Key equity indices pare some losses; RBI policy announcement in focus

The key equity indices pared their losses after Nikkei pulled back from session lows. However the undertone remains pretty cautious as investors are keenly awaiting central bank's policy announcement at noon, which is expected to raise rates by a quarter percentage point as Inflation control is expected to remain the key focus in its mid-quarter review today. On the global front, overnight fall of the S&P and Nasdaq due to crush of trading on the perception that Japan's nuclear crisis would continue to be a headwind for equities also casted its shadow on other Asian bourses. The US future with no different trend, were showing downtick on the screen trade. Back home on BSE Sectoral front, stocks from Consumer Durable, Capital Goods and Banking counters are trading confidently thereby attempting to push  the market's momentum on positive side, while stocks from IT, TECk and Fast Moving Consumer Goods space are languishing at the bottom with deep shade of red. The benchmark 50 share index--Nifty--is hovering around  5500 mark, currently trading lower than that, while Sensex despite being in shade of red is trading above 18300 mark. However, broader indices are showing strong resilience ahead of the big decision and have garnered gain of 030% (BSE Midcap Index) and 0.29% (BSE Smallcap Index) respectively. The overall market breadth is in the favour of advances which have thrashed declines in the ratio of 1177:989, while, 104 shares remained unchanged.

The BSE Sensex is currently trading at 18,303.49, down by 55.20 points or 0.30%. The index has touched a high of 18,327.45 and a low of 18,209.05 respectively. There were 14 stocks advancing against 16 declines on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices were up by 0.30% and 0.29%, respectively.

The top gaining sectoral indices on the BSE were, CD up by 0.74%, CG up by 0.66% Bankex up by 0.47%, Power up by 0.19% and PSU was up by 0.11%. While, IT down by 1.22%, TECk down by 0.87%, FMCG down by 0.82%, Metal down by 0.48% and Auto down by 0.44%, were the major losers on the index.

The top gainers on the Sensex were Reliance Communication up by 3.59%, HDFC Bank up by 1.61%,BHEL up by 1.10%, SBI up by 0.69 % and Cipla up by 0.62%.

To funds its expansion plans, the country's largest lender State Bank of India (SBI) managed to raise Rs 5,496.90 crore from retail bonds. In the first tranche, SBI has granted the approval for issue and allotment of 7,31,078 Series 3 Lower Tier-II Bonds of face value Rs 10,000 each and 47,65,918 Series 4 Lower Tier-II Bonds of face value Rs 10,000 to the eligible applicants. The bank thus managed to raise Rs 5,496.9 crore, as in all 54,96,996 applicants received bonds worth Rs 10,000 each.

The issue, which had opened on February 21 and closed on February 28 attracted many investors because of its competitive coupon rate and the timing. This issue is part of the Rs 10,000-crore retail bond programme SBI has planned for FY11 through FY12.

The bank had raised Rs 1,000 crore through the retail bonds in the first tranche, issued in October, 2010, which was oversubscribed 19 times. That was the first retail bond offering in the country by any bank.

Maruti Suzuki down by 2.58%, HDFC down by 1.55 %, Infosys down by 1.53%, TCS down 1.36% and Hindalco Industries down by 1.08% were the top losers on the Sensex.

Meanwhile, the Indian cabinet on Wednesday approved the Constitutional Amendment Bill to roll out the much awaited Goods and Services Tax (GST). The union finance ministry is hoping that by taking the battle from empowered group of state finance ministers to the Parliament by tabling the bill, a consensus can be generated on the hotly debated issue.

The purpose of the GST is to integrate all the indirect taxes on goods and services at the state and central levels including the value-added tax (VAT), excise and service taxes etc. Since the GST will bring all these taxes under one head, it will be easy to pay and collect taxes resulting in reduced cost of collection and greater compliance.

However, states continue to remain divided on the matter and many of them, mainly the opposition ruled ones, have been calling for a phased approach for amending the change. On the other hand, the Congress ruled states, the party which is also the major constituent of the coalition centre government, want to make all the changes in a single move.

Some of the states have raised concerns that the GST as being envisaged by the central government will erode the financial autonomy of state level governments. The first three drafts of the constitutional amendment bill which will be required before the GST can be implemented have been rejected by the states. The centre has now prepared a fourth draft. Building on the second and third versions, the fourth draft has proposed that the GST council, the main decision-making body, will be formed through a presidential order.

In the third draft, the finance ministry had proposed vesting to Parliament the power to set up the council. However, to take on board the opposition ruled states, the council now will be brought into life through a Presidential order. This would mean that it would not be possible to change the rules of the council by just passing a bill in Parliament, something that states had been opposing. With fourth draft in hand, the government is now looking to table the same in Parliament within current session, in fact as early as next week. 

The S&P CNX Nifty is currently trading at 5,494.55, down by 16.60 points or 0.30%.The index has touched high of 5,501.35 and a low of 5,453.90 respectively. There were 25 stocks advancing against 25 declines on the index.

The top gainers of the Nifty were RCom up by 3.69%, Ambuja Cement up by 2.46 %, Reliance Capital up by 1.80%, HDFC Bank up by 1.67% and BHEL up by 1.30%.

The top losers of the index were Maruti Suzuki down by 2.50%, Gail down by 1.54%, Infosys down by 1.49%, HDFC down by 1.36%, and TCS was down by 1.33%.

All the Asian markets were trading in the red; Shanghai Composite was down  by 0.51%, Hang Seng declined 1.79%, Jakarta Composite slid 1.53%, KLSE Composite dropped 0.35%, Nikkei 225 skid 1.03%, Straits Times trimmed 1.07%, Seoul Composite dragged 0.42% and Taiwan Weighted was down by 0.91%.

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