Benchmarks turn green after RBI cuts repo rate by 50 bps

Indian equity benchmarks, wiping off all their early losses, entered into green terrain and are trading with a gain of over quarter percent in noon deals as the Reserve Bank of India has cut its key repo rate by a higher-than-expected 50 basis points to 6.75 per cent, with inflation running at record lows and the economy in danger of slowing down. Some support also came with Finance Minister Arun Jaitley’s statement that he is confident of maintaining fiscal deficit at 3.9 per cent in the current financial year and extremely keen to better the 7.3 per cent growth of fiscal year 2014-15.

On the global front, European counters have made an awful start, CAC, DAX and FTSE were trading with a cut of around a percent in early deals. Asian markets were trading mostly in red at this point of time after weak Chinese data rekindled worries about its fragile economy and led to sharp losses on Wall Street. Back home, on the sectoral front, realty, banking and software witnessed the maximum gain in trade, while metal, oil and gas and healthcare remained the top losers on the BSE sectoral space. However, the broader indices were reeling under pressure, while the market breadth on the BSE was negative; there were 969 shares on the gaining side against 1,248 shares on the losing side while 116 shares remain unchanged.

The BSE Sensex is currently trading at 25686.56, up by 69.72 points or 0.27% after trading in a range of 25287.33 and 25722.18. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.09%, while Small cap index down by 0.22%.

The top gaining sectoral indices on the BSE were Realty up by 0.84%, Bankex up by 0.55%, IT up by 0.44%, Capital Goods up by 0.21% and Auto up by 0.19% while, Metal down by 1.42%, Oil & Gas down by 1.23%, Healthcare down by 1.11%, Power down by 0.09% and PSU down by 0.08%, were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.67%, HDFC up by 1.97%, SBI up by 1.27%, BHEL up by 1.03% and HDFC Bank up by 1.01%. On the flip side, Vedanta down by 5.26%, Tata Steel down by 3.22%, Dr. Reddys Lab down by 3.09%, Hindalco down by 2.83% and Bharti Airtel down by 2.18% were the top losers.

Meanwhile, concerned over continued decline in exports, the Commerce Ministry will hold a meeting of exporters on October 7 to discuss ways to contain the plunge in the outbound shipments. The meeting will be chaired by Commerce Secretary Rita Teaotia and and would be attended by several export promotion councils and Federation of Indian Export Organisations (FIEO).

Issues related to higher cost of credit which is impacting country’s exports and ways to reduce the transactions cost for exporters are expected to be discussed in the meeting. FIEO Director General & CEO Ajay Sahai said that earlier single application was allowed to be filed for all EDI (electronic data interchange) ports in the country for claiming promotional benefits but currently exporters have to file separate applications which are pushing up transaction cost. Ajay Sahai further said that the government should soon take decision on resuming the interest subsidy scheme where exporters get loans at affordable rates.

Indian exports extending its decline for the ninth month in a row, plunged 20.66 percent in August at $21.26 billion. The significant fall in country's exports is attributed to global slowdown and declining commodity prices worldwide. During the month, top two sectors, engineering and petroleum products, contracted by 29 percent and 47.88 percent, respectively. The continuous decline in exports is expected to impact jobs and also put pressure on the current account deficit. India aims to take exports of goods and services to $900 billion by 2020 and also raise the country’s share in world exports to 3.5% which is currently 2%.

The CNX Nifty is currently trading at 7817.35, up by 21.65 points or 0.28% after trading in a range of 7691.20 and 7824.70. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 2.94%, HDFC up by 1.89%, Zee Entertainment up by 1.82%, SBI up by 1.25% and Coal India up by 1.12%. On the flip side, Vedanta down by 5.43%, Adani Ports &Special down by 3.87%, Bosch down by 3.62%, BPCL down by 3.50% and Dr. Reddys Lab down by 3.20% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 tumbled 714.27 points or 4.05% to 16,930.84, Hang Seng declined 702.05 points or 3.31% to 20,484.27, Shanghai Composite dropped 57.42 points or 1.85% to 3,043.33, Straits Times decreased 37.74 points or 1.35% to 2,754.18, Jakarta Composite shed 23.52 points or 0.57% to 4,096.98 and FTSE Bursa Malaysia KLCI was down by 10.24 points or 0.64% to 1,598.19. On the flip side, Taiwan Weighted was up by 9.25 points or 0.11% to 8,132.35.

European Markets were trading in red; UK’s FTSE lost 1.08%, France’s CAC declined 1.50% and Germany’s DAX was down by 1.34%.