PROFIT BOOKING

The Indian equity markets extended early losses and trading near the lows of the day after RBI kept key interest rates unchanged in its policy review, ahead of the economic survey today. Nifty has breached the 5,400 level, while Sensex is trading down by 245 points from its previous close. However, RBI kept its policy repo rate unchanged at 8.5% and CRR rate unchanged at 4.75% at its mid-quarter review and it is expected to ease policy rates after manufacturing inflation shows signs of easing. In this policy, central bank remained focused on economic growth even though rising oil prices have emerged as an inflationary risk. The apex bank says the sudden rise in crude oil prices poses a serious threat to economic growth and that a credible fiscal policy is important for inflation outlook. On the sectoral front rate sensitive banking and realty stocks were down sharply following the central bank's monetary policy statement. Shares from consumer durables, metal, capital goods, power and automobile sectors too were mostly down in negative territory now. Select information technology stocks were up in positive territory. On the global front most of the Asian shares were trading in red. Back home, the market breadth favoring the negative trend; there were 841 shares on the gaining side against 1,557 shares on the losing side while 115 shares remained unchanged.

The BSE Sensex is currently trading at 17,742.23, down by 177.07 points or 0.99%. The index has touched a high and a low of 17,918.25 and 17,725.69 respectively. There were 8 stocks advancing against 22 declining ones on the index.

The broader indices too pared their losses in line with frontline indices; the BSE Mid cap and small cap indices were down by 0.94% and 0.59% respectively.

The only gaining sectoral indices on the BSE were, IT up by 0.24%. While, CD down by 2.23%, Bankex down by 2.15%, Realty down by 2.04%, PSU down by 1.46% and Auto down by 1.21% were the top losers on the index.

The top gainers on the Sensex were GAIL India up by 1.00%, HUL up by 0.93%, NTPC up by 0.87%, Tata Power up by 0.68% and TCS up by 0.45%.

On the flip side, DLF down by 3.77%, Coal India down by 2.83%, BHEL down by 2.45%, ICICI Bank down by 2.32% and SBI down by 2.28% were the top losers on the Sensex.

Meanwhile, the government is most likely to overshoot its targeted fiscal deficit of 4.6% of GDP this fiscal and should be near the 5.7-5.8% mark as estimated by Federation of Indian Chambers of Commerce and Industry (FICCI). Further it may be around the 5.2% mark in the next fiscal.

As per FICCI, the estimates are based on detailed government revenue expenditure trends. It has predicted the government might have to resort to some one time revenue mobilization if it wants to bring the deficit below 5% in the next fiscal. The government can hope to increase its one time revenues through inflows from 2G /4G. It has also advised the government to increase its tax rate and also bring agricultural income under the tax bracket to increase its revenue receipts.

It has further estimated that a revenue mobilisation of around Rs 40,000 - Rs 50,000 crore and more can bring down the fiscal deficit from 5.2% to below 5% in next fiscal. Finance Minister Pranab Mukherjee will present the Union Budget for 2012-13 fiscal on March 16. The upcoming budget is likely to be a challenge in terms of falling revenue receipts, inelastic expenditure and a stubborn fiscal deficit. Combined with this will be the challenge of reviving the economy in a sluggish world scenario. 

The S&P CNX Nifty is currently trading at 5,409.35, lower by 54.55 points or 1.00%. The index has touched a high and a low of 5,462.50 and 5,398.45 respectively. There were 11 stocks advancing against 39 declining ones on the index.

The top gainers of the Nifty were NTPC up by 1.01%, Ambuja Cement up by 0.99%, Dr Reddy up by 0.92%, HUL up by 0.86% and GAIL up by 0.77%.

On the flip side, DLF down by 3.74%, Reliance Communication down by 3.59%, Coal India down by 2.86%, IDFC down by 2.84% and Jaiprakash Associates down by 2.71% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite declined 0.39%, Hang Seng lost 0.30%, Seoul Composite down 0.06%, Straits Times slid 0.16% and Taiwan Weighted lost 0.04%.

On the flip side, Jakarta Composite added 0.16%, KLSE Composite inched up by 0.04% and Nikkei 225 spurted by 0.72%.