flip side, Hero MotoCorp down by 2.87%, ITC down by 1.67%, Asian Paints down by 1.36%, HDFC down by 1.36% and Wipro down by 1.35% were the top losers.

Asian markets were trading mostly in the red; Hang Seng decreased 222.58 points or 0.81% to 27,374.58, Nikkei 225 decreased 60.64 points or 0.29% to 20,509.23, Straits Times decreased 44.53 points or 1.31% to 3,347.58, KOSPI Index decreased 22.63 points or 1.08% to 2,079.74, Jakarta Composite decreased 2.56 points or 0.05% to 5,213.82, FTSE Bursa Malaysia KLCI decreased 2.32 points or 0.13% to 1,741.09 and Shanghai Composite decreased 1.88 points or 0.04% to 4,826.86. On the flip side, Taiwan Weighted increased 10.83 points or 0.11% to 9,636.52.