Fears of further rate hike drag Indian markets lower

Continuing southward journey, Indian equity benchmarks were trading in the red amid looming fear of another hike in repo rates by the Reserve Bank of India (RBI) to contain inflation and support rupee. Sentiments also remained dampened after Fitch Ratings cut its growth forecast for India in 2013-14 to 4.8%, from its earlier estimate of 5.7% made in June and 7% in September. Further, the agency also slashed India's growth rate projection for FY’15 to 5.8% from the June’s forecast of 6.5%, against its projection of 7.5% in September, 2012. Meanwhile, there is report that foreign direct investment (FDI) inflows into the services sector, which contribute over 60 percent to India’s GDP, declined by 36.5% year-on-year to $1.02 billion during the April-July period.

Global cues too remained choppy with the US markets ending lower in last session on the looming uncertainty about the time of Fed’s tapering. Moreover, the Asian markets were trading mixed at this point of time as investors remained wary ahead of readings on manufacturing across Europe, which are due, later on Monday. However, Chinese markets were trading with traction after flash HSBC Purchasing Managers’ Index (PMI) of the country climbed to 51.2 in September, from August’s 50.1, with 10 out of 11 sub-indices up in the month.

Back home, investors were cautiously awaiting the government’s second half market borrowing schedule later today. Bank treasurers and fund managers expect government to stick to its gross borrowing target of Rs 5.79 lakh crore. On the sectoral front, software witnessed the maximum gain in trade followed by consumer durables and technology, while banking, realty and public sector undertakings remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction, while the market breadth on the BSE was evenly divided; there were 581 shares on the gaining side against 574 shares on the losing side while 49 shares remain unchanged.

The BSE Sensex opened at 20060.82; about 202 points lower compared to its previous closing of 20263.71, and has touched a high and a low of 20199.81 and 20057.10 respectively.

The index is currently trading at 20091.15, down by 172.56 points or 0.85%. There were 10 stocks advancing against 20 declines on the index.

The overall market breadth has made a strong start with 48.04% stocks advancing against 47.37% declines. The broader indices were trading mixed; the BSE Mid cap index down by 0.28% and Small cap index up 0.14%. 

The few gaining sectoral indices on the BSE were, IT up by 1.41%, Consumer Durables up by 1.26%, Teck up by 0.88% and Metal up by 0.40%, while Bankex down by 2.84%, Realty down by 1.88%, PSU down by 1.05%, Oil & Gas down by 0.89% and Capital Goods down by 0.85% were the only losers on the sectoral index.

The top gainers on the Sensex were Hero MotoCorp up by 1.57%, Wipro up by 1.41%, Infosys up by 1.38%, Sesa Goa up by 1.26% and TCS up by 0.93%. On the flip side, SBI was down by 3.44%, ICICI Bank was down by 3.37%, HDFC Bank was down by 3.04%, Bharti Airtel was down by 3.01% and HDFC was down by 2.93% were the top losers on the Sensex.

Meanwhile, Indian banking industry's deposits increased by 14.2 percent to Rs 98.63 lakh crore in the January-March quarter, 2013. The nationalised banks accounted for the highest share of 52.4 per cent of the aggregate deposits in the total deposits during the period followed by the State Bank of India and its associates having 22 per cent share and new private sector banks represent 13.6 per cent share in deposits. Meanwhile, the share of old private sector banks, foreign banks, and regional rural banks in aggregate deposits was 5.1 percent, 4 percent and 2.9 percent, respectively. The Banking Industry had reported 13.8 percent deposits growth in the same period of previous year.

Meanwhile, the growth in credit slowed down to 15.1 per cent at Rs 55.42 lakh crore in the reported quarter from 17.3 per cent a year ago. In gross bank credit, nationalised banks accounted for the highest share at 51 percent followed by SBI and its associates having 22.7 percent share and new private sector banks consist 14 percent share. Meanwhile, old private sector banks, foreign banks and regional rural banks had relatively lower shares in the gross bank credit at 5 percent, 4.9 percent and 2.5 percent in January-March quarter respectively. Indian banking industry credit-to-deposit ratio stood at 78.1 percent in March 2013. The contraction in industry credit growth was mainly due to the prevailing economic slowdown, hurting domestic demand. Indian economic growth slowed down to decade low of 5 percent in the previous fiscal. Meanwhile, banks have also stayed away from aggressive lending due to concerns over asset quality and a rise in non-performing assets.

The CNX Nifty opened at 5,945.80; about 66 point lower as compared to its previous closing of 6,012.10, and has touched a high and a low of 5,989.40 and 5,945.60 respectively.

The index is currently trading at 5,958.90, down by 53.20 points or 0.88 %. There were 18 stocks advancing against 32 declines on the index.

The top gainers of the Nifty were HCL Tech up by 3.08%, Sesa Goa up by 1.88%, Hero MotoCorp up by 1.72%, Ranbaxy up by 1.45% and Infosys up by 1.35%. On the flip side, Bank of Baroda down by 4.44%, DLF down by 4.06%, PNB down by 3.79%, HDFC down by 3.46% and SBI down by 3.41% were the major losers on the index.

The Asian equity indices were trading mixed; Shanghai Composite strengthened 17.32 points or 0.79% to 2,209.17, Seoul Composite added 6.00 points or 0.30% to 2,011.58 and Taiwan Weighted was up by 78.32 points or 0.95% to 8,287.50.

On the flip side, Jakarta Composite declined 36.14 points or 0.79% to 4,547.69, KLSE Composite shed 5.54 points or 0.31% to 1,796.29 and Straits Times was down by 22.76 points or 0.70% to 3,214.77.