Close below 6,675 may pull Nifty further lower

We mentioned in Monday’s closing report that the upmove of both the BSE 30-share Sensex and NSE 50-share Nifty may slow down. The benchmark opened Tuesday higher and immediately hit its all time high. The momentum was soon lost with both the indices plunging in the red. However, it came back into the green and closed higher.

Sensex opened at 22,455 and hit a high at 22,486 while Nifty opened at 6,730 and hit a high at 6,732. The Indices hit a low at 22,296 and 6,675. Sensex closed 22,446 (up 60 points or 0.27%) while Nifty ended the day at 6,721 (up 17 points or 0.25%). The NSE recorded a lower volume of 76.74 crore shares.
 

The market was awaiting the Reserve Bank of India (RBI) monetary policy review. The RBI kept its main lending rate -- the repo rate -- unchanged at 8% in line with market expectations. The central bank also left the cash reserve ratio, or the minimum percentage of deposits that lenders must park with the RBI, unchanged at 4%.

Meanwhile, the Election Commission (EC) has allowed Reserve Bank of India (RBI) to take action on new banking license as 'appropriate'. "RBI can go ahead with in- principle nod for banking licences," the EC said.

Coming back to markets, two of the software stocks in the pack of Sensex stocks were the top gainers today. Wipro rose 3.30% to close at Rs560.50 on the BSE while TCS rose 2.08% to close at Rs2,172.45.

Maruti was among the top five losers in the pack of Sensex 30 stocks. Maruti Suzuki has seen its passenger car sales inch up by 3.4% during 2013-14 financial year though its total sales, including exports, declined 1.4%during 2013-14 FY compared to the previous fiscal. The company has recorded a 6.4% drop in passenger car sales during March 2014 and its total sales fell 5.5% in March this year compared to the same month last year. Maruti fell 2.04% to close at Rs1,931.15 on the BSE.

Retail inflation measured by the consumer price index (CPI) moderated for the third month in succession in February 2014, driven lower by the sharp disinflation in food prices, although prices of fruits, milk and products have started to firm up. Excluding food and fuel, however, retail inflation remained sticky at around 8%. This suggests that some demand pressures are still at play, the RBI said. Since December 2013, the sharper than expected disinflation in vegetable prices has enabled a sizable fall in headline inflation. Looking ahead, vegetable prices have entered their seasonal trough and further softening is unlikely, the RBI said.

Indian manufacturing activity grew at a slower pace in March as weaker domestic demand dragged on output growth, a business survey showed on Tuesday. The HSBC Manufacturing Purchasing Managers' Index (PMI), which gauges business activity in Indian factories but not its utilities, fell to 51.3 in March after surging to a one-year high of 52.5 in February.

The Bharatiya Janata Party (BJP) on Monday said that if it wins national elections set to begin next week, its first priority would be to revive investment in the country's slowing economy. The BJP's prime ministerial candidate, Narendra Modi, has campaigned on pledges to spur development, create jobs and boost manufacturing.

In overseas markets, US indices closed Monday in positive.

Except for KLSE Composite (down 0.08%), Nikkei 225 (down 0.24%) and NZSE 50 (down 0.34%) all the other Asian indices closed in the positive. Jakarta Composite (2.22%) was the top gainer.

China's official Purchasing Managers' Index (PMI) increased to 50.3 in March from February's 50.2. A separate PMI HSBC Holdings Plc and Markit Economics pointed to weakness in the world's second-biggest economy. Chinese Purchasing Managers' Index fell to 48 in March, the lowest reading since July, from 48.5, HSBC Holdings Plc and Markit Economics said on Tuesday.

European indices were trading in the positive. US Futures were trading marginally higher.