Markets remain in tight band with a negative bias

Indian equity markets continue to show muted reaction to the 2012-13 budget on Monday and the major indices were currently trading with moderate losses. Investors now bet on timing and magnitude of interest rate cuts in the next monetary policy as worries remain about a lack of clear road map on the fiscal front. Meanwhile, Reliance Industries lost over 1% after its KG-D6 gas output hit all time low as the company shut 6 wells, which it shut due to water and sand ingress. On sectoral front FMCG, consumer durables, auto and health care stocks were trading in green while, IT, banking and realty stocks were dragging the market down. On global front recovery was witnessed across Asian pacific region. Back home, the market breadth favoring the negative trend; there were 1048 shares on the gaining side against 1373 shares on the losing side while 106 shares remained unchanged.

The BSE Sensex is currently trading at 17,380.66, down by 85.54 points or 0.49%. The index has touched a high and a low of 17,561.46 and 17,354.19 respectively.   There were 11 stocks advancing against 19 declines on the index.

The broader indices also trading in red; the BSE Mid cap and Small cap indices added 0.06% and 0.20% respectively.

The top gaining sectoral indices on the BSE were, FMCG up by 1.46%, CD up by 1.07%, Metal up by 0.50%, Auto up by 0.35% and Health Care up by 0.15%. While, IT down by 1.45%, Bankex down by 1.16%, TECk down by 1.12%, Realty down by 0.87% and Oil & Gas down by 0.66% were the top losers on the index.

The top gainers on the Sensex were Sterlite Industries up by 2.50%, ITC up by 2.20%, M&M up by 2.00%, HUL up by 1.65% and Hindalco Industries up by 0.96%.

On the flip side, TCS down by 3.21%, HDFC down by 1.86%, BHEL down by 1.75%, SBI down by 1.75% and HDFC Bank down by 1.50% were the top losers on the Sensex.

Meanwhile, Finance Minister Pranab Mukherjee has expressed his optimism of rate cuts and policy reversal by the Reserve Bank of India (RBI) in the wake of moderation in inflation. He said that '... the fact that core inflation has moderated in the past three months and that in coming months we are looking at reversal in the policy rates should help in improving sentiments.' He stated that economic expansion could revive to as much as 7.85 percent in the fiscal year starting on April 1 and that inflation would ease.

However, budget deficit has been projected to exceed 5 percent for a second year and that could hamper the scope of RBI for a series of interest-rate cuts to bolster a slowing economy. The deficit for the year through March 31 is projected at 5.9 percent, wider than the 4.6 percent target set in 2011. RBI has signaled before the budget that better control of the nation’s fiscal deficit would boost its scope to lower borrowing costs, which are at the highest level since 2008, at 8.5 percent.

The bank raised the repurchase rate by a record 3.75 percentage points from 2010 to October last year to fight price increases. The monthly inflation figure stood at 6.95 percent. Earlier this month, RBI reduced the cash reserve ratio (CRR) -- the portion of deposits banks require to keep with the central bank -- from 5.5 per cent to 4.75 per cent, pumping Rs 48,000 crore in the economy.

The S&P CNX Nifty is currently trading at 5,297.10, down by 20.80 points or 0.39%. The index has touched a high and a low of 5,340.70 and 5,281.70 respectively.  There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were Sterlite Industries up by 2.90%, ACC up by 2.40%, ITC up by 2.11%, M&M up by 2.07% and Sesa Goa up by 1.99%.On the flip side, TCS down by 3.41%, IDFC down by 2.76%, Ranbaxy down by 1.97%, HDFC down by 1.94% and BHEL down by 1.79% were the major losers on the index.

Recovery was witnessed across Asian pacific region; Shanghai Composite up 0.02%, Hang Seng gained 0.31%, KLSE Composite gained 0.15%, Nikkei 225 added 0.18%, Straits Times expanded by 0.31%, Seoul Composite was up by 0.56% and Jakarta Composite bounced back 0.12%.

On the flip side, Taiwan Weighted lost 0.30%