Indian equities trim losses; RBI cuts repo rate, CRR

Indian equities trimmed losses in the late morning session after the Reserve Bank of India cut key policy rates in the quarterly monetary policy. On the global front, most of the Asian equity indices were trading in the positive terrain on Tuesday’s late morning trade after solid US data, but investors remained cautious ahead of more US economic reports and a Federal Reserve policy decision later in the week. Back home, to support an economy set for its slowest growth in a decade, Reserve Bank of India, in ‘Third Quarter Review of Monetary Policy 2012-13’, not only slashed its repo rate by 25 basis points at 7.75% against 8% earlier, but also decided to cut cash reserve ratio of scheduled banks by 25 basis points from 4.25% to 4.0% of their net demand and time liabilities effective the fortnight beginning February 9, 2013. Thus, reverse repo rate under the Liquidity adjustment facility, determined with a spread of 100 basis points below the repo rate, now stands adjusted to 6.75% with immediate effect. Meanwhile, the Marginal Standing Facility rate, too determined with a spread of 100 basis points above the repo rate, stands adjusted to 8.75% with immediate effect. The traders were seen piling up position in Health Care and Metal while selling was seen in Consumer Durables, Realty and Auto sectors. In scrip specific development, Axis Bank shares hit 2-year high on opening of QIP issue. Amara Raja Batteries surged on reporting 23% rise in Q3 net profit. Adani Ports and Special Economic Zone gained on report that it will sell a majority stake in Australia's Abbot Point port to the Adani family. ING Vysya Bank surged after strong Q3 results. The NSE Nifty and BSE Sensex were managing to hold their psychological 6,000 and 20,000 levels respectively.

The market breadth on BSE was positive; advances: declines in the ratio of 987:928.

The BSE Sensex is currently trading at 20061.78 down by 41.57 points or 0.21% after trading in a range of 20107.68 and 20059.68. There were 9 stocks advancing against 21 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.10% and Small cap index was up by 0.12%.

The few gaining sectoral indices on the BSE were, Health Care up by 0.38% and Metal up by 0.12%. While, Consumer Durables down by 0.91%, Realty down by 0.77%, Auto down by 0.40%, FMCG down by 0.30% and Oil & Gas down by 0.23% were the top losers on the index.

The top gainers on the Sensex were Tata Power up by 0.85%, Cipla up by 0.65%, Maruti Suzuki up by 0.60%, Sun Pharma up by 0.53%, and Coal India up by 0.47%.

On the flip side, Wipro was down by 1.83%, Tata Motors was down by 1.15%, BHEL was down by 0.96%, HDFC Bank was down by 0.96% and Bajaj Auto was down by 0.93% were the top losers on the Sensex.

Meanwhile, at the CII Global Partnership Summit, Commerce and Industry Minister Anand Sharma warned that global economic growth remained extremely fragile and faced a heightened risk of going into double-dip recession.  The latest projections indicated that this year the global economic growth would remain almost flat by 3.5 per cent as last year (3.2 per cent).

Sharma said, “The most worrisome is the slowdown in growth of developing economies, which grew at 5.1 per cent last year, registering perhaps the slowest growth in the last decade. The situation in Eurozone remains grim. The U.S. is staring at a ‘fiscal cliff’ and the BRICS economies, which had emerged as pillars of stability and engines of economic growth even at the peak of the crisis, are now experiencing a slowdown. There was a continued volatility of capital flows, particularly to emerging and developing economies.”

Last year, the net private capital flows to emerging markets were down by 10 per cent at $1 trillion even as the emerging market economies invested over $1.3 trillion abroad. A major area of serious concern had been the rising food prices, which jumped to a record high in July last year though there was a softening towards the latter part of the year. Apart from the deteriorating economic situation, there was a massive social dimension to the problem as the world was faced with an unprecedented crisis of unemployment.

The minister also stressed that the national manufacturing policy was not just on paper rather it was being implemented to help India emerge as a manufacturing hub and create millions of new jobs. By adding further, he said that G-20 had emerged as the pre-eminent global body for economic stabilisation in this time of crisis. 

The S&P CNX Nifty is currently trading at 6,068.35 down by 6.45 points or 0.11% after trading in a range of 6,075.35 and 6,056.15. There were 22 stocks advancing against 28 declines on the index.

The top gainers of the Nifty were Axis Bank up by 4.60%, Tata Power up by 0.99%, JP Associate up by 0.82%, Power Grid up by 0.80% and Sesa Goa up by 0.79%

On the flip side, Wipro down by 1.80%, Tata Motors down by 1.15%, DLF down by 1.12%, HDFC Bank down by 1.03% and HUL down by 0.91% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite added 0.89 points or 0.04% to 2,347.39, Jakarta Composite rose 12.39 points or 0.28% to 4,429.33, Nikkei 225 surged 55.15 points or 0.51% to 10,879.32, KOSPI Composite soared 16.09 points or 0.84% to 1,956.04 and Taiwan Weighted was up by 75.78 points or 0.98% to 7,791.25.

On the flip side, Straits Times declined 2.59 points or 0.09% to 3,270.89 and Hang Seng was down by 24.92points or 0.11% to 23,646.96.