Markets trade modestly lower recovering from the day’s low

Indian stocks digesting the RBI’s policy review on expected lines have started moving higher, though the major benchmarks are not completely out of woods and still continue to trade in red in early noon session, after slightly higher opening followed by profit taking in some rate sensitive sector. RBI has kept Repo rate unchanged at 7.25% and CRR at 4% in its Third Bi-monthly Monetary Policy Review, 2015-16. There were some dovish comments in the policy review that has supported the markets. In its economic assessment, RBI has said that global economic activity has recovered modestly in Q2 of calendar 2015, though domestic consumption is still weak, but manufacturing activity picked up in July and strengthening exports and corporate profitability could stimulate capital spending in H2. It added that the Indian economic recovery is still work in progress. After strong rainfall in June, July has been below par, but on net, the monsoon is near normal. Regarding inflation it said that inflation rose for the second successive month in June 2015 to a nine-month high on the back of a broad based increase in upside pressures, belying consensus expectations. Though it also noted that during 2015-16 so far, inflation conditions have evolved around the path projected in April and June bi-monthly policy statements. The central bank also sounded positive on growth revival. Back on street, the banking gauge that was under pressure since morning and the biggest loser among sectoral indices, has bounced back, despite the RBI keeping the CRR rates unchanged. The other sectors that are supporting the markets are metal, auto and realty, while IT, tech and consumer durables were restricting any major recovery. Broader indices were however outperforming the benchmarks.

The BSE Sensex is currently trading at 28150.99, down by 36.07 points or 0.13% after trading in a range of 27963.71 and 28264.72. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices trading in green were outperforming the benchmarks; the BSE Mid cap index was higher by 0.84%, while Small cap index was up by 0.55%.

The top gaining sectoral indices on the BSE were Metal up by 0.91%, Auto up by 0.74%, PSU up by 0.70%, Bankex up by 0.54% and Realty up by 0.29%, while IT down by 0.50%, Consumer Durables down by 0.38%, Oil & Gas down by 0.30%, TECK down by 0.27%, FMCG down by 0.18% were the losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 2.21%, Coal India up by 1.63%, SBI up by 1.49%, Mahindra & Mahindra up by 1.46% and Hindalco up by 1.09%. On the flip side, GAIL India down by 2.54%, ONGC down by 1.79%, Infosys down by 1.53%, Tata Motors down by 1.31% and Reliance Industries down by 0.81% were the top losers.

Meanwhile,  Industry body, Federation of Indian Chambers of Commerce and Industry (FICCI), has lauded government’s plan to recapitalise public sector banks (PSU Banks) with infusion of Rs 70,000 crore over the next four years and said that it augurs well for the banking sector and will help fuel economic growth.

FICCI President Jyotsna Suri said that “This is a positive development as it would help meet both the capital adequacy requirements of the banks as well as help build on-lending capacity to fuel growth in the economy. FICCI welcomes this move and hopes that as public sector banks get further support from the government, they would also introduce a cut in lending rates commensurate with cuts announced by RBI in the policy rate”.

She said that FICCI has been suggesting that the fiscal space created on account of savings in fuel subsidies and increased tax revenues due to better coverage and compliance should be utilised for recapitalisation of the banks.

The FICCI president also said that this four year plan announced by the government augurs well for the health of the banking sector and is another step forward in government’s concerted efforts to enhance growth of the economy.

Recently, the finance ministry announced four-year road map for infusing Rs 70,000 crore in state run banks. As part of the plan, the government would infuse Rs 25,000 crore each into PSBs in the current and the next fiscal and then follow it up with Rs 10,000 crore each in 2017-18 and 2018-19.

The CNX Nifty is currently trading at 8532.55, down by 10.50 points or 0.12% after trading in a range of 8486.05 and 8565.15. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.83%, BPCL up by 2.63%, PNB up by 2.45%, Asian Paints up by 2.35% and Hero MotoCorp up by 2.15%. On the flip side, Idea Cellular down by 3.10%, GAIL India down by 2.57%, Cairn India down by 2.51%, ONGC down by 1.90% and Infosys down by 1.71% were the top losers.

Asian markets were trading mixed, KOSPI Index was up by 19.5 points or 0.97% to 2,027.99,
Hang Seng increased by 25.2 points or 0.1% to 24,436.62 and Shanghai Composite increased 98.16 points or 2.71% to 3,721.06.

On the other hand, Nikkei 225 was down by 27.75 points or 0.14% to 20,520.36, FTSE Bursa Malaysia KLCI declined by18.29 points or 1.05% to 1,725.90, Taiwan Weighted lost13.55 points or 0.16% to 8,510.86; Jakarta Composite was lower by 9.69 points or 0.2% to 4,790.49 and Straits Times declined by 6.16 points or 0.19% to 3,186.63.