Bourses in limbo ahead of RBI’s Annual monetary policy meet; 50 bps rate cut cheers market

Lot of anxiety is being witnessed across the board at Dalal Street as bourses are listlessly hovering in tight band ahead of the outcome of much awaited RBI’s Annual monetary policy review. Even though the current economic scenario is tough, money markets and indices seem to have factored in the apex bank going ahead with a 25 basis point rate cut at least.

However, finance minister statement of reversal of policy stance by RBI during its policy review, seems to be guiding the market going into the crucial event as benchmark indices have pruned substantial losses.  However, lack of positive triggers from global front, are also making Indian equity markets go languid. Regional counterparts are showing downtrend, while US future indices are acting no different in the screen trade.

Back home, barometer index of BSE-Sensex hovering around its neutral line is trading above the 17150 bastion. Meanwhile, the widely followed index of National Stock Exchange-Nifty- trading with slender loss is oscillating sub 5250 crucial level. The broader indices, however, have continued to trade in fine contour. Stocks from Metal, Public Sector Undertaking and Power counters are showing strength, while stocks from Consumer Durable, Bankex and Capital Goods are languishing at the bottom.

Much to investor’s delight, besides cutting rates for the first time in three years to combat slowing economic growth in Asia's third largest economy, RBI delivered a higher than expected 50 bps rate cut in key policy rates. However, the apex bank refrained from toying with CRR, cutting rates for the first time in three years to combat slowing economic growth in Asia's third largest economy, which it left unchanged at 4.75%.  However, RBI in its Macroeconomic and Monetary Development Report cautioned that inflation is likely to remain 'sticky' at the current level throughout the fiscal (2012-13). Post the rate cut, the repo rate and reverse repo under the liquidity adjustment facility (LAF) stand at 8.0% and 7.0% respectively.

The BSE Sensex is currently trading at 17,159.57, up by 8.62 points or 0.05%. The index has touched a high and low of 17225.13 and 17112.41 respectively. There were 17 stocks advancing against 12 declining one’s on the index, while 1 stock remained unchanged. The overall market breadth on BSE was supporting advances which thumped declines in the ratio of 1113:850, while 89 shares remained unchanged.

The broader indices continued to trade in fine fettle; the BSE Mid cap and Small cap indices were up by 0.24% and 0.32% respectively.

The top gaining sectoral indices on the BSE were, Metal up by 0.93%, PSU up by 0.75%, Power up by 0.56%, TECk up by 0.30% and Realty up by 0.26%. While, Consumer Durable down by 0.77%, Bankex down by 0.67%, Capital Goods down by 0.11%, Health Care down by 0.04% were the top losers on the index.

The top gainers on the Sensex were Coal India up by 2.42%, Sterlite Industries up by 1.74%, NTPC up by 1.18%, ONGC up by 1.12% and Hero MotoCorp up by 1.09%. On the flip side, HDFC Bank down by 0.90%, ICICI Bank down by 0.65%, Infosys down by 0.47%, RIL down by 0.46% and M&M down by 0.43% were the top losers on the Sensex.

Meanwhile, India’s services sector has witnessed a growth of a whopping 62% in the inflow of FDI during April-January last fiscal. The growth has come in at a time when the global economy is witnessing a slowdown and leads one into believing that India is emerging as a safe bet for foreign investment.

As per official data, the financial and non-financial services sector had attracted FDI worth $4.83 billion during the 10-months period of 2011-12 as compared to $2.98 billion in the same period of previous year. Total FDI inflows amounted to $26.19 billion during the 10-month period registering an increase of 53%.The sectors that attracted sizeable FDI inflows include drugs and pharmaceutical ($3.20 billion), construction ($2.23 billion), telecommunications ($1.99 billion) and power ($1.56 billion).

During the period, the highest FDI of $8.91 billion came from Mauritius, followed by Singapore ($4.30 billion) and Japan ($2.75 million). The investment trend is encouraging and reflective of the level of confidence of investors in India’s growth story.

Though economic growth in India has declined in FY’12 to 6.9%, the economy is still among the best performing in the world. The growth figures, as per government estimates, are expected to improve to 7.6% in the current fiscal. The Asian Development Bank (ADB) has also projected a moderate increase in growth rate for India to 7% in the current fiscal.

The S&P CNX Nifty is currently trading at 5,223.35, down by 2.85 points or 0.05%. The index has touched a high and low of 5266.60 and 5212.05 respectively. There were 27 stocks advancing against 22 declining one’s on the index.

The top gainers of the Nifty were Coal India up by 2.46%, Sterlite Industries up by 1.79%, RCom up by 1.60%, ONGC up by 1.37% and Sesa Goa up by 1.35%.

On the flip side, Cairn India down by 1.36%, Kotak Bank down by 1.19%, Grasim Industries down by 1.14%, HDFC Bank down by 0.99% and Dr Reddy’s Lab down by 0.87% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite declined by 0.18%, Hang Seng slid 0.58%, Straits Times shed 0.45%, Seoul Composite descended by 0.40%, Taiwan Weighted plunged 1.48% and Nikkei 225 was down by 0.05%.

On the flip side, Jakarta Composite gained 0.17% and KLSE Composite inched up by 0.04% were the only gainers amongst the Asian pack.