Benchmarks trade slightly lower tracking weak Asian cues

Indian equity benchmarks are trading slightly in the red in early deals on Monday, tracking weak Asian cues. Sentiments also remained cautious ahead of the December quarter gross domestic product (GDP) reading on Friday, which will be closely watched by the market to gauge whether the decline in economic growth has stemmed. Depreciation in Indian Rupee against dollar too dampened sentiments. On the currency front, the rupee was trading marginally lower at 62.14/15 versus its Friday's close of 62.12/13 against the dollar, tracking the weakness in Asian currencies. However, losses remained capped as some support came in from Prime Minister’s Economic Advisory Council (PMEAC) Chairman C Rangarajan’s statement that India's Current Account Deficit (CAD) is expected to be around two percent of GDP during the current fiscal on the back of slackening imports and increased shipments.

On the global front, Asian stocks dropped and the dollar firmed on Monday, as investors looked past the Group of 20’s latest commitment to spur faster global growth and turned their focus back to the impact of the US Federal Reserve’s stimulus withdrawal. Moreover, Chinese shares in the mainland and Hong Kong suffering major plunge on reports of property-lending curbs. The US markets ended modestly lower in last session on getting weak housing starts data, previously owned homes sales declined 5.1 percent in January.

Back home, on the sectoral front, capital goods, healthcare and realty witnessed the maximum gain in trade, while power, consumer durables and software remained the top losers on the BSE sectoral space. The broader indices, however, were outperforming benchmarks, while the market breadth on the BSE was positive; there were 846 shares on the gaining side against 653 shares on the losing side while 82 shares remain unchanged.

The BSE Sensex opened at 20695.48; about 5 points lower compared to its previous closing of 20700.75, and touched a high and a low of 20701.47 and 20637.30 respectively. The index is currently trading at 20676.17, down by 24.58 points or 0.12%. There were 19 stocks advancing against 11 declines on the index.

The overall market breadth has made a strong start with 53.81% stocks advancing against 40.95% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.29% and Small cap gained 0.16%. 

The top gaining sectoral indices on the BSE were, Capital Goods up by 1.47%, Healthcare up by 0.85%, Realty up by 0.40%, FMCG up by 0.36% and Auto up by 0.21%, while Power down by 1.09%, Consumer Durables down by 0.59%, PSU down by 0.57%, IT down by 0.56% and Teck down by 0.49% were the top losers on the sectoral index.

The top gainers on the Sensex were Tata Power up by 4.57%, BHEL up by 2.29%, Axis Bank up by 1.78%, L&T up by 1.70% and Dr Reddys Lab up by 1.35%. On the flip side, NTPC was down by 9.19%, Tata Steel was down by 1.36%, TCS was down by 1.29%, HDFC Bank  was down by 1.02% and  HDFC was down by 0.93% were the top losers on the Sensex.

Meanwhile, the International Monetary Fund (IMF) has lauded India's ability to keep a tight check on spending and monetary policy in the face of snail-paced economic growth and soaring inflation, especially amid difference of opinion over handling these two toxic factors between the government and the Reserve Bank of India (RBI). It was all praises for Indian authorities for their ability to maintain macroeconomic and financial stability amid a challenging macroeconomic landscape.

In consonance with the views, while Finance minister P Chidambaram slashed spending and put in place several measures to ensure that the fiscal deficit was contained at desired level, RBI Governor Raghuram Rajan, a former IMF chief economist, raised the key repo rate by 75 basis points to 8.00 percent since becoming head of India's central bank in September.

IMF however has recommended RBI to go for more interest rate hikes, given the sticky nature of inflation. Further, it also revised its previous forecast upwards to a 4.6 per cent GDP growth in FY14, which would improve to 5.4 per cent in FY15. Though, the new growth estimates are higher than the IMF’s previous forecast of 3.75 per cent in the current fiscal and 5.1 per cent in the next fiscal, India is way more optimistic about economic recovery, given that Interim Budget 2014-15 has pegged the economy’s growth at 4.9 per cent this fiscal and at least 6 per cent in FY15.

Further, the report, which comes just ahead of spring meeting of IMF, said that India was successful to shore up its growth and revive investor sentiments since July last year. The report pointed that while, no further policy changes were assumed in the baseline, but slightly stronger global growth, improving export competitiveness, a favorable monsoon, and a confidence boost from recent policy actions would deliver a modest growth rebound in the near term.

The CNX Nifty opened at 6,140.95; about 14 point lower as compared to its previous closing of 6,155.45, and has touched a high and a low of 6,150.65 and 6,130.80 respectively. The index is currently trading at 6,145.85, down by 9.60 points or 0.16%. There were 27 stocks advancing against 23 declines on the index.

The top gainers of the Nifty were Tata Power up by 4.57%, BHEL up by 2.26%, Axis Bank up by 1.66%, L&T up by 1.58% and Ranbaxy up by 1.40%. On the flip side, NTPC down by 9.48%, Tata Steel down by 1.54%, TCS down by 1.35%, Ambuja Cements down by 1.23% and HDFC down by 1.07% were the top losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined by 42.99 points or 2.03% to 2,070.70, Hang Seng dropped 289.29 points or 1.28% to 22,278.95, Jakarta Composite contracted 10.47 points or 0.23% to 4,635.68, KLSE Composite slipped by 3.92 points or 0.21% to 1,826.82, Nikkei 225 tumbled 135.04 points or 0.91% to 14,730.63, Seoul Composite dropped 7.71 points or 0.39% to 1,950.12 and Taiwan Weighted was down by 44.95 points or 0.52% to 8,556.91.

On the flip side, Straits Times was up by 0.98 points or 0.03% to 3,100.91.