We had said on Thursday that while the decline may be temporary, the gains would also be short. The market indices are following this script
The domestic market settled with a minor loss a day ahead of the Reserve Bank of India’s mid-quarter policy review. While the decline may be temporary, the gains would also be short. The market is currently range-bound. The National Stock Exchange (NSE) witnessed a lower volume of 65.91 crore shares and advance-decline ratio of 931:776.
The Indian market opened flat with a negative bias as investors were cautious ahead of the RBI’s monetary policy review, due on Tuesday. While a majority feel that the central bank is likely to maintain a status quo, some analysts opine that the Reserve Bank of India might cut the cash reserve ratio, in an attempt to boost growth. On the global front, markets in Asia were mixed in morning trade while the US markets closed lower on Friday on the delay over the budget deal.
The Nifty opened 19 points down at 5,861 and the Sensex resumed trade at 19,291, a fall of 26 points over its close on Friday. The market hit its intraday high in the first hour amid a high degree of volatility on the back of support from the IT and auto sectors. At the highs the Nifty went up to 5,886 and the Sensex rose to 19,347.
The benchmarks couldn’t maintain their early gains and began a southward journey a short while later. Selling was seen in technology, consumer durables and IT stocks.
In its Mid-Year Economic Analysis tabled in Parliament, the government today lowered the growth projection for the current financial year to 5.7%-5.9% from 7.6% estimated earlier, while pitching for supportive monetary and fiscal policies to improve investor confidence. Referring to inflation, it said, further moderation in price rise is likely to commence from the fourth quarter of the fiscal.
The market drifted further into the red in the second half of trade on a mixed opening of the key European indices. The indices fell to their lows in the last hour with the Nifty going down to 5.850 and the Sensex dropping to 19,222.
However, bargain hunting enabled the indices to close off the lows of the day. The Nifty settled 22 points (0.37%) down to 5,858 and the Sensex finished trade at 19,244, a cut of 73 points (0.38%).
While the Sensex ended in the negative, the broader indices outperformed the key benchmark. The BSE Mid-cap index gained 0.59% and the BSE Small-cap index rose 0.46%.
The top sectoral gainers were BSE Metal (up 1.76%); BSE Auto (up 0.67%); BSE Healthcare (up 0.43%); BSE Power (up 0.38%) and BSE PSU (up 0.36%). The main losers were BSE TECk (down 1.32%); BSE IT (down 1.22%); BSE Fast Moving Consumer Goods (down 0.52%); BSE Oil & Gas (down 0.50%) and BSE Capital Goods (down 0.43%).
Sixteen of the 30 stocks on the Sensex closed in the positive. The chief gainers were Sterlite Industries (up 4.06%); Hindalco Industries (up 3.46%); Jindal Steel & Power (up 2.36%); Maruti Suzuki (up 1.70%) and Tata Power (up 1.34%). The losers were led by Bharti Airtel (down 3.69%); TCS (down 2.83%); HDFC (down 1.85%); BHEL (down 1.76%) and HDFC Bank (down 1.60%0.
The top two A Group gainers on the BSE were—Adani Ports & Special Economic Zone (up 5.34%) and Jain Irrigation Systems (up 5.28%).
The top two A Group losers on the BSE were—IRB Infrastructure Developers (down 7.20%) and Bharti Airtel (down 3.69%).
The top two B Group gainers on the BSE were—Energy Development Company (up 19.87%) and Polar Industries (up 19.81%).
The top two B Group losers on the BSE were—Taksheel Solutions (down 19.98%) and Becksons Industries (down 11.43%).
Out of the 50 stocks listed on the Nifty, 26 stocks settled in the positive. The major gainers were Hindalco Ind (up 3.42%); Sesa Goa (up 2.85%); Jindal Steel & Power (up 1.90%); Cipla (up 1.89%) and Grasim Industries (up 1.64%). The key losers were Bharti Airtel (down 3.68%); TCS (down 2.98%); BPCL (down 1.84%); Siemens (down 1.73%) and BHEL (down 1.65%).
Markets across Asia settled mostly down as profit booking set in after the recent gains. Traders were also worried about the deadlock as the third meeting between US president Barack Obama and Republican House speaker, John Boehner, failed to come up with a solution to the US budget.
The Hang Seng fell 0.41%; the KLSE Composite fell 0.21%; the Straits Times was down 0.31%; the Seoul Composite declined 0.60% and the Taiwan Weighted dropped 0.88%. On the other hand, the Shanghai Composite gained 0.45%; the Jakarta Composite rose 0.16% and the Nikkei 225 climbed 0.945.
At the time of writing, the three key European indices were in the negative and the US stock futures were mixed with a negative bias.
Back home, foreign institutional investors were net buyers of shares totalling Rs574.38 crore on Friday while domestic institutional investors were net sellers of equities aggregating Rs512.42 crore.
Suzlon Group subsidiary, REpower Systems SE, announced today it has concluded a contract with wpd Europe GmbH, a subsidiary of project developer wpd AG, for the delivery of 51 wind turbines. As part of this, a service and maintenance agreement (ISP) for a total of 15 years for the new projects was also concluded, the company said in a statement. Suzlon Energy gained 1.07% to settle at Rs18.85 on the NSE.
McNally Bharat Engineering today said it has bagged a contract worth Rs733 crore from cement major ACC for construction and installation of a cement plant. The contract involves onshore supply, civil construction and installation & erection of New Jamul Cement plant, McNally Bharat said in a filing to BSE. The stock climbed 2.68% to close at Rs99.45 on the NSE.
Pharma major Panacea Biotec today said it has received an order worth Rs187.61 crore from the government to supply 345 million doses of Trivalent Oral Polio Vaccines (tOPV) and Bivalent Oral Polio Vaccine (bOPV) between December 2012 and May 2013 The stock jumped 8% to settle at Rs123.50 on the NSE.
Experts say the tight liquidity condition will continue for a while till the government starts spending, and this makes a case for lowering of CRR
New Delhi: Moderating inflation has raised hopes of a rate cut by the Reserve Bank of India (RBI) in its mid-quarter review of monetary policy on Tuesday, but experts believe that it is more likely to cut the cash reserve ratio (CRR) for banks, reports PTI.
There has been some tightening on the liquidity front due to advance tax outgo. Following this, the banks’ borrowing from the RBI has gone up to Rs1.46 lakh crore today, from Rs64,445 crore on Friday.
Experts say the tight liquidity condition will continue for a while till the government starts spending, and this makes a case for lowering of CRR.
Indian Overseas Bank chairman and managing director M Narendra said, “...as on date since liquidity still has been slightly tight, I think there will be some more support to liquidity (through CRR cut).
“We will not be surprised if there will also be a symbolic repo rate cut now and a major cut in January also.”
SBI managing director Diwakar Gupta said RBI should consider cutting both repo rate and the Cash Reserve Ratio (CRR). “As a banker I can always say that our wish-list is that rate should change, they should reduce. Both repo and CRR,” he said.
Repo is the rate at which RBI lends money to the banks. It stands at 8% at present, leading to a high interest rate regime—much blamed for slowing industrial growth. Cash reserve ratio (CRR) is the portion of deposits banks have to mandatorily park with RBI, which is 4.25% now.
“CRR has already been brought down significantly by the Reserve Bank, if they do a little more that will be great.
“Repo cut will actually bring down rate systematically in the system. So, deposits will be cheaper therefore people will lend cheaper. Overall, there will be a downward bias which has been required,” Mr Gupta said.
Inflation declined to 10-month low of 7.24% in November from 7.45% in the previous month, raising hopes that RBI may cut rates to spur growth.
At the same time, the economic growth in the first half of the fiscal fell to 5.4%, as against 7.3% in the year-ago period. The growth in 2011-12 had fallen to a nine-year low of 6.5%.
Asked about the likely RBI’s policy action, Chief Economic Adviser Raghuram Rajan said the role of the finance ministry or the government is to increase the real side growth. The RBI will look at the monetary side.
Industry leaders have been demanding a cut in interest rate for long to prop growth and investment.
As the inflation is at its 10-month low, it is time for the RBI to take measures to ensure that interest rates are reduced, irrespective of the tools it may choose to use, Assocham president Rajkumar N Dhoot said.
On concerns of sticky inflation, the RBI had left key policy rates unchanged in its last quarterly review of the monetary policy in October but hinted at easing monetary policy further in the January-March quarter.
“As inflation eases further, there will be an opportunity for the monetary policy to act in conjunction with fiscal and other measures to mitigate the growth risks and take the economy to a sustained higher growth trajectory,” RBI governor D Subbarao had said in the October policy review.
However, investment bank Goldman Sachs expects the RBI to cut its key interest rate by 0.25% in its policy review following moderation in inflation.
“With both growth and inflation surprising on the downside relative to the RBI's forecast, there is a reason for the central bank to move earlier than its previous guidance,” it said.
Union Bank of India chairman and managing director D Sarkar said, “I expect that there should be some reduction in policy rates. It will boost up the sentiment and economic sentiment.
“There is expectation that the repo rate or CRR could come down by about 25 basis points,” he said.
Rajesh Iyer, head-products and research, Kotak Wealth Management said, “We continue to expect no change in the Repo rate by the RBI in the December policy, with the first cut of 25bps likely to come on the next policy date of 29th January. However, given the liquidity condition, the RBI could provide another 25 bps easing in the CRR that would infuse around Rs17,500 crore of liquidity into the banking system.”
Shinde, addressed Hafiz Saeed, the key conspirator of the Mumbai terror attacks, as 'Mr' and 'Shri' twice each during the course of a statement on the visit of Pakistan's Interior Minister Rehman Malik
New Delhi: Jamaat-ud-Dawa chief Hafiz Saeed may be the key conspirator of the Mumbai terror attacks, but Home Minister Sushilkumar Shinde referred to him in Parliament using honorifics like 'Mr' and 'Shri', reports PTI.
Shinde, during the course of a statement on the visit of Pakistan's Interior Minister Rehman Malik, addressed Saeed as 'Mr' and 'Shri' twice each.
"Mr Rehman Malik, Interior Minister of Pakistan has been telling us repeatedly that he had arrested Mr Hafiz Saeed thrice and that on each occasion, he was let off by the courts for lack of evidence," Shinde said in an identical statement in both Houses of Parliament.
"We had been given to understand by the Interior Minister of Pakistan that Mr Hafiz Saeed had been arrested on the charges of being a part of the conspiracy for the 26/11 Mumbai terror attacks. .... When we pursued this matter, they have given us papers pertaining to the detentions of Shri Hafiz Saeed in 2002 and 2009.
"From the papers given to us, it is clear that the detentions of Shri Hafiz Saeed in the aforesaid cases were for other reasons and not for his role as a conspirator in the 26/11 Mumbai terror attacks. Therefore, I can only say that Mr Rehman Malik appears to have been misinformed in the matter," the Minister said.