Markets pare early gains as SP may not need Cong support in UP

The Indian equity markets pared some early gains but still in the positive territory amid doubt about the federal government's ability to stimulate stalled reforms process. However, investors were waiting for positive triggers like rate cut by the central bank as last week's weak GDP data is likely to compel RBI to start cutting rates next quarter. Meanwhile Samajwadi Party (SP) has taken a big lead in Uttar Pradesh Assembly elections, but the Bharatiya Janata Party (BJP) and the Bahujan Samaj Party (BSP) together pose a tough challenge for it. Going by the trends the SP is well on its way to emerge as the single largest party. On sectoral front few stocks from realty, consumer durables, automobile and information technology sectors too have forced their way back into the reckoning. Healthcare and metal were also edging higher now. Oil stocks were relatively subdued. On the global front, Asian shares were trading lower. Back home, the market breadth favoring the positive trend; there were 1,450 shares on the gaining side against 852 shares on the losing side while 95 shares remained unchanged.

The BSE Sensex is currently trading at 17,518.02, up by 155.15 points or 0.89%. The index has touched a high and low of 17,691.96 and 17,185.24 respectively.  There were 22 stocks advancing against 7 declines and one remained unchanged on the index.

The broader indices were trading in line with the front-liners; the BSE Mid cap and Small cap indices rose 1.16% and 0.76% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 3.31%, Consumer Durable (CD) up by 2.02%, Bankex up by 1.76%, CG up by 1.73% and Public Sector Undertaking (PSU) up by 1.40%. While, there were no loser on the BSE sectoral space.

The top gainers on the Sensex were DLF up by 4.68%, SBI up by 3.33%, BHEL up by 2.65%, Maruti Suzuki India up by 2.01% and Jindal Steel up by 1.83%.

On the flip side, Cipla down by 0.75%, Tata Power down by 0.66%, Gail India down by 0.45%, Hindalco Industries down by 0.32% and Reliance down by 0.30% remained the top losers on the Sensex.

Meanwhile, liquidity infusion through open market operations (OMOs) could not resolve the deficit problem said, Reserve Bank of India (RBI), Deputy Governor Subir Gokarn, further indicated that the apex bank may cut its CRR rates in its next monetary policy meeting scheduled on March 15. However the possibility of a SLR cut has been ruled out.

Gokran, who is in charge of the monetary policy of the RBI, while speaking on the sidelines of a function stated that RBI’s focus continues to remain on growth even though the recent increase in oil prices remain a threat to inflation. However, he clarified that the magnitude and timing of the cut will be governed by market conditions.

The RBI deputy governor further said the current liquidity tightness was partly temporary, and partly due to structural problems like the central bank’s foreign exchange market intervention. He said OMOs were being conducted to offset the structural issues.

On the policy rate reversal, Gokarn said rising oil prices posed an upward risk to inflation. He added the pricing power of producers may have been hit due to the slowdown in growth. ‘With growth having somewhat slowed, whether higher input prices can be automatically passed through to consumers by producers is a question.’

His comments have come in at a time when the economy is faced with a severe liquidity crunch owing to the 13 interest rate hikes made by the RBI to control inflation in this fiscal. The RBI had cut the CRR by 50 basis points in its last review of the monetary policy in view of a slight decline in inflation. The cut in CRR released Rs 32,000 crore into the banking system.

The S&P CNX Nifty is currently trading at 5,330.35, higher by 50.00 points or 0.95%. The index has touched a high and a low of 5,382.05 and 5,222.70 respectively. There were 42 stocks advancing against 8 declines on the index.

The top gainers of the Nifty were DLF up by 5.02%, SBI up by 3.21%, IDFC up by 3.17%, Axis Bank up by 2.89% and Siemens up by 2.71%.

On the flip side, Tata Power down by 1.01%, Cipla down by 0.93%, Ambuja Cement up by 0.74%, GAIL up by 0.42% and Sterlite Industries down by 0.25% remained the top losers on the index.

All the Asian equity indices were trading in the red; Shanghai Composite plunged by 1.15%, Hang Seng slid 1.38%, Jakarta Composite declined by 0.71%, KLSE Composite shed 0.52%, Nikkei 225 lost 0.58%, Straits Times plummeted by 1.25%, Seoul Composite plunged by 0.74% and Taiwan Weighted was down by 0.83%