Sensex, Nifty lurch in red as RBI leaves rates unchanged

The benchmarks have slipped in the red after making a positive start in morning trades as the Reserve Bank of India maintained a status quo at its policy meet and left the interest rates unchanged due to weak rupee. According to the central bank, only a durable fall of inflation will open space for policy easing. It is of the view that it can address growth risks only if inflation eases. On the global front, all the Asian equity indices, barring South Korean Kospi Composite, were trading in the green as investors opted to pile-up positions in beaten down but fundamentally strong stocks after a huge sell-off last week. However, the up-side remained capped as investors remained little cautious ahead of the Fed policy meeting over Tuesday and Wednesday.

Back home, Much in line with street expectations, the Reserve Bank of India (RBI) in its monetary policy review kept the key rates unchanged. Thus, repo rate under the liquidity adjustment facility (LAF) remains at 7.25 per cent. Consequently, the reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, also stands to 6.25 per cent. Meanwhile, the CRR of scheduled banks has yet again been retained at 4.0 per cent of their net demand and time liabilities (NDTL).

The traders were seen piling up positions in Teck, Consumer Durables and IT while selling was seen in Realty, Power and Metal sector. In scrip specific actions, Infosys soared after the IT major shareholders welcomed the re-appointment of company's co-founder N R Narayana Murthy as Executive Chairman, but expressed disappointment over the firm's performance. M&M surged after India's largest utility vehicle manufacturer, on Saturday announced a multi-structured deal under which it will pick up 13.5% stake in Spain's auto component maker CIE. Coal India rose after the state-owned monopoly miner is seriously considering acquisition of two Australian companies for over $4 billion (about Rs 23,000 crore), a move that will enable it to import 28 million tonne high quality thermal coal a year.

Meanwhile, the NSE Nifty and BSE Sensex were trading just below their psychological 5,800 and 19,200 levels respectively. The market breadth on BSE was showing positive trend with advances to declines in ratio of 881:805. The BSE Sensex is currently trading at 19171.23, down by 6.70 points or 0.03% after trading in a range of 19257.41 and 19150.74. There were 10 stocks advancing against 20 declines on the index. The broader indices were trading on mixed note; the BSE Mid cap index was down by 1.19% and Small cap index was up by 0.22%.

The top gaining sectoral indices on the BSE were, Teck up by 0.42%, Consumer Durables up by 0.45%, IT up by 0.35%, Capital Goods up by 0.10% and Auto up by 0.10% while Realty down by 1.13%, Power down by 0.93%, Metal down by 0.88%, PSU down by 0.74%, and Bankex down by 0.59% were the top losers on the BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.70%, Sun Pharma up by 2.32%, Bharti Airtel up by 1.38%, Hero MotoCorp up by 1.34% and HDFC up by 1.32%. On the flip side, Sterlite Industries was down by 1.81%, Tata Motors was down by 1.75%, Jindal Steel was down by 1.46%, NTPC was down by 1.12% and Tata Steel was down by 1.09% were the top losers on the Sensex.

Meanwhile, as per National Council of Applied Economic Research (NCAER), Indian economy is in a crisis with growth slowing down, fiscal and current account deficits (CAD) running high amid persistent inflation. NCARE study said that persistent increase in deficits will lead to macroeconomic risk as it raises concerns about the economy's ability to credit its external payments obligations and also affects the confidence of potential lenders and investors.

India's Current Account Deficit (CAD) widened to a record 6.7 percent in the third quarter of FY13. Attributing high CAD to GDP ratio, increase in imports of oil, coal and gold; slowdown in exports, India's premier economic research institution NCAER said that there is a need to boost exports as high CAD requires high foreign investment to lower the deficit on balance of trade.

By adding further, NCAER said that manufacturing in several sectors of production in India is still not internationally competitive. So, there is a need to pay attention on long-term factors including infrastructure, labour laws and governance reforms and goods and services tax (GST), which would add to India's global competitiveness in manufactured goods.

On the trade integration with other Asian nations, it noted that India should play a pro-active role in strengthening its bilateral trade integration with other Asian nations as country's trade and investment relations with Asia will play a major role in boosting its exports in the Asian century.

The CNX Nifty is currently trading at 5,798.45 down by 9.95 points or 0.17% after trading in a range of 5,825.55 and 5,793.35. There were 13 stocks advancing against 37 declines on the index.

The top gainers of the Nifty were M&M up by 2.57%, Sun Pharma up by 2.31%, Bharti Airtel up by 1.40%  Lupin up by 1.38%, and HDFC up by 1.29%. On the flip side, JP Associates down by 2.46%, Ranbaxy down by 1.90%, Tata Motors down by 1.89%, Sesa Goa down by 1.79% and IDFC down by 1.78% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 0.70 points or 0.03% to 2,162.75, Hang Seng surged 248.88 points or 1.19% to 21,218.02, Jakarta Composite jumped 16.71 points or 0.35% to 4,777.46, KLSE Composite increased 7.75 points or 0.44% to 1,769.94, Nikkei 225 soared 254.45 points or 2.01% to 12,930.14, Straits Times added 21.97 points or 0.68% to 3,183.08 and Taiwan Weighted was up by 55.07 points or 0.67% to 7,991.08.

On the flip side, KOSPI Composite was down by 8.06 points or 0.43% to 1,881.00.