Indian markets trade firm ahead of RBI policy

Indian equity benchmarks, after declining by about half a percent in previous session, have made a decent bounce back with Sensex recapturing its crucial 19,300 mark ahead of the Reserve Bank of India’s (RBI’s) policy announcement. The global cues too remained supportive as the US markets made a good bounce back with the start of the new week and the major indices gained about a percent on rising hopes that negotiations over the “fiscal cliff” were making progress. Moreover, most of the Asian equity indices were trading in the green with Japanese Nikkei remained the top gainer amongst the regional peers, gaining over a percentage point following the weekend election victory of the Liberal Democratic Party, whose leader, Shinzo Abe, in line to become prime minister, is looking forward to shore up growth with higher public works spending.

Back home, the sentiments remained higher on hopes that RBI will cut its key interest rate by 25 basis points at its policy review to be announced later in the day after last week’s inflation data came well below expectations, and as economic growth remains sluggish. However, the gains remain capped as there is some pressure of the government pegging down the 2012-13 growth rate from above 7% to 5.7-5.9%, the lowest in a decade since 2002-03 in its mid-year economic review. Market-men also stayed away from picking up any hefty positions awaiting development in parliament as the government’s plan to push through crucial financial sector bills in the winter session may not fructify, with the Samajwadi Party looking determined to disrupt Parliament on Quota Bill issue.

All of the sectoral indices barring banking were trading with a positive bias. Consumer Durables, Capital goods and Auto indices are the notable gainers. Power, healthcare, realty, technology and public sector undertaking indices have gained moderately as well. The broader indices were going neck-to-neck with benchmarks while, the market breadth on the BSE was positive; there were 1,078 shares on the gaining side against 582 shares on the losing side while 74 shares remain unchanged. The BSE Sensex opened at 19,293.01; about 48 points higher compared to its previous closing of 19,244.42, and has touched a high and a low of 19,330.60 and 19,287.09 respectively.

The index is currently trading at 19,304.21, up by 59.79 points or 0.31%. There were 21 stocks advancing against 8 declines and 1 remains unchanged on the index.

The overall market breadth has made a positive start with 62.17% stocks advancing against 33.56% declines. The broader indices too were trading in-line with benchmarks; the BSE Mid cap and Small cap indices rose 0.16% and 0.39% respectively.

The top gaining sectoral indices on the BSE were, CD up by 1.15%, Capital Goods up by 0.89%, Auto up by 0.70%, Power up by 0.51% and Realty up by 0.35%. While Bankex down by 0.12%, was the sole loser on the index.

The top gainers on the Sensex were BHEL up by 2.22%, Bharti Airtel up by 1.63%, Sun Pharma up by 1.61%, Mahindra & Mahindra up by 1.30% and Tata Motors up by 1.26%.

On the flip side, HDFC Bank was down by 0.39%, Hindustan Unilever was down by 0.28%, ONGC was down by 0.25%, Wipro was down by 0.24% and Coal India was down by 0.17% were the top losers on the Sensex.

Meanwhile, in order help generate more demand during the stake sale process as investors won't have to worry about providing funds upfront for making bids, the finance ministry has urged the market regulator Securities and Exchange Board of India (SEBI) to do away with the 25 per cent margin money requirement for institutions bidding during the PSU stake sale through auction route.  As per the existing norms, institutional investors have the option of submitting bids with 25 per cent margin money under the OFS or auction route.

The ministry has also urged the SEBI to extend the time for accepting bids by the stock exchanges to 1730 hours from 1530 hours during the auction process. These steps by the finance ministry will help to generate better response for PSU shares since these are off-market deals and need not be restricted to equity market timings. Trading in equity markets happen between 0900-1530 hours.

In the current fiscal, the government has fixed a target of raising Rs 30,000 crore from stake sale in PSUs. So far this fiscal, the government has raised over Rs 6,900 crore. Earlier last week, the government raised Rs 6,000 crore through 10 per cent stake sale in NMDC.

The S&P CNX Nifty opened at 5,873.60; about 15 points higher compared to its previous closing of 5,857.90, and has touched a high and a low of 5,882.70 and 5,871.35 respectively. The index is currently trading at 5,876.05, up by 18.15 points or 0.31%. There were 34 stocks advancing against 16 declines on the index.

The top gainers of the Nifty were BHEL up by 2.24%, Bharti Airtel up by 1.73%, Asian Paint up by 1.61%, Sun Pharma up by 1.39% and Bank of Baroda up by 1.35%.

On the flip side, Lupin down by 0.86%, Axis Bank down by 0.60%, ACC down by 054%, BPCL down by 0.38% and Kotak Bank down by 0.36%, were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite surged 15.67 points or 0.73% to 2,176.01, Hang Seng rose 41.36 points or 0.18% to 22,554.97, KLSE Composite added 6.87 points or 0.42% to 1,655.45, Nikkei 225 soared 97.08 points or 0.99% to 9,926.97, Straits Times gained 9.03 points or 0.29% to 3,167.73 and KOSPI Composite was up by 4.01 points or 0.21% to 1,987.11.

On the flip side, Jakarta Composite declined 11.52 points or 0.26% to 4,304.48, Taiwan Weighted was down by 1.86 points or 0.02% to 7,630.21.