Indian markets trade flat in morning deals

Indian equity benchmarks, after three consecutive sessions’ of rally, have made a flat-to-positive start and are hovering near their pre-close mark as market participants trade cautiously as the regional peers are not in good shape and traders will remain cautious before going long. The US markets remained shut overnight for Martin Luther King Jr. Day and were unable to give any cue to the other global markets. The Asian equity indices too were trading cautiously but, mostly in the green ahead of outcome of a Bank of Japan (BOJ) meeting in which it was expected to adopt an aggressive monetary easing policy. The BOJ will announce its decision after it ends its two-day meeting later on Tuesday.

Back home, markets after a flat opening were trading slightly in the positive terrain as sentiments got some support from Power sector which garnered about half a percent after the government said that it will soon appoint a coal regulator to monitor the fuel pricing, sampling and other practices in the sector. Some strength also came in from currency markets front after the rupee, gained sharply against the dollar after the government hiked import duty on gold to contain rising current account deficit. The rupee traded at 53.44, its highest level since October 2012. However, the gains remain capped as gold related stocks like Thangamayil Jewellery and PC Jeweller were trading under pressure as the government hiked import duty on gold and platinum by 50%, which is aimed at curbing gold imports and is bound to push up prices of gold and platinum jewellery further. India imported 600 tonnes of gold in the first three quarters of this fiscal. 

On the sectoral front, banking witnessed the maximum gain in trade followed by realty and metal while, software, consumer durables and technology remained the top losers on the BSE sectoral space. The broader indices were going neck-to-neck with benchmarks while, the market breadth on the BSE was positive; there were 1,058 shares on the gaining side against 706 shares on the losing side while 98 shares remain unchanged.

The BSE Sensex opened at 20,102.43; flat compared to its previous closing of 20,101.82, and has touched a high and a low of 20,133.58 and 20,090.22 respectively.

The index is currently trading at 20,118.38, up by 16.56 points or 0.08%. There were 17 stocks advancing against 13 declines on the index.

The overall market breadth has made a positive start with 56.82% stocks advancing against 37.92% declines. The BSE Mid cap and Small cap indices rose 0.46% and 0.28% respectively.

The top gaining sectoral indices on the BSE were Bankex up by 0.62%, Realty up by 0.62%, Metal up by 0.48%, Power up by 0.42% and Health Care up by 0.40%. While, IT down by 0.35%, Consumer Durables down by 0.33%, TECk down by 0.25% and FMCG down by 0.20% were the only losers on the index.

The top gainers on the Sensex were Sun Pharma up by 1.77%, NTPC up by 1.73%, Mahindra & Mahindra up by 1.26%, ICICI Bank up by 1.08% and Hindustan Unilever up by 0.97%.

On the flip side, Gail India was down by 1.83%, Hero MotoCorp was down by 0.74%, ONGC was down by 0.70%, Bharti Airtel was down by 0.69% and ITC was down by 0.67% were the top losers on the Sensex.

Meanwhile, the global rating agency Moody's has retained India's credit rating at the existing level, but cautioned that a high fiscal deficit could pull down the economic growth in the coming years. Moody's expects Indian economy to grow by 5.4 percent in the current fiscal and 6 percent in FY14 while, in the last fiscal, economy grew by 6.5 percent.

The agency also highlighted factors like large government deficits and debt ratios as well as supply constraints in the form of infrastructure, policy and administrative inefficiencies constraining the sovereign credit profile. While on the positive side the global rating agency reaffirmed sovereign credit rating of India at Baa3, which indicates investment grade with a stable outlook.

As per the agency, the government finances are the weakest aspect of India's macroeconomic profile. Further, high commodity prices have raised the subsidy bill and the government's measures to reduce fuel and fertilizer subsidies are too modest to compensate for high global commodity prices. However, the agency’s report has not taken into account the recent decision of the government to partially deregulate diesel and allow oil market companies to raise price every month. 

Regarding the growth prospects, it said that a downturn was underway which could be made worse by slower global growth. While the robust domestic savings and a dynamic private sector would provide strength in the medium term.

On India’s outlook in the near term, the agency said improvement in fiscal situation would depend in increasing tax revenues and expediting PSU disinvestment. Further, on the rating upgrade, Moody's said that the improvement in investment climate, project completion, reduction in infrastructure bottlenecks and sustained improvement in public finances could lead to the credit rating upgrade. However, it also cautioned that a continued increase in government debt ratio and worsening of the balance of payments situation could lead a ratings downgrade.

The S&P CNX Nifty opened at 6,080.15; about 2 points lower as compared to its previous closing of 6,082.30 and has touched a high and a low of 6,093.85 and 6,078.80 respectively.

The index is currently trading at 6,090.85, up by 8.55 points or 0.14%. There were 33 stocks advancing against 17 declines on the index.

The top gainers of the Nifty were Asian Paint up by 3.11%, Sun Pharma up by 1.86%, NTPC up by 1.70%, JP Associate up by 1.54% and ACC up by 1.49%.

On the flip side, Gail down by 1.98%, HCL Tech down by 1.18%, ITC down by 0.94%, Bharti Airtel down by 0.91% and Hero MotoCorp down by 0.81%, were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite rose 2.10 points or 0.09% to 2,330.32, Hang Seng jumped 66.49 points or 0.28% to 23,657.40, Nikkei 225 surged 65.24 points or 0.61% to 10,812.98, KOSPI Composite added 2.45 points or 0.12% to 1,989.31 and Taiwan Weighted was up by 26.24 points or 0.34% to 7,751.16.

On the flip side, Jakarta Composite declined 21.54 points or 0.49% to 4,418.43, KLSE Composite dropped 12.12 points or 0.74% to 1,623.51 and Straits Times was down by 1.00 points or 0.03% to 3,220.32.