Benchmarks open lower ahead of RBI policy meet

Snapping their three days of continuous rally, Indian equity benchmarks have made a negative start ahead of the Reserve Bank of India’s (RBI) monetary policy review later in the day. The central bank continued to be cautious about the state of the economy. In its macro-economic report ahead of credit policy review, the central bank has maintained that monetary space is limited this fiscal. Meanwhile, RBI has cautioned that though CAD in 2013-14 is likely to benefit from moderation in global commodity prices but its sustainability continues to face risk from event shocks that may cause a sudden stop or reversal of capital inflows.

However, global cues remained supportive as overnight, US markets edged higher led by tech shares, after weekly jobless claims figures pointed to improving labor market conditions a day before the closely watched monthly payroll report. Asian markets too were trading higher at this point of time after an interest rate cut by the European Central Bank added to hopes that more stimulus from yet another major central bank will help shore up the global economic recovery.

Back home, Indian rupee too depreciated 17 paise to 53.98 against the dollar in early trade on the Interbank Foreign Exchange market due to appreciation of the US currency against other currencies overseas. On the sectoral front, technology witnessed the maximum gain in trade followed by software and consumer durables while, realty, auto 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 positive; there were 492 shares on the declining side against 770 shares on the losing side while 55 shares remain unchanged.

The BSE Sensex opened at 19,707.95; about 27 points lower compared to its previous closing of 19,735.77, and has touched a high and a low of 19,731.63 and 19,630.55 respectively.

The index is currently trading at 19,669.44, down by 66.33 points or 0.34%. There were 9 stocks advancing against 21 declines on the index.

The overall market breadth has made a strong start with 37.36% stocks advancing against 58.47% declines. The broader indices were trading in red; the BSE Mid cap and Small cap indices up by 0.46% and 0.16% respectively. 

The only gaining sectoral indices on the BSE were, Teck up by 0.61%, IT up by 0.51%, Consumer Durables up by 0.39% and Health Care up by 0.20% while, Realty down by 1.14%, Auto down by 1.12%, Bankex down by 0.96%, PSU down by 0.56% and Capital Goods down by 0.44% were the top losers on the sectoral index.

The top gainers on the Sensex were Bharti Airtel up by 1.74%, Sun Pharma up by 1.09%, NTPC up by 0.84%, Hindustan Unilever up by 0.73% and TCS up by 0.72%.

On the flip side, Tata Motors was down by 2.36%, ICICI Bank was down by 1.55%, SBI was down by 1.42%, Hero MotoCorp was down by 1.09% and Bajaj Auto was down by 1.09% were the top losers on the Sensex.

Meanwhile, the International Monetary Fund (IMF), has estimated that India will grow at about 5.8 percent in FY14 and said that acceleration in infrastructure investment will only help the economy to get back its growth rate at 8 percent per annum.

IMF Deputy Managing Director N Shinohara said ‘IMF forecasts India to grow at around 5.8 percent in FY14 and 6.3 percent in FY15. The stagnant global economy, cyclical policies and structural domestic bottlenecks are the main reasons for the slowdown.     

By adding further, he said that getting back to 8 percent growth will require focusing on the investment problems as the investment in new roads, factories, ports and energy has fallen. The slowdown in bureaucratic approvals is affecting road building, power plant construction and new factory approvals. Project approvals have become more difficult because of the scandals related to big projects, increasingly complex and overlapping regulations and intensified scrutiny of all projects.

Continued efforts by the Government to expedite project clearances and with the new land acquisition bill, new investment projects will spur quickly. These structural reforms would all help bring growth back to pre-crisis level at around 8 percent.  

The CNX Nifty opened at 5,993.50; about 5 points lower as compared to its previous closing of 5,999.35, and has touched a high and a low of 6,000.30 and 5,965.00 respectively.

The index is currently trading at 5,973.65, down by 25.70 points or 0.43%. There were 15 stocks advancing against 35 declines on the index.

The top gainers of the Nifty were Bharti Airtel up by 1.47%, HCL Tech up by 1.46%, Ambuja Cements up by 1.13%, Lupin up by 1.09% and Sun Pharmaceuticals up by 1.08%.

On the flip side, Tata Motors down by 2.69%, IDFC down by 2.07%, JP Associate down by 1.94%, Reliance Infrastructure down by 1.92% and ICICI Bank down by 1.73%, were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite surged 39.37 points or 1.81% to 2,213.49, Hang Seng rose 155.40 points or 0.69% to 22,823.70, KOSPI Composite increased 2.35 points or 0.12% to 1,959.56 and Taiwan Weighted was up by 13.34 points or 0.16% to 8,141.85.

On the flip side, Jakarta Composite declined 38.23 points or 0.77% to 4,955.82, KLSE Composite dropped 13.81 points or 0.81% to 1,699.65 and Straits Times was down by 25.09 points or 0.74% to 3,377.30.

Japanese Nikkei remained shut for the trade today.