Benchmarks on the verge of breaking out in green; RBI’s monetary policy turns out to be 'non-event'

Shaving almost entire losses, benchmark equity indices appear on the verge of breaking out in green, given the pace of recovery of Indian equity markets. Unaffected by RBI’s hawkish tone, investors picked up select bargain bets available at attractive valuation. Meanwhile, a positive start of European counterparts could provide the required fillip to equity markets, given that RBI’s monetary policy largely turned out to be a non-event. On the macro front, drawing comfort from 3-year low inflation, Reserve Bank of India (RBI), in its ‘Monetary Policy Statement 2013-14’, reduced repo rate by 25 basis points from 7.5 per cent to 7.25 per cent with immediate effect, its lowest since May 2011, in order to prod the sputtering economy. However, the apex bank restrained from delivering CRR cut, which is largely seen as a tool for infusing liquidity in the banking system. Benchmark 30-share index, Sensex, is currently trading above its 19,700 psychological level, while 50-share index, Nifty, is just trading shy off 6,000 mark. On the BSE sectoral front, Metal, Capital Goods and Information Technology counters were the major pillars of strength, while the entire rate sensitives Bankex, Realty and Auto counters were the laggards.

On the global front, European shares got off to a positive start 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. Meanwhile, Asian pacific shares were trading mixed at this point of time.

Closer home, the BSE Sensex is currently trading at 19,722.94, down by 12.83 points or 0.07% after trading in a range of 19,744.85 and 19,552.55. There were 16 stocks advancing against 14 declines on the index.

The overall market breadth on BSE is in favour of declines which outnumbered advances in the ratio of 1117:947, while 113 shares remain unchanged. The broader indices were trading marginally in green; the BSE Mid cap index and Small cap index were trading up by 0.03% and 0.02% respectively.

The top gaining sectoral indices on the BSE were Metal up by 2.05%, Capital Goods up by 1.48%, Teck up by 0.95%, IT up by 0.81% and Power up by 0.73% while Bankex down by 1.22%, Realty down by 1.00%, Auto down by 0.59%, PSU down by 0.40% and FMCG down by 0.29% remained the top losers on the sectoral space.

The top gainers on the Sensex were Jindal Steel up by 3.60%, Sterlite Industries up by 2.83%, Hindalco Industries up by 2.61%, Tata Steel up by 2.35% and L&T up by 1.70%.

On the flip side, SBI down by 1.97%, Tata Motors down by 1.69%, ICICI Bank down by 1.69%, Bajaj Auto down by 1.51% and HDFC down by 1.28% were the top losers on the Sensex.

Meanwhile, stressing that exporters and entrepreneurs deserved a greater access to Chinese markets, Commerce and Industry Minister Anand Sharma said that India had taken up the issue with the Chinese leadership at the highest level as the country has huge trade deficit with China. Sharma said, ‘we have a huge trade deficit with China and what is a cause of serious worry for us is the composition of trade with China as India remains an exporter of raw-material and importer of finished manufactured goods.’

By adding further, he said India had taken the issue of ballooning trade deficit with the Chinese leadership. India’s estimated trade deficit of around $39.65 billion was in favour of China. In fact, China has emerged as our largest trading partner at $69 billion and Indian exporters need more access to China market for sectors like pharma and IT.

Regarding the India-EU free trade agreement, Sharma said that the negotiations are at an advanced stage within the defined mandate and are taking care of all the sensitivities and concerns of the domestic industry, which ensure that the country will get more access to foreign markets for sectors such as textiles, pharma and IT.

On global economic slowdown, the minister said that the global economic conditions continued to be grim, which is impacting the India’s export. While, the government's initiative of diversification of export market has helped shipments grow. Meanwhile, India recorded $300.6 billion export during 2012-13, which missed the government target of $360 billion by a wide margin, also pushed up the trade deficit during the fiscal to $190.91 billion from $183.4 billion in the previous financial year. 

The CNX Nifty is currently trading at 5,998.60, down by 0.75 points or 0.01% after trading in a range of 6,000.30 and 5,930.15. There were 26 stocks advancing against 24 declines on the index.

The top gainers of the Nifty were Jindal Steel up by 3.48%, Reliance Infra up by 3.44%, Sesa Goa up by 3.20%, Hindalco up by 2.76% and Tata Steel up by 2.76%.

On the flip side, BPCL down by 2.14%, SBI down by 1.89%, Bajaj Auto down by 1.68% Tata Motors down by 1.65% and Power Grid down by 1.44% and were the major losers on the index.

Most of the Asian equity indices were trading mixed; Shanghai Composite surged 1.34%, Hang Seng rose 0.08%, KOSPI Composite increased 0.43% and Taiwan Weighted was up by 0.08%.

On the flip side, Jakarta Composite declined 0.94%, KLSE Composite dropped 1.26% and Straits Times was down by 0.81%. Japanese Nikkei remained shut for the trade today.

European shares got off to mostly positive start; with CAC 40 gaining 0.20%, DAX adding 0.11% and FTSE 100 declining by 0.09%.