Markets erase some early losses after repo rate cut from RBI

Indian equity markets erased some early losses but continued trading in negative territory in the late morning session on Friday after Reserve Bank of India (RBI) in its monetary policy review, delivered 25 basis points repo rate cut, which is already factored in, while keeping the Cash Reserve Ratio (CRR) unchanged. The Sensex lost 140 points after the policy announcement but within some time it recovered from day’s low. Meanwhile, central bank’s statement that the room to cut borrowing costs this year to support economic growth is limited because of inflation and a record current-account deficit has restricted the markets gain. In currency markets, rupee depreciated against greenback on increased demand for the dollar from banks. On the sectoral front, rate sensitives such as banking, realty and automobile stocks were reeling under pressure. Stocks from PSU and FMCG sectors were mostly subdued amid lackluster trades. Select healthcare, information technology and consumer durables stocks were trading higher.

On the global front, most Asian markets were trading higher, as European Central Bank cut interest rate and prospects for more easing increased hopes that fresh stimulus from yet another major central bank will help foster a stronger global recovery. Back home, the market breadth was favoring negative trend; there were 1,120 shares on the losing side against 795 shares on the gaining side, while 107 shares remain unchanged.

The BSE Sensex is currently trading at 19,678.22, down by 57.55 points or 0.29% after trading in a range of 19,731.63 and 19,552.55. There were 16 stocks advancing against 13 declines on the index and one remains unchanged.

The broader indices were trading in red; the BSE Mid cap index was down by 0.29% and Small cap index was down by 0.20%.

The top gaining sectoral indices on the BSE were, TECk up by 0.91%, IT up by 0.78%, Capital Goods up by 0.71%, Power up 0.29% and Oil & Gas up by 0.27% while, Realty down by 1.62%, Bankex down by 1.35%, Auto down by 0.89%, PSU down by 0.78% and FMCG down by 0.52% were the top losers on the BSE.

The top gainers on the Sensex were Jindal Steel up by 1.55%, Reliance up by 1.46%, Bharti Airtel up by 1.36%, L&T up by 1.12%, and NTPC up by 1.12%.

On the flip side, Bajaj Auto was down by 2.11%,SBI was down by 1.91%, Tata Motors was down by 1.45%, ICICI Bank was down by 1.29% and HDFC was down by 0.84% were the top losers on the Sensex.

Meanwhile, concerned over the widening current account deficit (CAD), President Pranab Mukherjee said that deficit can be brought down at sustainable levels only by increasing exports. The CAD, which occurs when a country's total imports of goods, services and transfers are greater than its exports, has reached an all-time high of 6.7 percent of GDP in the third quarter of FY13.

By adding further, the President said that a strong revival of the global economy is expected in 2014 and at a time when global demand is yet to firm up, there is a need to strengthen our export industry. To reduce dependence on imports, India has encouraged domestic manufacturing for inputs to export industry. The Government's initiative of diversification of export market has helped shipments grow despite the global financial crisis

The commodity export has increased, but there is a need to ensure the availability of enough food in the country. India's exports have increased from $17.9 billion in 1991-92 to $300.6 billion in 2012-13. The country is the largest rice exporter and second largest wheat exporter.

On India's economic growth, Mukherjee expressed confidence that India will bounce back to the high growth trajectory. 

The CNX Nifty is currently trading at 5,979.35 down by 20.00 points or 0.33% after trading in a range of 6,000.30 and 5,930.15. There were 18 stocks advancing against 30 declines while 2 stocks remains unchanged on the index. The top gainers of the Nifty were HCL Tech up by 2.43%, Reliance Infra up by 2.35%, Jindal Steel up by 1.49%, Ambuja Cements up by 1.47% and Bharti Airtel up by 1.34%.

On the flip side, PNB down by 2.49%, Bajaj Auto down by 2.16%, SBI down by 2.15%, BPCL down by 2.14% and Tata Motors down by 1.98% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite surged 1.46%, Hang Seng rose 0.27%, KOSPI Composite increased 0.43% and Taiwan Weighted was up by 0.08%.

On the flip side, Jakarta Composite declined 0.81%, KLSE Composite dropped 0.91% and Straits Times was down by 0.68%.

Japanese Nikkei remained shut for the trade today.