NEUTRAL LINE

Indian equity markets continued range bound movement, lacking any significant upside triggers in Monday afternoon trades. The frontline indices lost some momentum and slipped to the session's lows in early afternoon trades but hefty buying in FMCG bellwether HUL and TECk major Bharti Airtel has brought the benchmarks back in close proximity with the previous closing levels. However, the plunge of over three percent in index heavyweight Reliance Industries on the back of its disappointing third quarter earnings announcement has capped the upside chances for the frontline gauges. The psychological 5,050 (Nifty) and 16,750 (Sensex) levels are proving as stern resistances which the key gauges are finding difficult to break. Investors are only indulging in stock specific activity amid a slew of earnings announcement after seeing the market's close to four percent rally in the week gone by. Market participants remain at the sidelines as they await the outcome of important RBI credit policy review meet which is scheduled to be held on January 24. While consensus estimates are that the Indian central bank will keep both repo and reverse repo rates unchanged at 8.5% and 7.5% respectively however, there are some expectations of OMOs. The OMO is a tool by which central bank controls the short term interest rate and the supply of base money in economy, thus indirectly controlling the total money supply. In the global space, on a day when all major Asian equity markets enjoyed an extended weekend, the Japanese benchmark remained the only index which was trading and trading with modest loss. The European futures too indicated a subdued opening for the markets there as marketmen looked forward for the European Union meet scheduled later in the global day where the region's leaders may decide upon measures to tackle a debt crisis.

Moreover, the broader markets traded on a flat note with marginal gains, outperforming their larger peers. The bourses consolidated on good volumes of over Rs 0.60 lakh crore. The market breadth on BSE was in favor of advances in the ratio of 1349:1166 while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 16,707.29 down by 31.72 points or 0.19% after trading as high as 16,766.93 and as low as 16,659.32. There were 18 stocks advancing against 12 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index added 0.06% and Small cap rose 0.16%.

On the BSE sectoral space, FMCG up 0.99%, TECk up 0.86%, IT up 0.68%, Power up 0.51% and Bankex up 0.22% were the major gainers while Metal down 2.01%, Oil & Gas down 1.85%, Capital Goods down 1.37%, Auto down 0.65% and Realty down 0.35% were the major losers in the space.

Bharti Airtel up 2.12%, Cipla up 1.98%, HUL up 1.84%, ICICI Bank up 1.49% and BHEL up 1.26% were the major gainers on the Sensex, while Sterlite down 4.17%, Hero Moto down 3.47%, Hindalco down 3.28%, RIL down 3.06% and L&T down 2.77% were the major losers in the index.

Meanwhile, jewellery exports have declined by huge 15% in the month of December as compared to the same period last year. According to the Gems and Jewellery Export Promotion Council (GJEPC) India exported jewellery $3 billion in the month of December against $3.5 billion in December 2011.

The exports decline was mainly due to a slowdown in demand in the US and EU markets. According to the GJEPC Chairman Rajiv Jain, "There has been a demand slowdown for our products mostly from the western markets like the US and EU'.

Exports of cut and polished diamonds in December declined by 40% year on year in dollar terms while in volume terms, exports fell by 31%, to 36.38 lakh carats. Exports of cut and polished diamonds from India during the nine-month period of April-December 2011 lower by 5% in dollar terms. However, gold jewellery exports saw robust growth during December by 41% to $778.37 million. While, during the same period, silver jewellery exports too moved up by partly due to the low base effect. During the April-December period, gems and jewellery exports have grown 11.65% to $32.1 billion, compared to the same period last fiscal.

Exporters are now exploring new markets like Latin America, Africa and Russia to reduce dependence on traditional markets. Other major markets for the country's gems and jewellery exports include the UAE and Hong Kong. India mainly imports gold and rough diamonds in large quantities and re-exports value-added items like jewellery.

The S&P CNX Nifty is currently trading at 5,034.65, lower by 13.95 points or 0.28% after trading as high as 5,059.55 and as low as 5,021.35. There were 28 stocks advancing against 22 declines on the index.

The top gainers on the Nifty were Bharti Airtel up 2.07%, HUL up 1.83%, Grasim up 1.72%, Cipla up 1.49% and ICICI Bank up 1.42%.

Sterlite down 4.38%, Hero Moto down 3.48%, Hindalco down 3.38%, L&T down 3% and Reliance down 2.95% were the major losers on the index.

In the Asian space, only Nikkei 225 eased 0.1% to 8,765.90, while all other stock markets including that in China, Hong Kong, Indonesia, Malaysia, South Korea, Singapore and Taiwan remained closed in observance of a public holiday.