Indian equities trim gains in the late afternoon session

Indian equities trimmed off early gains but traded above the neutral line in the late afternoon session as investors continued accumulating front line counters on regaining conviction amid increasing hopes that the key interest rates have peaked and the Indian central bank will abstain from any more rate hikes. In the fight between bulls and bears to gain control over the market, bulls were seen rallying firm in the market giving no chance for bears to pounce upon them. Traders were seen piling up positions in Consumer Durables, Auto and Health Care sector while selling was witnessed in Capital Goods, Bankex and Metal sector.

Dr Reddy’s Lab, Cadila Healthcare, Glenmark Pharma, Cipla and Divis Lab from HealthCare pack were trading firm in green pulling the markets higher. L&T, BHEL, Crompton Greaves, Punj Lloyd, Suzlon Energy and Thermax from Capital Goods space were trading weak in red pulling the markets down. Axis Bank, HDFC Bank, Kotak Bank, PNB, SBI and ICICI Bank from Banking space were trading in red putting pressures on the market. Jindal Steel, JSW Steel, Tata Steel Sterlite and Sesa Goa from Metal sectors were trading weak in red exerting pressure on the markets.

In the scrip specific development, aviation companies JetAirways, KingFisher Airlines and SpiceJet rose after public sector oil marketing companies cut jet fuel rates by 1.3% in step with softening in commodity's international rates. Auto company stocks M&M, Hero MotoCorp, Tata Motors, Bajaj Auto, Maruti Suzuki, Ashok Leyland and TVS Motors were trading firm in green after the Reserve Bank of India kept its policy rates unchanged at the mid-quarterly review of the monetary policy today. Oil exploration stocks Cairn India, Oil India and ONGC rose as oil recovered from a six-week low. Valiant Communications soared on report that the company’s board will consider buyback of equity shares. HMT jumped after it submitted Rs 981 crore revival plan to the government.

On the global front, all Asian markets were seen trading in green while the European markets were trading on a mix note. The manufacturing activity in the euro zone contracted at a slower pace than expected in December, while Germany’s preliminary December figures rose versus the previous month. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 4,750 and 15,900 levels, respectively. The market breadth on the BSE was in favor of advances in the ratio of 1382:1188 while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 15,922.77 up by 86.30 points or 0.54% after trading as high as 16,068.90 and as low as 15,866.63. There were 19 stocks advancing against 11 declines on the index.

The broader indices were trading on an optimistic note; the BSE Mid cap index gained 0.25% while Small cap advanced 0.40%.

On the BSE sectoral space, Consumer Durables up 1.78%, Auto up 1.41%, Health Care up 1.02%, FMCG up 1.00% and Power up 0.85% were the major gainers while Capital Goods down 1.09%, Bankex down 0.32%, Metal down 0.09% and Realty down 0.05% were the only losers in the space.

Bharti Airtel up 3.35%, Tata Motors up 2.87%, Cipla up 2.52%, ONGC up 2.43% and Hindalco up 1.89% were the major gainers on the Sensex, while L&T down 1.90%, TCS down 1.57%, Wipro down 1.09%, Coal India down 1.03% and Sterlite Industries down 1.02% were the major losers in the index.

Meanwhile, the Reserve Bank of India (RBI), for the first time since March 2010, kept the key policy rates unchanged. In the mid-quarter monetary policy review, the RBI kept its repo rate, the rate at which RBI lends funds to banks constant at 8.5% and reverse repo rate, at which the RBI borrows money from banks at 7.5%. The RBI also left the cash reserve ratio (CRR), which is the amount of cash the banks have to maintain with the central bank, unchanged at 6%, despite market speculation that it might cut the ratio in order to bolster market liquidity. Bank rate was also maintained at 6%.

The RBI in its mid-quarter monetary policy review, said, ‘on the domestic front, growth is clearly decelerating. This reflects the combined impact of several factors; the uncertain global environment, the cumulative impact of past monetary policy tightening and domestic policy uncertainties.’

‘Both inflation and inflation expectations are currently above the comfort level of the Reserve Bank. However, reassuringly, inflationary pressures are expected to abate in the coming months despite high crude oil prices and rupee depreciation. The growth deceleration is contributing to a decline in inflation momentum, which is also being helped by softening food inflation’ the RBI added.

Finance Minister Pranab Mukherjee on December 15, said that the government's focus needs to shift back to growth concerns in view of weakening growth and market sentiments. 'The present indicators show that both private consumption and investment sentiments have weakened and it is this weakening of sentiments that makes it necessary to shift some of our focus back to near term issues.’

On the domestic front, agricultural prospects look promising on the back of expected record kharif output and satisfactory progress on rabi sowing. However, industrial activity is moderating, driven by deceleration in investment, which is a matter of serious concern, the RBI said.

However, by adding further it said that overall, the growth momentum in the economy is clearly moderating. Further, considering the global and domestic macroeconomic situation, the downside risks to the Reserve Bank’s growth projection, as set out in the Second Quarter Review (SQR), have increased significantly.

The S&P CNX Nifty is currently trading at 4,757.25, higher by 10.90 points or 0.23% after trading as high as 4,818.85 and as low as 4,752.50. There were 33 stocks advancing against 17 declines on the index.

The top gainers on the Nifty were Bharti Airtel up 3.07%, GAIL up 2.92%, Reliance Power up 2.77%, Tata Motors up 2.75% and Cipla up 2.66%.

Axis Bank down 3.50%, L&T down 2.11%, TCS down 1.76%, Coal India down 1.52% and Wipro down 1.41% were the major losers on the index.

Asian markets traded on an optimistic note, Shanghai Composite surged 2.02%, Hang Seng soared 1.43%, Jakarta Composite jumped 1.84%, Nikkei 225 added 0.29%, Straits Times climbed 0.82%, Seoul Composite climbed 1.15% and Taiwan Weighted rose 0.30%.

The European markets were trading on a mix note with, France’s CAC 40 declining 0.04%, Germany’s DAX jumped 0.07% and Britain’s FTSE 100 added 0.36%.