Benchmarks trade cautiously ahead of RBI policy

Indian equity benchmarks have started the new financial year on positive note but are turning flat as investors are booking their profits ahead of Reserve Bank of India’s (RBI) first bi-monthly monetary policy statement for 2014-15. The RBI is expected to keep its policy interest rate unchanged, despite retail inflation easing to a 25-month low in February. But if RBI Governor Raghuram Rajan springs a surprise it will direct the markets in that direction. However, some support came in with Finance Minister P Chidambaram’s statement that the current account deficit (CAD) is likely to be $35 billion in 2013-14. Meanwhile, foreign institutional investors (FIIs) bought shares worth a net Rs 942.86 crore on March 31, 2014, as per provisional data from the stock exchanges.

Global cues too remained supportive with the US markets posting gains to end the first quarter on a solid note after Federal Reserve Chair Janet Yellen reassured investors on ultra-easy monetary policy and on hopes that China and Europe will be unveiling fresh stimulus measures. The Asian markets too were trading mostly in the green at this point of time after China’s official PMI survey showed manufacturing managed to continue expanding in March.

Back home, on the sectoral front, software, oil and gas and technology witnessed the maximum gain in trade, while metal, realty and fast moving consumer goods remained the top losers on the BSE sectoral space. The broader indices too were trading slightly in the green, while the market breadth on the BSE was positive; there were 942 shares on the gaining side against 657 shares on the losing side while 76 shares remain unchanged.

The BSE Sensex opened at 22,455.23; about 68 points higher compared to its previous closing of 22,386.27, and touched a high and a low of 22,485.77 and 22,361.22 respectively. The index is currently trading at 22,399.78, up by 13.51 points or 0.06%. There were 11 stocks advancing against 19 declines on the index.

The overall market breadth has made a strong start with 56.24% stocks advancing against 39.22% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.06% and Small cap gained 0.27%. 

The top gaining sectoral indices on the BSE were, IT up by 1.13%, Oil & Gas up by 1.05%, Consumer Durables up by 0.99%, Teck up by 0.97% and Auto up by 0.38%, while Metal down by 1.31%, Realty down by 1.01%, Capital Goods down by 0.69%, FMCG down by 0.64% and Bankex down by 0.11% were the top losers on the sectoral index.T

he top gainers on the Sensex were ONGC up by 2.07%, Wipro up by 1.76%, TCS up by 1.56%, Tata Motors up by 1.32% and RIL up by 1.19%. On the flip side, Hindalco was down by 3.18%, BHEL was down by 1.42%, Coal India was down by 1.41%, Tata Steel was down by 1.32% and ITC was down by 1.29% were the top losers on the Sensex.

Meanwhile, in order to avoid the confusion among stakeholders and to bring consistency in its recent regulation, the Corporate Affairs Ministry has made changes in the depreciation schedule under the new company law.

The ministry has notified that there will not be two classes of companies for depreciation purposes as was indicated in the new company law schedule. Clearing air on depreciation schedule for firms, the Corporate Affairs Ministry noted that all companies need to follow the ‘useful life’ mentioned for various tangible assets in the depreciation schedule whereas the residual value of an asset cannot exceed 5 percent. Further, companies need to disclose the justification in their financial statement if they deviate from these norms.

Regarding the continuous process plants, the Corporate Affairs Ministry has changed the useful life of continuous process plants to 25 years from 8 years specified in the depreciation schedule under the new law which is likely to boost the net profits of companies in industries, such as cement and chemicals. Furthermore, the Ministry has restored revenue-based amortisation for toll roads built under public-private partnerships and has clarified that amortisation of intangible assets must be in accordance with the applicable accounting standards.

The CNX Nifty opened at 6,729.50; about 25 point higher as compared to its previous closing of 6,704.20, and has touched a high and a low of 6,732.25 and 6,690.30 respectively. The index is currently trading at 6,703.75, down by 0.45 points or 0.01%. There were 21 stocks advancing against 28 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were Power Grid up by 2.19%, ONGC up by 2.15%, Wipro up by 1.72%, HCL Tech up by 1.61% and TCS up by 1.34%. On the flip side, Hindalco down by 3.28%, Asian Paint down by 2.77%, Coal India down by 1.70%, IDFC down by 1.51% and Tata Steel down by 1.36% were the top losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite increased by 13.32 points or 0.65% to 2,046.62, Hang Seng rose 209.52 points or 0.95% to 22,360.58, Jakarta Composite gained by 81.75 points or 1.71% to 4,850.03, Nikkei 225 surged by 1.44 points or 0.01% to 14,829.27, Straits Times soared 15.61 points or 0.49% to 3,204.23, KOSPI Composite up 0.26 points or 0.01% to 1,985.87 and Taiwan Weighted was up by 5.12 points or 0.06% to 8,854.40.

On the flip side, KLSE Composite was down by 6.32 points or 0.34% to 1,842.89.