Indian equity benchmarks pared early losses and entered into positive territory in afternoon session as buying was witnessed in banking stocks, after the Reserve Bank of India (RBI), in its second Quarter Review of Monetary Policy 2013-14, announced a hike in repo rate by 25 bps and reduced the marginal standing facility (MSF) rate by 25 basis points to 8.75% from 9%, which was on expected lines. The central bank has also increased the liquidity provided through term repos of 7-day and 14-day tenor from 0.25% of net demand and time liability (NDTL) of the banking system to 0.5% with immediate effect. Buying was also witnessed in consumer durables, auto and realty stocks. On stock specific movement, Maruti Suzuki was up nearly 7% on BSE after reporting a better than expected net profit at Rs 670 crore for Q2FY2014. Sun Pharma was trading up by around 1% on BSE after the company said it has addressed the United States Food and Drug Administration’s (USFDA) concerns about quality control.
On the global front, Asian markets were trading mixed as investors turned cautious and booked profit ahead of the outcome of the U.S. Federal Reserve's policy meet this week. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,100 and 20,500 levels respectively. The market breadth on BSE was negative, out of 1,977 stocks traded, 864 stocks advanced, while 1,008 stocks declined on the BSE.
The BSE Sensex is currently trading at 20,669.46 up by 99.18 points or 0.48% after trading in a range of 20,697.22 and 20,493.66. There were only 23 stocks advancing against 7 declines on the index.
The broader indices were trading mixed; the BSE Mid cap index was up by 0.51%, while Small cap index down by 0.02%.
The gaining sectoral indices on the BSE were Bankex up by 1.66%, Consumer Durables up by 1.40%, Auto up by 1.07%, Realty up by 1.00% and Metal up by 0.92%. While, Capital Goods down by 0.75%, FMCG down by 0.15% and Teck down by 0.02% were losing indices on BSE.
The top gainers on the Sensex were Maruti Suzuki up by 6.51%, ICICI Bank up by 2.66%, Tata Steel up by 1.82%, SSLT up by 1.66% and Hindalco Inds up by 1.31%. On the flip side, BHEL down by 1.98%, L&T down by 0.90%, ITC down by 0.38%, TCS down by 0.25% and Bharti Airtel down by 0.21% were the only losers on the Sensex.
Meanwhile, Kirit Parikh panel has recommended the government for an immediate increase in diesel prices by at least Rs 4 a litre. Favoring the continuation of existing trade parity pricing mechanism for controlled petroleum products, the expert panel, which was tasked to suggest a methodology for pricing of diesel and cooking fuel, also wants the government to stop subsiding kerosene and domestic cooking gas within three years.
The panel’s report said that the diesel prices should be hiked by Rs 4 a litre immediately to offset the revenue loss incurred by public sector oil marketing companies (OMCs) for selling the fuel at lower than cost price. The remaining subsidy should be recovered from consumers through a monthly price hike of Re 1 per litre. At present, the oil marketing companies have been allowed to increase diesel price by 45-50 paise a litre every month.
By adding further, Parikh panel said that existing pricing mechanism based on trade parity should continue, until diesel pricing is made market determined. The panel was also stressed that modification in existing trade parity pricing principles will not solve the problem of mounting losses on sale of price-controlled products because of high international crude prices and rupee depreciation. Meanwhile, the government is looking to alter the way diesel and cooking fuels are priced to reduce its subsidy burden, which appears to be slipping out of hand.
In India, the refinery-gate price of diesel since 2006 has been based on trade parity pricing, which include 80 percent of import parity price and 20 per cent of export parity price. Meanwhile, Indian public sector oil marketing companies have been maintaining that export parity pricing was not viable for their refineries. On the other hand, private refiners such as Reliance and Essar have been seeking market-determined pricing for all fuels and providing consumers a choice by promoting competition. The CNX Nifty is currently trading at 6,135.90 up by 34.80 points or 0.57% after trading in a range of 6,145.60 and 6,079.20. There were 42 stocks advancing against 8 decline on the index.
The top gainers of the Nifty were Maruti up by 6.58%, Bank of Baroda up by 2.95%, JP Associate up by 2.90%, ICICI Bank up by 2.73% and CAIRN up by 2.60%. On the flip side, BHEL down by 1.95%, L&T down by 0.82%, ITC down by 0.72%, M&M down by 0.38% and Ranbaxy down by 0.26% was the major loser on the index.
The Asian equity indices were trading mixed; Taiwan Weighted up by 0.16%, Seoul Composite up by 0.18%, Straits Times up by 0.10%, Hang Seng up by 0.04%. While, Jakarta Composite down by 0.70%, KLSE Composite down by 0.70%, Nikki 225 down by 0.28% and Shanghai Composite down by 1.57%.
