Benchmarks pair early gains; continue to trade marginally in green

Indian equity benchmarks pared early gains and were trading near the neutral line with positive bias, after touching life time high level in early trade. Investors became circumspect ahead of RBI’s monetary policy review statement and were selling defensive sectors stocks such as IT, teck and FMCG. Though, major indices were managing to remain in green supported by firm global cues and gain in rate sensitive stocks such as banking, metal and consumer durables. Investors’ sentiments also got some support as Industry body FICCI projected India’s GDP growth for the FY15 at 5.5 percent mainly on the back of improvement in industrial output. The survey expected that the country’s current account deficit (CAD) to remain in the comfort zone at 2.2 percent in 2014-15 and rupee value to remain at 61 against the US dollar by March-end 2015. Shares of public sector banks (PSB) continued to trade higher after Reserve Bank of India relaxed the Basel III norms by a year.

GM Breweries, extending its previous day's rally, has soared 17% to nearly Rs 154, after the company said that its board will recommend bonus issue to existing shareholders in forthcoming board meeting. Jain Irrigation Systems was up 3% on reports that it is looking to sell a stake in its food-processing business to private equity funds to raise up to Rs 610 crore as it seeks to cut debt and boost growth. Larsen and Toubro (L&T) was trading higher by 1% to Rs 1,298 after the company said L&T Construction has won new orders worth Rs 1,009 crore across various business segments in March 2014.

Asian equity indices were trading in green with Nikkei 225 up by 0.96% and Hang Seng up by 0.20%. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,700 and 22,300 levels respectively. The market breadth on BSE was positive, out of 2,359 stocks traded, 1,459 stocks advanced, while 776 stocks declined on the BSE.

The BSE Sensex is currently trading at 22,361.42 up by 21.74 points or 0.10% after trading in a range of 22,467.21 and 22,344. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.68%, while Small cap index up by 0.96%.

The gaining sectoral indices on the BSE were Consumer Durables up by 2.57%, Metal up by 1.62%, Realty up by 1.18%, Auto up by 0.94% and Capital Goods up by 0.57%. While, IT down by 0.81%, Power down by 0.45%, Teck down by 0.36%, FMCG down by 0.19% and Oil and Gas down by 0.06% were the losing indices on BSE.   

The top gainers on the Sensex were Hindalco Inds up by 2.34%, Bharti Airtel up by 2.25%, Bajaj Auto up by 1.66%, Tata Steel up by 1.50% and M&M up by 1.48%. On the flip side, Tata Power down by 1.91%, Dr Reddy’s Lab down by 1.78%, Gail India down by 1.71%, Wipro down by 1.67% and ONGC down by 1.33%.

Meanwhile, industry body FICCI expects India’s GDP growth for the FY15 at 5.5 percent mainly on the back of improvement in industrial output. FICCI, in its Economic Outlook Survey is expecting industrial sector to recover with an estimated growth of 3.3 percent, while it pegs agriculture and services sector growth at 3.3 percent and 7 percent for the next financial year.

FICCI’s survey, based on the response of economists, has noted that that growth in the fourth quarter of the current fiscal is expected to pick up marginally to 5 percent, thus this means that actual growth for FY14 will be slightly lower than the growth of 4.9 percent projected by the Central Statistical Organization. The participating economists cited delays in government approvals and high cost of borrowing as the key reasons hindering investments. Meanwhile, GDP growth is expected to recover to 5.2 per cent in the first quarter of FY15.

Referring to the inflation outlook, FICCI’s survey noted that both WPI and retail inflation rates would remain range bound in coming future. As per the survey, inflation based on Wholesale Price Index (WPI) is expected to stay at about 5.5 percent in FY15 and CPI inflation will be at about 7.9 percent during the next fiscal. The economists’ opinion was divided on CPI becoming the new anchor for the Reserve Bank's monetary policy. The survey added that some economists favored CPI as a good indicator for monetary policy, while others were of the opinion that a single parameter may not be a correct approach adding that CPI is a fairly new series available only since 2011 and hence does not adequately portray the underlying trends.

The survey further forecasted the fiscal deficit as a percent of GDP stands at 4.4 percent for FY15, which is higher than the 4.1 percent estimate announced in the Interim Budget last month. Subsidy burden continues to remain an issue for the government and can further lead to fiscal slippages. Regarding the country’s external sector, the survey expected that the country’s current account deficit (CAD) to remain in the comfort zone at 2.2 percent in 2014-15 and rupee value to remain at 61 against the US dollar by March-end 2015.

The CNX Nifty is currently trading at 6,701.90 up by 6 points or 0.09% after trading in a range of 6,730.05 and 6,699.80. There were only 34 stocks advancing against 16 declining on the index.

The top gainers of the Nifty were Bharti Airtel up by 2.43%, Jindal Steel up by 2.05%, Sun Pharma up by 1.81%, Bajaj Auto up by 1.72% and NMDC up by 1.72%. On the flip side, Dr Reddy’s Lab down by 2.12%, GAIL down by 1.97%, Tech Mahindra down by 1.92%, Tata Powers down by 1.79% and Wipro down by 1.54% were the major losers on the index.

Asian equity indices were trading in green; Straits Times was up by 0.51% to 3,188.40, Jakarta Composite up by 0.96% to 4,768.28, Nikkei 225 up by 0.96% to 14,837.90, Hang Seng up by 0.20% to 22,110.46 and Taiwan Weighted was up by 0.85% to 8,849.28. While, Shanghai Composite down by 0.19% to 2,037.85.