Markets enter red terrain as RBI maintains status quo

Indian equity benchmarks pared early gains and have entered into negative territory in early noon session as the Reserve Bank of India (RBI) kept the policy repo rate unchanged at 6.75 per cent due to inflation concerns. RBI governor Raghuram Rajan expects inflation to be around 5 percent by the end of 2016-17. However, losses remained capped with Core sector output returning to positive territory in December 2015 by registering a 0.9 per cent growth after shrinking (-) 1.3 per cent in November last year. Traders were seen piling position in Capital Goods, TECK, It, Power and Auto stocks, while selling was witnessed in Metal, Oil & Gas, PSU, Bankex and FMCG sector stocks.

On the global front, Asian markets were trading mostly in red, as the price of oil extended losses following a 6-percent plunge that was sparked by data showing a manufacturing slowdown in the world's two largest economies. Back home, both the Sensex and Nifty were trading down below their 24,800 and 7,550 levels respectively. In scrip specific development, shares of Bajaj Auto were trading higher after the company has registered rise of 2% in total sales to 2,93,939 units in January 2016 against 2,88,746 units in January 2015. On the flip side, Aban Offshore plunged 4.79% after the company reported net loss of Rs 88.73 crore for the quarter ended December 2015 against net profit of Rs 129.99 crore in the corresponding quarter a year ago.

The market breadth on BSE was positive, out of 2370 stocks traded, 1168 stocks were advancing, while 1094 stocks declined on the BSE.

The BSE Sensex is currently trading at 24787.47, down by 37.36 points or 0.15% after trading in a range of 24709.99 and 24892.53. There were 12 stocks advancing against 17 stocks declining on the index while 1 stock remained unchanged.

The broader indices were trading in red and green; the BSE Mid cap index was down by 0.02%, while Small cap index up by 0.06%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.34%, TECK up by 0.20%, IT up by 0.18%, Power up by 0.02% and Auto up by 0.01%, while Metal down by 1.83%, Oil & Gas down by 1.20%, PSU down by 0.62%, Bankex down by 0.24% and FMCG down by 0.16% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.47%, Dr. Reddys Lab up by 1.28%, Bajaj Auto up by 1.11%, Lupin up by 0.66% and Larsen & Toubro up by 0.52%. On the flip side, Tata Steel down by 3.77%, ONGC down by 2.25%, NTPC down by 1.32%, BHEL down by 1.21% and Cipla down by 1.14% were the top losers.

Meanwhile, amid mounting concern of falling exports, Commerce and Industry Minister Nirmala Sitharaman has convened a meeting of export promotion councils on February 02, to discuss reasons for the decline in exports and ways to promote India's exports, which have remained in the negative zone since December 2014. It is a part of an exercise to assess the country's trade trends in this financial year and the interventions needed to strengthen overseas shipments.

In the meeting, the exports councils will raise matters related to timely refund of tax claims and more support in the forthcoming Budget. They are going to raise the issue of affordable credit to exporters. Besides, the council will also ask the government to create Rs 100 crore market development fund particularly for MSME sector.

The minister is scheduled to first meet representatives of 13 export promotion councils, including those from the engineering, pharmaceutical, cotton textile, leather and chemical sectors. Officials from the Agricultural and Processed Food Products Export Development Authority and the Marine Products Export Development Authority will also attend the meeting. Further, the minister plans to meet all 40-odd export promotion councils over time but in smaller groups so as to give sufficient time to their concerns.

Reflecting the sluggish global demand, India's merchandise exports contracted for the thirteenth consecutive month in December 2015, registering 14.75% decline over last year. The cumulative exports during the April-December period declined by 18.06 per cent to $196.6 billion. The Commerce Ministry is doing several consultations with industry and state representatives in order to find ways to enhance the outbound shipments.

The CNX Nifty is currently trading at 7533.85, down by 22.10 points or 0.29% after trading in a range of 7508.90 and 7568.55. There were 14 stocks advancing against 35 stocks declining on the index while 1 stock remained unchanged.

The top gainers on Nifty were Power Grid up by 1.53%, Bharti Airtel up by 1.48%, PNB up by 1.39%, Dr. Reddys Lab up by 1.36% and Bajaj Auto up by 0.98%. On the flip side, Vedanta down by 4.62%, Tech Mahindra down by 4.00%, Tata Steel down by 3.71%, Cairn India down by 3.25% and ONGC down by 2.36% were the top losers.

Asian markets were trading mostly in red, Nikkei 225 decreased 155.98 points or 0.87% to 17,709.25, Hang Seng decreased 131.24 points or 0.67% to 19,464.26, Jakarta Composite decreased 32.08 points or 0.69% to 4,592.56, Taiwan Weighted decreased 25.72 points or 0.32% to 8,131.24, KOSPI Index decreased 16.34 points or 0.85% to 1,908.48 and FTSE Bursa Malaysia KLCI decreased 11 points or 0.66% to 1,656.80, while Shanghai Composite increased 62.07 points or 2.31% to 2,750.93.