Benchmarks snap four days winning streak after RBI maintains status quo

Indian equity benchmarks, snapping four days gaining streak, ended the session in red on Tuesday as investors opted to book some of their profits on Reserve Bank of India’s (RBI) status quo stance in its third bi-monthly policy review. Although RBI’s policy stance was much on expected lines where it left its key interest rate unchanged at 7.25%, raising the possibility of a rate cut later in the year. The central bank, however, retained its growth forecast of 7.6% for the financial year ending March 2016, citing a gradually improving outlook on the back of better real income from the decline in commodity prices and likelihood of better agricultural income if the monsoon continues to improve.

Sentiments remained dampened after the India Meteorological Department (IMD) said that India’s southwest monsoon in the remaining two months of the four-months season, that is in August and September, is expected to be below normal at 84 per cent of the long-period average (LPA) as El Nino weather conditions have strengthened in the past few month. Traders were also concerned about a report stating that Mutual fund inflow in equity markets dropped by 58% to Rs 4,300 crore in July.

Global cues too remained sluggish with European counters losing ground on Tuesday, with French bank Credit Agricole and German carmaker BMW among the worst performers after reporting results, while weak oil prices also weighed on energy stocks. Asian markets ended mostly in red after downbeat economic data pressured Wall Street ahead of a key US jobs report that could provide important clues to the timing of the Federal Reserve’s interest rate increase.

Back home, losses remained capped on reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 350.41 crore on August 3, 2015, as per provisional data released by the stock exchanges. Appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 63.77 per dollar at the time of equity market closing against the Monday’s close of 64.03 on the Interbank Foreign Exchange. On the sectoral front, Steel stocks remained on buyers’ radar on reports that the government plans to hike import duty on flat and long steel products. Additionally, stocks of public sector oil marketing companies (OMCs) edged higher after crude oil prices dropped sharply yesterday.

The NSE’s 50-share broadly followed index Nifty declined by over twenty points but managed to hold the psychological 8,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over one hundred and ten points to end below its crucial 28,100 mark. Broader markets, however, outperformed benchmarks and ended the session with a gain of around a percent. The market breadth remained in favor of advances, as there were 1,619 shares on the gaining side against 1,271 shares on the losing side while 127 shares remain unchanged.

Finally, the BSE Sensex declined by 115.13 points or 0.41% to 28071.93, while the CNX Nifty lost 26.15 points or 0.31% to 8516.90.

The BSE Sensex touched a high and a low 28264.72 and 27866.12, respectively. The BSE Mid cap index was up by 1.11%, while Small cap index was up by 0.67%.

The top gaining sectoral indices on the BSE were Metal up by 2.69%, PSU up by 1.03%, Auto up by 1.00%, Bankex up by 0.47% and Healthcare up by 0.06%,while Consumer Durables down by 0.77%, Oil & Gas down by 0.69%, TECK down by 0.65%, IT down by 0.59% and FMCG down by 0.38% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.39%, Hindalco up by 3.36%, Coal India up by 2.82%, SBI up by 2.54% and Mahindra & Mahindra up by 2.18%. On the flip side, Hero MotoCorp down by 2.73%, GAIL India down by 2.53%, ONGC down by 2.40%, Wipro down by 2.16% and Tata Motors down by 1.85% were the top losers.

Meanwhile, in the financial year 2015, Foreign Direct Investment (FDI) in petroleum and natural gas sector has witnessed ten-fold jump. During the year FDI surged to Rs 6,473.22 crore, as compared to Rs 678.39 crore in FY14 and Rs 1,192.57 crore in financial year 2013. Over the previous three financial years, the sector has received FDI worth more than Rs 8,375 crore.

In order to increase domestic investment and technological capabilities, Union Minister Dharmendra Pradhan has said the government is encouraging foreign investment in the sector. The minister further added that there was highest investment in exploration and production of oil and natural gas, followed by refineries and marketing including pipelines network and LNG re-gasification infrastructure. Besides, the government is planning to set up 15,000 kilometres of new pipeline.

In the first three months of current financial year, the sector has received FDI worth Rs 31.35 crore. During the financial year from 2013 to end of June 2015, the Plan Capital Investment in the sector has reached Rs 2,59,278.83 crore. The government has allowed 100 percent FDI in the sector in exploration and production, refining by the private companies and marketing of petroleum products, among other areas.

The CNX Nifty touched a high and low 8565.15 and 8448.25 respectively.

The top gainers on Nifty were Tata Steel up by 4.38%, Bank of Baroda up by 3.71%, Hindalco up by 3.64%, PNB up by 3.22% and Tech Mahindra up by 3.13%. On the flip side, Idea Cellular down by 3.83%, Cairn India down by 2.92%, Hero MotoCorp down by 2.75%, GAIL India down by 2.54 and ONGC down by 2.43% were the top losers.

European Markets were trading in the red; UK's FTSE was down by 0.07% France’s CAC was down by 0.56% and Germany’s DAX was down by 0.20%.

Asian markets closed in red on Tuesday, barring Shanghai Composite and KOSPI Index. Shanghai stocks closed up amid a late spurt of buying after China’s two stock exchanges announced new rules to restrict short-selling. The Bank of Japan is expected to maintain its massive monetary stimulus and optimism on chances that it will hit its inflation target at a policy review later this week, even though the economy is expected to have contracted in the second quarter. BOJ is conducting simulations about how to end quantitative easing, including its purchase of exchange-traded funds, but it is too early to talk about specific strategies in public. Bank of Japan Deputy Governor Kikuo Iwata played down any risk that expected interest rate increases by the US Federal Reserve or the Bank of England could pose to financial markets, and dismissed suggestions that the BOJ should raise rates to prevent the yen from falling too fast. Japan’s Average Cash Earnings fell to a seasonally adjusted -2.4%, from 0.7% in the preceding quarter whose figure was revised up from 0.6%. South Koreans are on course to buy a record amount of gold in 2015, worried that a meltdown in China’s stock markets will destabilize South Korean equities and keen to replenish a traditional store of value in an era of low interest rates. In contrast to the weak demand in top gold buyers China and India, South Koreans are on target to buy 1 trillion won ($860 million) in bullion for the first time this year. South Korean CPI remained unchanged at a seasonally adjusted annual rate of 0.7% compared to the preceding month.