Post Session: Quick Review

RBI’s Monetary Policy Review for 2012-13’ turned out to be mood dampener for Indian equity markets, as investors bee-lined cashing out profits, which led benchmarks end with a cut of about a percent. Mere 25 basis repo cut and no CRR cut, mainly disappointed investors, however, major jolt was sensed on account of hawkish tone of RBI in its Monetary Policy Statement. Providing guidance in its monetary policy statement, the central bank suggested of ‘little space’ for further monetary easing given the overall balance of risks stemming from the Reserve Bank’s assessment of the growth-inflation dynamic yields.

Snapping three consecutive sessions rising streak, benchmark 30 share index, Sensex offloaded over 150 points, to shut shop below the psychological  19600 level, while Nifty surrendered over 50 points and concluded below the crucial 6000 level. However, with three sessions of gains in the holiday shortened week, both Sensex and Nifty ended with gains of over a percent. For the week, CNX midcap, underperforming frontline equity indices was up by just about 0.20%, while BSE Smallcap index registered gains of over two percent.

On the global front, Asian pacific shares ended on a mixed note on Friday as investors awaited the employment figures for the world's largest economy. The monthly employment report for the US is expected to show improvement over March but still deliver a fairly weak picture of job growth. Meanwhile, European shares were trading upbeat after European Central Bank (ECB) added to hopes that more stimulus from yet another major central bank will help shore up the global economic recovery.

Closer home, stocks from Metal, Capital Goods, Information Technology counters were the top gaining sectoral indices on BSE. While rate sensitives’ , Bankex, Auto and Realty were the top laggards after  Reserve Bank of India warned of little room for easing monetary policy further. Meanwhile, IT stocks rose on positive economic data in the US, the biggest outsourcing market for the Indian IT firms. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1027: 1339 while 137 scrips remained unchanged. (Provisional)

The BSE Sensex lost 160.13 points or 0.81% to settle at 19,575.64. The index touched a high and a low of 19,744.85 and 19,542.63respectively. 12 stocks were up, while 18 stocks declined and one stock remains unchanged on the index. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 0.26% and 0.39% respectively. (Provisional)

On the BSE Sectoral front, Metal up by 1.44%, Capital Goods up by 0.92%, Teck up by 0.49%, IT up by 0.44% and Health Care up by 0.22% were the only gainers, while Bankex down by 2.40%, PSU down by 1.52%, Auto down by 1.50%, Realty down by 1.39% and Consumer Durables down by 1.06% were the top losers in the space. (Provisional)

The top gainers on the Sensex were Jindal Steel up by 4.22%, Hindalco Industries up by 2.30%, Tata Steel up by 2.22%, Sun Pharma up by 1.84% and Sterlite Industries up by 1.36%, while, Tata Motors down by 3.76%,  SBI down by 3.60%, ICICI Bank down by 3.57%, Gail India down by 2.99% and Bajaj Auto down by 2.56% were the top losers in the index. (Provisional)

Meanwhile, 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 percent to 7.25 percent with immediate effect, its lowest since May 2011, in order to prod the sputtering economy. Consequently, the reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, now stands adjusted to 6.25 percent with immediate effect.

However, the apex bank, held back from slashing Cash Reserve Ratio (CRR) from the present 4 percent. Meanwhile, the Reserve Bank also proposed to reduce the proportion of bonds Indian banks are permitted to hold in the so-called held-to-maturity category to 23 percent from 25 percent, in line with the recommendations of the Working Group on Government Securities and Interest Rate Derivatives Markets, which would be effected by way of reduction of at least 50 bps every quarter, beginning with the quarter ending June 2013.

Providing guidance in its monetary policy statement, the central bank suggested of ‘little space’ for further monetary easing given the overall balance of risks stemming from the Reserve Bank’s assessment of the growth-inflation dynamic yields. Worryingly, the report highlighted of monetary policy being on alert to the risks on account of the CAD and its financing, which could warrant a swift reversal of the policy stance.

On inflation front, RBI expects WPI inflation to be range-bound around 5.5 per cent during 2013-14, with some edging down in the first half on account of past policy actions, while increasing in the second half, largely reflecting base effects. On the growth front, RBI assuming modest improvement in economy activity, with a pick up likely in the second half of the year, has projected the baseline GDP growth for 2013-14 at 5.7 per cent.

The RBI delivered a rate cut of 25 basis points for the third time in 2013 to revive growth, extending the only reduction in borrowing costs among major emerging nations this year. Central Bank’s governor, Subbarao stepped up efforts to spur investment and consumption after India’s weakest expansion in a decade led to the slowest rise in wholesale prices in 40 months in March. In a big relief, the annual rate of inflation, based on monthly WPI, eased to a 40-month low at 5.96% (Provisional) for the month of March, 2013 (over March, 2012) as compared to 6.84% (Provisional) for the previous month and 7.69% during the corresponding month of the previous year. 

India VIX, a gauge for markets short term expectation of volatility lost 4.48% at 15.55 from its previous close of 16.28 on Thursday. (Provisional)

The CNX Nifty lost 55.35 points or 0.92% to settle at 5,944.00. The index touched high and low of 6,000.30 and 5,930.15 respectively. 17 stocks advanced against 33 declining on the index. (Provisional)

The top gainers on the Nifty were Jindal Steel & Power up by 3.81%, Hindalco Industries up by 2.25%, Tata Steel up by 2.22%, HCL Tech up by 2.21% and Sesa Goa was up by 1.90%. On the other hand, Tata Motors down by 3.99%, SBI down by 3.80%, IDFC down by 3.73%, ICICI Bank down by 3.56% and DLF down by 3.41% were the top losers. (Provisional)

All the European markets were trading in green with, Germany’s DAX up by 0.02%, the United Kingdom’s FTSE 100 up by 0.19% and France’s CAC 40 up by 0.24%.

Asian markets ended mixed on Friday amid upbeat jobs data and a rate cut by the European Central Bank. China’s Shanghai Composite went home with green mark on relief buying spread across various sectors, after dropping in five of the last six sessions. South Korea's Kospi Composite closed higher as telecom stocks gave a boost after positive earnings results.

Japanese financial markets remained closed for holidays.