Markets continue to show traction ahead of RBI’s Mid-quarterly policy review

Indian equity markets continued to showcase traction amid prevailing caution ahead of RBI’s Mid-Quarterly Monetary Policy Review, as market-men placed massive bets on the hopes that RBI Governor Duvvuri Subbarao will go slow on his over two-year-old anti-inflationary stance and would unveil a softer interest rate regime on Monday, as more dark clouds gather over the economy.  The consensus view is that Central Bank of India will bring down the key short-term lending rate or repo rate by at least 0.25 percentage points to 7.75 per cent, and may even lower the cash reserves ratio by up to 1 percentage point. Hinging on this optimism, 30 scrip sensitive index, Sensex, was currently oscillating above the 17000 mark, while the widely followed index, Nifty, continued to hover above the 5150 bastion. The broader indices too managed too continued to trade in fine fettle.

Optimistic leads from Europe mainly buoyed the sentiment of globe after Greece’s election delivered a slim parliamentary majority to pro-bailout parties, a result seen as crucial to European leaders’ efforts to hold the euro together. Much of the prop up came for the Asian counterparts, which largely celebrated the victory of the parties supporting the bailout, which otherwise could lead to a financial turmoil. Meanwhile, the US future indices continued to depict an uptick on the screen trade.

Closer home, the BSE Sensex is currently trading at 17,082.76, up by 132.93 points or 0.78%. The index has touched a high and low of 17,109.95 and 17,039.54 respectively.  

The broader indices continued to trade on firm note; the BSE Mid cap and Small cap indices were trading higher by 0.70% and 0.92% respectively.

The top gaining sectoral indices on the BSE were, CG up by 1.58%, Auto and Metal were up by 1.55%, CD up by 1.50% and Realty up by 1.45%, while FMCG continued to reel under pressure and wad trading with a cut of over 0.39%.

The top gainers on the Sensex were Tata Steel up by 2.32%, Hindalco up by 2.03%, Tata Motors up by 1.65%, Sterlite Industries up by 1.55% and L&T up by 1.53%.

On the flip side, Dr Reddy down by 0.22%, HUL down by 0.13%, ITC down by 0.04% and ONGC down by 0.02% remained the few losers on the Sensex.

Meanwhile, services imports into India in the month of April showed a marked decline of 28.41% to $6.5 billion as compared to previous month’s number of $9.08 billion according to the provisional data released by the Reserve Bank of India (RBI). The RBI data included travel, transport, construction, insurance and pension services, financial services, charges for the use of intellectual property, telecommunications, computer and information services among the major components of the services sector exports.

On the other hand, India’s services exports also witnessed a significant contraction to $10.48 billion in April, plunging 22.95% against March’s services exports reading of $12.89 billion. Amid a gloomy global scenario where developed economies are struggling to avoid another wave of slowdown while the emerging ones too are cooling down at an accelerated pace, the demand for Indian services has been impacted adversely. Meanwhile, the domestic macro-economic concerns including elevated inflation levels, the depreciating rupee, higher borrowing costs, widening current account and fiscal deficits etc too have had their share of toll on the services sector.

Over the past decade, services exports from Asia’s third largest Indian economy have grown at a swift pace. Except for the financial year 2009-10 where exports dipped by 9% and FY 2011-12 where growth was just 4% owing to global slowdown, services exports have been growing at an average yearly rate of 25 percent in last 10 years. Services exports has recorded more than six-and-a-half- fold increase in 10 years from $20.76 billion in 2002-03 to $138 billion in 2011-12.

The RBI comes up with the provisional aggregate monthly data on India’s international trade in services with a lag of 45 days. The data undergoes revision in the quarterly Balance of Payments (BoP) data. The October-December BoP data was released on March 30, 2012. According to the provisional data of RBI, services exports in the last quarter of FY 2011-12 stood at $35.14 billion while services imports bill was at $23.16 billion.   

The S&P CNX Nifty is currently trading at 5,172.50, higher by 33.45 points or 0.65%. The index has touched a high and low of 5,190.20 and 5,172.00  respectively. There were 40 stocks advancing against 10 declines on the index.

The top gainers of the Nifty were JP Associates up by 2.93%, Tata Motors up by 2.41%, Sesa Goa up by 2.19%, Reliance Infra up by 2.10% and Tata Steel up by 2.09%.On the flip side, HCL Tech down by 2.91%, Ambuja Cement down by 0.98%, Ranbaxy down by 0.53%, Dr Reddy down by 0.49%, and ITC  down by 0.40% remained the top losers on the index.

All the Asian equity indices were trading in the green; Shanghai Composite climbed 0.69%, Hang Seng Index surged 1.37%, Jakarta Composite soared 1.71%, KLSE Composite advanced 0.43%, Nikkei 225 jumped 1.98%, Straits Times Index ascended 1.13%, KOSPI Composite Index shot up 1.87% and Taiwan Weighted garnered 1.74%.