Indian markets trade flat-to-negative in morning deals

Indian equity benchmarks have made a flat-to-negative start and are hovering tad below their pre-close mark tailing weak global cues. Overnight, the US markets mostly made a weak closing while, Asian shares extended their losses on Wednesday and investors gave the euro a wide berth after a bailout deal for Cyprus was thrown into disarray. Cyprus’ Parliament overwhelmingly rejected a proposed tax on bank deposits as a condition for bailout aid, pushing the Mediterranean island a step closer to the brink of financial meltdown.

Back home, investors remain worried on political uncertainty in the country. The Dravida Munnettra Kazhagam (DMK) withdrew from the United Progressive Alliance (UPA) yesterday, claiming UPA had betrayed the Tamils of Sri Lanka with its soft approach towards the Mahinda Rajapakse-led government in that country. Selling in telecom stocks also dampened the sentiments after Sunil Mittal, chairman of Bharti Airtel along with Asim Ghosh, the former head of Vodafone Group Plc’s Indian unit and Ravi Ruia of Essar Group were summoned by a court hearing 2G case. 

On the sectoral front, fast moving consumer goods witnessed the maximum gain in trade followed by healthcare and realty while, consumer durables, oil and gas and banking remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction while, the market breadth on the BSE was negative; there were 728 shares on the gaining side against 1,134 shares on the losing side while 80 shares remain unchanged.

The BSE Sensex opened at 19,026.46; about 18 points higher compared to its previous closing of 19,008.10, and has touched a high and a low of 19,028.09 and 18,900.88 respectively.

The index is currently trading at 19,001.88, down by 6.22 points or 0.03%. There were 17 stocks advancing against 13 declines on the index.

The overall market breadth has made a weak start with 40.80% stocks advancing against 54.60% declines. The broader indices were trading in-line with benchmarks; the BSE Mid cap and Small cap indices declined by 0.25% and 0.29% respectively. 

The top gaining sectoral indices on the BSE were, FMCG up by 0.67%, Health Care up by 0.59%, Realty up by 0.55%, Metal up by 0.37% and Capital Goods up by 0.28% while, Consumer Durables down by 0.65%, Oil & Gas down by 0.45%, Bankex down by 0.42%, PSU down by 0.42% and Teck down by 0.26% were the top losers on the sectoral index.

The top gainers on the Sensex were Sterlite Industries up by 1.62%, Cipla up by 1.49%, Hindustan Unilever up by 1.43%, TCS up by 0.88% and Sun Pharma up by 0.75%.

On the flip side, ONGC was down by 1.34%, NTPC was down by 0.90%, Infosys was down by 0.82%, HDFC Bank was down by 0.52% and ICICI Bank was down by 0.45% 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 opened at 5,740.55; about 5 points lower as compared to its previous closing of 5,745.95, and has touched a high and a low of 5,745.30 and 5,705.95 respectively.

The index is currently trading at 5,735.40, down by 10.55 points or 0.18%. There were 23 stocks advancing against 26 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were Hindustan Unilever up by 1.65%, Cipla up by 1.42%, DLF up by 1.39%, Sesa Goa up by 1.32% and BHEL up by 1.08%.

On the flip side, UltraTech Cement down by 2.70%, ONGC down by 1.57%, ACC down by 1.46%, Grasim down by 1.35% and NTPC down by 0.97%, were the major losers on the index.

Most of the Asian equity indices were trading in red; Jakarta Composite dipped 5.63 points or 0.12% to 4,817.00, Straits Times slipped 5.58 points or 0.17% to 3,263.55, KOSPI Composite declined 6.90 points or 0.35% to 1,971.66 and Taiwan Weighted was down by 2.35 points or 0.03% to 7,836.12.

On the flip side, Shanghai Composite soared 47.37 points or 2.10% to 2,304.80, Hang Seng rose 192.51 points or 0.87% to 22,234.37 and KLSE Composite was up by 4.09 points or 0.25% to 1,629.55.

Japanese Nikkei remained shut for the trade today.