Key benchmarks trim early gains amid weak Asian cues

Key benchmarks have pared most of the intraday gains and continue to trade marginally in green in late morning trades after a sharp fall in last two sessions, as profit booking intensified in banks ahead of the Reserve Bank of India's first quarter review on monetary policy on Tuesday. The market is likely to consolidate in the near term with stock specific action only. Rate sensitives’ may remain under pressure on worries that the central bank may hike interest rates to support the rupee from depreciation. The rupee and bonds opened stronger on Friday following comments from the country's chief economic adviser, but traders will now await the auction of 150 billion rupees worth of bonds for further direction. Meanwhile, the Fixed Income Money Market and Derivatives Association of India said there would be no trading bands for government bonds and other securities on Friday. The trading body has been removing or relaxing trading bands in recent sessions in view of the sharp volatility in government bond.  On Friday morning, the rupee was trading at 58.85/86 per dollar compared to its Thursday's close of 59.11/12. The benchmark 10-year bond yield was down 6 basis points at 8.13%. Earlier on Thursday, the rupee had risen to a five-week high of 58.76 against the dollar, indicating the RBI’s steps to prop up the currency are having an impact. India’s chief economic adviser Raghuram Rajan said all options were being considered to fund the country's record-high current account deficit. He said policy measures were geared to stabilise a weak rupee in a way that only does 'minimal damage' to growth.

Meanwhile, rating firm Crisil today revised downwards its GDP growth forecast to 5.5 percent this fiscal from its earlier estimate of 6 percent, citing reduced likelihood of monetary easing going forward due to falling rupee. Sentiments got some support from fresh buying by funds in select stocks following beginning of new settlement in the derivatives segment, recovery in the rupee in the forex market. However, a weak trend on the other Asian bourses, capped the gains in the domestic markets.

On the global front, Most of the Asian equity indices were trading in red at this point of time with Japanese Nikkei declining to its two-week low, as selling accelerated on the back of a firmer yen and disappointing quarterly earnings from the likes of Canon Inc and Advantest Corp. Meanwhile, strengthening Yen also weighed on exporter shares. Back home, the traders were seen piling up positions in Capital Goods, Consumer Durables and Oil & Gas, while selling was seen in Metal, FMCG and PSU sector.

Meanwhile, the NSE Nifty and BSE Sensex were trading near the psychological 5,900 and 19,800 levels respectively. The market breadth on BSE was showing negative trend with advances to declines in the ratio of 925:682. The BSE Sensex is currently trading at 19835.31, up by 30.55 points or 0.15% after trading in a range of 19907.45 and 19794.94. There were 19 stocks advancing against 11 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.06% and Small cap index gained 0.39%.

The top gaining sectoral indices on the BSE were, Capital Goods up by 0.98%, Consumer Durables up by 0.89%, Oil & Gas up by 0.85%, Health Care up by 0.73% and Realty up by 0.62%, while Metal down by 0.67%, FMCG down by 0.48%, PSU down by 0.33% and Bankex down by 0.15% were the losers on the BSE.

The top gainers on the Sensex were Sun Pharma up by 2.22%, L&T up by 1.65%, Mahindra & Mahindra up by 1.44%, Hero MotoCorp up by 1.42% and Cipla up by 1.03% On the flip side, Hindustan Unilever  was down by 3.13%, Coal India was down by 2.80%, Hindalco Inds was down by 2.45% , Maruti Suzuki was down by 2.07% and  Bharti Airtel was down by 1.22% were the top losers on the Sensex.

Meanwhile, the government’s highly debated FDI nod in multi-band retail is likely to face another hurdle with the Medium and Small Enterprise (MSME) Minister, K H Muniyappa saying that global multi brand retailers must comply with mandatory 30 percent sourcing norm for small industries.

Retail giants like Walmart, Tesco and Carrefour have been demanding relaxation in the mandatory sourcing condition, expressing their inability on meeting the sourcing norm and have asked the government to make it to ‘preferably’ as in the case of single brand retail trading.

However, standing firm on its earlier stance, the MSME Ministry has further stated that multi-brand retailers should not continue sourcing items from small and medium units without a time cap even after crossing a minimum investment limit. The ministry has proposed that global retailer must not be allowed to source from small and medium enterprises (SMEs), three years after the unit crosses the investment limit of $ 1 million.

As per current policy, multi-brand retailers must procure 30 per cent of products mandatorily from SMEs with an investment in plant and machinery not exceeding $ 1 million.

Although, the government has permitted 51 per cent FDI in multi-brand retail about ten months ago but ironically, no multi-national company has approached the government to set up stores in India. Furthermore, a parliamentary panel had recently asked the government to set up a 'Retail Regulatory Authority' to deal with issues concerning foreign multi-brand retail companies in the country.

The CNX Nifty is currently trading at 5,918.80 up by 11.30 points or 0.19% after trading in a range of 5,944.50 and 5,913.70. There were 34 stocks advancing against 16 declines on the index.

The top gainers of the Nifty were Sun Pharmaceuticals up by 2.16%, Ambuja Cements up by 1.96%, L&T up by 1.70%, Hero Moto Co up by 1.59% and M&M up by 1.51%. On the flip side, Hindustan Unilever down by 3.19%, PNB down by 2.98%, Coal India down by 2.79%, Hindalco down by 2.64%, and Maruti down by 2.08% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 16.45 points or 0.81% to 2,004.72, Jakarta Composite slipped 3.82 points or 0.08% to 4,670.30, Nikkei 225 tumbled 369.23 points or 2.54% to 14,193.70, Seoul Composite was down by 1.49 points or 0.08% to 1,908.12and Taiwan Weighted was down by 24.27 points or 0.30% to 8,139.31.

On the flip side, Hang Seng rose 9.45 points or 0.04% to 21,910.41, KLSE Composite increased 1.04 points or 0.06% to 1,809.46 and Straits Times added 8.03 points or 0.25 % to 3,243.71.