Benchmarks gyrate around neutral line as RBI kept key rates unchanged

After a gap-up start, Indian equity benchmarks witnessed volatility amid a stirring tussle between bulls and bears as the Reserve Bank of India has kept key rates unchanged in its monetary review. However, losses on down side remained capped on report that foreign institutional investors (FIIs) bought shares worth a net Rs 942.86 crore on Monday, 31 March 2014, as per provisional data from the stock exchanges. 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.

On the global front, the Asian markets were trading mostly in green after China’s official PMI survey showed manufacturing managed to continue expanding in March. Back home, traders were buying, IT, Teck and Consumer Durables stocks, while selling was seen in Metal, Realty and Capital Goods. The market breadth on BSE remains positive with advances to declines in the ratio of 1040:877. BSE Sensex and NSE Nifty were comfortably trading near their psychological 22,300 and 6,650 levels respectively. The BSE Sensex is currently trading at 22367.96 down by 18.31 points or 0.08% after trading in a range of 22485.77 and 22347.83. There were 11 stocks advancing against 19 declines on the index. The broader indices were trading in mixed; the BSE Mid cap index was down by 0.15% and Small cap index up by 0.84%.

The top gaining sectoral indices on the BSE were IT up by 1.33%, Teck up by 1.01%, Consumer Durables up by 0.66%, Oil & Gas up by 0.58%, and Healthcare up by 0.35%, while Metal down by 1.48%, Realty down by 1.13%, Capital Goods down by 1.05%, FMCG down by 0.89% and Power down by 0.40% were the top losers on the sectoral index.

The top gainers on the Sensex were Wipro up by 1.80%, TCS up by 1.76%, ONGC up by 1.73%, Dr Reddys Lab up by 1.37% and Infosys up by 0.91. On the flip side, Hindalco was down by 3.21%, BHEL was down by 1.96%, Coal India was down by 1.77%, ITC was down by 1.39% and HDFC was down by 1.21% were the top losers on the Sensex.

Meanwhile, Giving no respite to the government, India’s fiscal deficit during the first eleven months of the financial year 2013-14 touched Rs 5,99,299 crore, or 114.3% of the full year target. Fiscal deficit, which is the gap between expenditure and revenue, was 97.4 percent of target during the same period of previous fiscal year. Net tax receipts were at Rs 6,27,134 crore in the first 11 months of 2013-14 fiscal, while total expenditure was about Rs 13,99,757 crore in the reported period. The revenue deficit at Rs 4,34,378 crore at the end of February crossed the year's target of Rs 3,70,288 crore.

The government in the interim budget in February had revised lower the target for FY14 to Rs 5,24,539 crore or 4.6 percent of the GDP from 4.8 percent of the GDP earlier. Lower tax collections due to prevailing economic slowdown remained the main reason for high fiscal deficit.

However, the finance minister has expressed confidence to achieve the revised estimate of 4.6% of GDP for FY14. The government has been taking measures to enhance tax collections revenue. The Central Board of Direct Taxes (CBDT) has recently launched a number of searches and survey operations across the country to clamp down on cases of tax evasions which have resulted in a number of entities declaring their hidden incomes and remitting the money in government treasury. Further, the government is tapping the ETF route for achieving revised disinvestment target of Rs 16,000 crore and has garnered huge amount through current CPSE-Exchange Traded Fund (ETF). The government has so far undertaken two follow-on public offers (FPOs), six offers for sale (OFS) and one buy-back offer besides the present CPSE-ETF to achieve the disinvestment targets during the current fiscal year.

The CNX Nifty is currently trading at 6,693.45 down by 10.75 points or 0.16% after trading in a range of 6,732.25 and 6,688.35. There were 17 stocks advancing against 33 declines on the index.

The top gainers of the Nifty were Power Grid up by 2.38%, Wipro up by 1.79%, HCL Tech up by 1.73%, ONGC up by 1.66%, and TCS up by 1.54%. On the flip side, Hindalco down by 3.28%, Asian Paint down by 2.79%, Coal India down by 2.13%, IDFC down by 1.84% and Ambuja Cement down by 1.63% were the top losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite increased by 13.99 points or 0.69% to 2,047.30, Hang Seng rose 198.52 points or 0.90% to 22,349.58, Jakarta Composite gained 90.70 points or 1.90% to 4,858.97, Straits Times soared 10.49 points or 0.33% to 3,199.11, KOSPI Composite up 3.17 points or 0.16% to 1,988.78 and Taiwan Weighted was up by 1.32 points or 0.01% to 8,850.60. On the flip side, KLSE Composite was down by 6.32 points or 0.34% to 1,842.89 and Nikkei 225 down by 4.31 points or 0.03% to 14,823.52.