Markets trade cautiously ahead of RBI policy review

Indian equity indices have made a cautious start as investors opted to remain on sidelines ahead of Reserve Bank of India’s (RBI) monetary policy review later in the day. Though, the consensus is that the central bank will maintain a status quo, however there will be cautiousness as the RBI in a document released ahead of the monetary policy review. Some support came in after Prime Minister Manmohan Singh has promised more reforms in the coming months in his meet with India Inc. However, weakness in the Indian rupee persists as rupee weakened against the US dollar, down 25 paise at Rs 59.66 to the dollar ahead of the RBI policy review.

Global cues too remained mixed with the US markets ending mostly lower in last session weighed down by the cautiousness ahead of this week's Federal Reserve monetary policy meeting. While a negative report of pending home sales too impacted the sentiments. However, most of the Asian equity indices were trading in the green at this point of time as sentiments remained up-beat after Chinese central bank injected funds into money markets via open market operations for the first time since February, easing fears of another cash crunch ahead of the month end after a severe cash squeeze in June caused market panic.

Back home, on the sectoral front, software witnessed the maximum gain in trade followed by healthcare and technology, while realty, FMCG and public sector undertaking remained the top losers on the BSE sectoral space. The broader indices were trading in the red, while the market breadth on the BSE was negative; there were 465 shares on the gaining side against 658 shares on the losing side while 59 shares remain unchanged.

The BSE Sensex opened at 19577.75; about 15 points lower compared to its previous closing of 19593.28 and has touched a high and a low of 19625.59 and 19553.27 respectively. The index is currently trading at 19603.70, up by 10.42 points or 0.05%. There were 14 stocks advancing against 16 declines on the index.

The overall market breadth has made a weak start with 39.34% stocks advancing against 55.67% declines. The broader indices were trading in red; the BSE Mid cap and Small cap indices down by 0.35% and 0.41% respectively. 

The top gaining sectoral indices on the BSE were, IT up by 0.91%, Health Care up by 0.58%, Teck up by 0.50%, Capital Goods up by 0.30% and Bankex up by 0.12%, while Realty down by 1.04%, FMCG down by 0.67%, PSU down by 0.49%, Power down by 0.45% and Auto down by 0.45% were the top losers on the sectoral index.

The top gainers on the Sensex were Jindal Steel up by 4.09%, Sun Pharma up by 1.70%, Infosys up by 1.35%, TCS up by 1.01% and L&T up by 0.91%. On the flip side, Gail India was down by 2.08%, Hindustan Unilever was down by 1.99%, Sterlite Industries was down by 1.42%, Bajaj Auto was down by 1.38% and Bharti Airtel was down by 1.21% were the top losers on the Sensex.

Meanwhile, Finance Minister P Chidambaram said that India has continued to be the second fastest growing economy in the world after China. While addressing a bank function, Chidambaram expressed hope of achieving six per cent growth this fiscal and said that Indian people should not be worried about the current economic slowdown and should take bank loans to invest in the farm, small industries and housing sectors etc. 

Expressing confidence on Indian economic recovery, Finance Minister said that the government has planned to open 8,000 new bank branches this year, which would create 50,000 jobs in the country and would also help the economy growth. He also suggested that women should form more self-help groups and obtain loans boldly to start new ventures.

Chidambaram said that presently global economic growth has slowed down therefore India cannot remain unaffected. Indian economic growth fell to decade low of 5 percent for the 2012-13 fiscal on account of poor performance of farm, manufacturing and mining sectors.

Referring to the petroleum product prices, he said that the prices have been going up due to the high price of crude oil touching $108 for a barrel, adding that the price of petrol and diesel would show a declining trend only if crude dropped below $100 a barrel. Presently, India imports over 70 per cent of its oil demand, meanwhile the efforts are on to explore crude and gas in the country.

The CNX Nifty opened at 5,836.05; about 4 points higher as compared to its previous closing of 5,831.65, and has touched a high and a low of 5,844.75 and 5,822.55 respectively.

The index is currently trading at 5,839.00, up by 7.35 points or 0.13%. There were 21 stocks advancing against 29 declines on the index.

The top gainers of the Nifty were Jindal Steel up by 4.01%, Sun Pharmaceuticals up by 1.79%, IDFC up by 1.67%, HCL Tech up by 1.54% and Kotak Bank up by 1.42%. On the flip side, DLF down by 2.90%, BPCL down by 2.20%, GAIL down by 2.20%, Hindustan Unilever down by 2.00% and JP Associate down by 1.76% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite surged 20.70 points or 1.05% to 1,997.00, Hang Seng rose 146.17 points or 0.67% to 21,996.32, Jakarta Composite jumped 46.18 points or 1.01% to 4,626.64, Nikkei 225 soared 192.08 points or 1.41% to 13,853.21, Straits Times increased 4.62 points or 0.14% to 3,241.59, Seoul Composite added 15.45 points or 0.81% to 1,915.34 and Taiwan Weighted was up by 80.84 points or 1.00% to 8,165.34.

On the flip side, KLSE Composite was down by 3.45 points or 0.19% to 1,795.33.