Indian equities add gains; Realty, CG and Bankex leads

Indian equities added gains to continue its firm trade in green in the late afternoon session on back of buying in frontline counters as investors digested the world’s most aggressive central bank’s anti-inflationary stance. Besides, the market didn’t paid any heed towards reports that Standard Chartered Bank has cut India’s economic growth forecast for the current financial year to 5.4% from 6.2%, citing slowing consumer spending and a slack in pickup in investment activity in the first half of fiscal. Traders were seen piling up position in Realty, Capital Goods (CG) and Bankex sector while selling was witnessed in FMCG, IT and TECk sector. Retail, Aviation and Cable Companies stocks were in lime-light as the government on Friday allowed 51% foreign investment in multi-brand retail, 49% investment by foreign airlines in aviation and raised the FDI cap in broadcasting from 49% to 74%. In the scrip specific development, TV18 Broadcast was trading firm in green after the retail broking arm of Kotak Securities upgraded its rating on the company to 'buy' from 'accumulate', citing attractive valuations. Mahindra & Mahindra (M&M) was trading in green on reports that the company has claimed victory in legal proceedings in England over its estranged US distributor Global Vehicles.

On the global front, the Asian markets were trading on a mixed note while the European markets were trading on pessimistic note. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,600 and 18,500 levels respectively. The market breadth on BSE was positive in the ratio of 1481:1277 while 131 scrips remain unchanged.

The BSE Sensex is currently trading at 18,576.84, up by 112.57 points or 0.61% after touching a high and low of 18715.03 and 18,480.54, respectively. There were 17 stocks advancing against 13 declines on the index.

The broader indices were too trading in green; the BSE Mid cap and Small cap indices were trading higher by 0.99% and 0.97% respectively.

The top gainers on the BSE sectoral space were, Realty up by 6.07%, Capital Goods up by 3.94%, Bankex up by 3.10%, Power up by 2.44% and Auto up by 2.28%. While FMCG down by 3.41%, IT down by 3.03% TECk down by 1.93% and Health Care down by 1.84% were top losers on the index.

The top gainers on the Sensex were Jindal Steel up by 7.16%, ICICI Bank up by 5.26%, Tata Motors up by 4.77%, L&T up by 4.66% and BHEL up by 4.57%. On the flip side, ITC down by 5.43%, Dr Reddy’s Lab down by 3.87%, TCS down by 3.75%, Infosys down by 2.80% and HUL down by 2.34% were top losers on the Sensex. 

Meanwhile, in an effort to sustain the newly-found animal spirit, Reserve Bank of India (RBI), in its mid-quarter monetary policy review, walking through a much thin rope, only slashed cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.75 per cent to 4.50 per cent of their net demand and time liabilities (NDTL) effective the fortnight beginning September 22, 2012. However, world’s most aggressive central bank, furthering its anti-inflationary stance, maintained a status quo on key policy rates, viz. repo and reverse repo, currently at 8 per cent and 7 per cent respectively. Meanwhile, marginal standing facility (MSF) rate and the Bank Rate stood unchanged at 9.0 per cent.

In an effort to capitalize on the momentum generated by last week's sudden burst of reforms by the government, which is basking in all-round praise for decisively attempting to rebound after months of paralysis, RBI’s move, which is expected to pump in around Rs 17,000 crore into the banking system, is seen as a positive one by some bankers. 

Meanwhile, after facing months of contemptuous criticism on policy paralysis, the government braved the might of opposition, by announcing a series of big-bang reforms, beginning with an increase in diesel prices followed by allowing foreign direct investment (FDI) in multi-brand retail and power exchanges as well as relaxing the norms on FDI in aviation and broadcasting.

However, RBI in its mid-quarter monetary policy review underscored that since inflationary tendencies have persisted, the primary focus of monetary policy remains the containment of inflation and anchoring of inflationary expectations.  Further, in its guidance, RBI pointing at current situation, where persistent inflationary pressures alongside risks emerging from twin deficits - current account deficit and fiscal deficit - has constrained a stronger response of monetary policy to growth risks, stated that the stance of RBI’s monetary policy will be conditioned by careful and continuous monitoring of the evolving growth-inflation dynamic.

Only in April, the Reserve Bank implemented a frontloaded policy rate reduction of 50 basis points on the expectations of fiscal policy support for inflation management alongside supply-side initiatives for addressing the deceleration of investment and growth. As these expectations did not materialise and inflation remained firmly above 7.5 per cent, the Reserve Bank decided to pause in its policy easing in the mid-quarter review (MQR) of June and in the first quarter review (FQR) of July.

The S&P CNX Nifty is currently trading at 5,617.25, up by 39.60 points or 0.71% after trading in a range of 5,652.20 and 5,585.15. There were 30 stocks advancing against 20 declines on the index.

The major gainers of the Nifty were Reliance Infrastructure up by 7.78%, DLF up by 7.57%, Jindal Steel up by 6.59%, IDFC up by 6.44% and JP Associates up by 5.50%. On the flip side, ITC down by 5.27%, TCS down by 4.41%, Dr Reddy down by 3.98%, HCL Tech down by 3.05% and Ranbaxy down by 3.04% were major losers on the index.

Asian indices were trading mixed; Hang Seng index was up 0.14%, Taiwan Weighted added 0.31% and Straits Times jumped by 0.33% while Shanghai Composite lost 2.14%, Jakarta Composite was down by 0.11%, and Kospi Composite Index declined by 0.26%, were the losers. 

The Japanese market is closed today on account of a public holiday on ‘Respect for the Aged Day’, while the Malaysian market is closed on account of Malaysia Day public holiday.

The European markets were trading in red with, France’s CAC 40 descended 0.48%, Germany’s DAX dropped 0.08% and the United Kingdom’s FTSE 100 declined 0.17%.