Markets pares losses even as RBI leaves rates unchanged

Following a positive start and subsequent retreat, Indian equity markets regained some strength in the late morning session on Monday. Though the Reserve Bank of India (RBI) kept key policy rates unchanged at its mid-quarter policy review today, but the stock market took the shock in its chin as it was more or less anticipated. In the guidance given by the central bank, it has mentioned that the monetary policy stance will be determined by how growth and inflation trajectories and the balance of payments situation evolve in the months ahead. In currency market, rupee depreciated against greenback on the back of dollar's gains against other currencies overseas. On the sectoral front, all rate sensitive stocks were trading down on central bank’s status quo stance on policy rates, while select stocks from health care, consumer durables and capital goods sector were trading in green.

On the global front, Asian shares recouped their early losses but the gains were capped as investors awaited this week’s Federal Reserve meeting and weighed the prospects of reduced economic stimulus. Back home, the market breadth was favoring negative trend; there were 902 shares on the gaining side against 974 shares on the losing side, while 103 shares remain unchanged.

The BSE Sensex is currently trading at 19,196.65, up by 18.72 points or 0.10% after trading in a range of 19,257.41 and 19,084.68. There were 13 stocks advancing against 16 declines on the index and one remained unchanged.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.11% and Small cap index was up by 0.08%.

The top gaining sectoral indices on the BSE were, Health Care up by 0.77%, TECk up by 0.41%, Auto up by 0.40%, Consumer Durables up by 0.39% and Capital Goods up by 0.34%, while Realty down by 1.18%, Metal down by 0.77%, Bankex down by 0.63%, PSU down by 0.55%, and Power down by 0.45% were the top losers on the BSE.

The top gainers on the Sensex were Sun Pharma up by 2.82%, Mahindra & Mahindra up by 2.65%, Hero MotoCorp up by 1.95%, Bharti Airtel up by 1.80% and HDFC up by 1.62%.

On the flip side, Tata Motors was down by 1.75%, Sterlite Industries was down by 1.75%, Hindalco was down by 1.49%, ICICI Bank was down by 0.90% and NTPC was down by 0.89% were the top losers on the Sensex.

Meanwhile, the Chief Economic Advisor Raghuram Rajan has said that India needs to change regulations that govern business as some of our regulations come from British times. Rajan further emphasized that things are difficult in India and we need a thorough revamping of these rules to boost the growth. 

By adding further, Rajan said that the government is trying to build ways to get over the problems and accordingly has taken many measures to speed up clearances of business projects. He said that government processes can take long time, therefore new regulatory bodies like Cabinet Committee on Investment (CCI) has been set up to accelerate the process. The CCI has cleared projects worth $ 25-30 billion since January.

Regarding the macro-economic condition, Rajan said that macro-economic indicators is showing signs of improvement, with inflation coming down, it would give space to the Reserve Bank to lower the policy rates in its monetary policy scheduled on June 17. Raghuram Rajan expects Indian economy to grow by 6 percent in the current fiscal after it grew at a decade's low level of 5 percent in 2012-13. 

The CNX Nifty is currently trading at 5,811.55 up by 3.15 points or 0.05% after trading in a range of 5,825.55 and 5,770.25. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 2.83%, M&M up by 2.74%, BHEL up by 1.76%, Hero MotoCorp up by 1.69%, and Bharti Airtel up by 1.66%. On the flip side, Sesa Goa down by 1.65, Tata Motors down by 1.63%, Ranbaxy down by 1.59%, NMDC down by 1.50% and Hindalco down by 1.35% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 0.16%, Hang Seng surged 1.31%, Jakarta Composite jumped 0.35%, KLSE Composite increased 0.44%, Nikkei 225 soared 2.73, Straits Times added 0.59% and Taiwan Weighted was up by 0.69%.

On the flip side, KOSPI Composite was down by 0.32%.