Benchmarks trim losses; Sensex regains 19k level

Finance Minister’s assuring statement of Congress party-led government being 'stable' , despite DMK pulling out from the Congress-led UPA coalition in protest against the government's position on a U.S.-backed United Nations resolution on war crimes carried out during Sri Lanka's civil war, has aided the benchmark equity indices in recoup some lost ground post RBI’s Mid-quarter Policy Review. Markets sunk to intra-day low level despite apex bank, in an effort to prop up the sagging growth of the economy, slashed repo rate by much anticipated 25 basis points, although left CRR, key liquidity tool unchanged at 4%, which in turn led to heavy sell off in Banking counter, besides  other rate sensitive’s. However, finding support at lower level, Sensex, reclaimed the crucial 19 k bastion, with Nifty too piercing past the crucial 5750 mark. Broader indices, in tandem with the frontline equity indices, too pruned losses. On the global front, Asian pacific shares were trading mixed as investors awaited a parliamentary vote in Cyprus on a bailout plan crucial to avert bankruptcy. Back home, although selling witnessed was broad-based, Metal, Realty and Public Sector Undertaking counters were the worst performers of the session. The overall market breadth on BSE is in the favour of declines which thumped advances in the ratio of 1771:715, while 125 shares remained unchanged.

The BSE Sensex is currently trading at 19077.86, down by 215.34 points or 1.12% after trading in a range of 19378.61 and 18939.47. There were 5 stocks advancing against 25 declines on the index.

The broader indices too have trimmed losses; the BSE Mid cap and Small cap indices were trading lower by 1.10% and 1.09% respectively.

There was no gainer on the BSE sectoral space, while Metal down by 2.09%, Realty down by 2.07%, PSU down by 1.95%, Bankex down by 1.54% and Capital Goods down by 1.49% were the top losers on the BSE.

The top gainers on the Sensex were Gail India up by 1.59%, Sun Pharma up by 1.17%, Bajaj Auto up by 0.65%, ITC up by 0.35% and Wipro up by 0.08%.

On the flip side, Jindal Steel down by 4.01%, BHEL down by 3.16%, Hero MotoCorp down by 3.10%, ONGC down by 2.95% and Coal India down by 2.53% , and were the top losers on the Sensex.

Meanwhile, for the second time in 2013, Reserve Bank of India (RBI), in an effort to revive the faltering economy, went ahead and slashed repo rate by 25 basis points  at 7.50% against 7.75% earlier in its ‘Mid-Quarter Monetary Policy Review: March 2013, but left its Cash Reserve Ratio (CRR) unchanged at 4%. Consequently, reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, now stands adjusted to 6.50% with immediate effect. Meanwhile, the Marginal Standing Facility (MSF) rate, too determined with a spread of 100 basis points above the repo rate, stands adjusted to 8.50% with immediate effect.

Besides, that apex bank, in its policy review, also exuded its commitment towards actively managing liquidity through various instruments, including open market operations (OMO), so as to ensure adequate flow of credit to productive sectors of the economy. The reduction of CRR of banks by 25 basis points, effective from February 9 and open market purchases of Rs 20,000 crore since February have enabled money market rates to remain anchored to the policy repo rate.

The central bank on January 29, in order to support an economy set for its slowest growth in a decade, slashed its repo rate by 25 basis points at 7.75% against 8% earlier, and cut cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.25% to 4.0%.

Notably, on guidance front, RBI highlighted that even as the policy stance emphasizes addressing the growth risks, the headroom for further monetary easing remains quite limited. RBI has been cautious in lowering rates as it fights inflation and record high Current Account Deficit (CAD) in Asia’s third largest economy.

In its reports, RBI has further added that, notwithstanding moderation in non-food manufactured products inflation, headline inflation is expected to be range-bound around current levels over 2013-14 in view of sectoral demand-supply imbalances, the ongoing corrections in administered prices and their second-round effects. Worryingly, it also emphasized that risks on account of the CAD continue to remain significant despite the likely improvement in Q4 over an expected sharp deterioration in Q3 of 2012-13.

The CNX Nifty is currently trading at 5,761.60, down by 73.65 points or 1.26% after trading in a range of 5,863.60 and 5,724.30. There were 7 stocks advancing against 43 declines on the index.

The top gainers of the Nifty were Gail up by 1.63%, Ranbaxy up by 1.34%, Sun Pharmaceuticals up by 1.21%, Bajaj Auto up by 0.79% and ITC up by 0.33%.

On the flip side, Jindal Steel down by 3.88%, Hero MotoCorp down by 3.45%, ONGC down by 3.04%, BHEL down by 2.94% and Sesa Goa down by 2.87% were the major losers on the index.

All Asian equity indices were trading mixed; Shanghai Composite gained 0.53%, Hang Seng added 0.12%, Jakarta Composite surged 0.51%, KLSE Composite increased 0.32%, Nikkei 225 surged 2.03%, Straits Times added 0.68%, KOSPI Composite soared 0.53% and Taiwan Weighted was up by 0.35%.