DIRECTIONLESS

Markets have made a positive start and are trading flat, a day after ratings agency S&P revised its growth outlook on India to negative. After opening in the green buoyed by supportive global cues, domestic bourses turned flat as investors remained cautious ahead of April F&O series expiry. On the global front, US stocks rallied on Wednesday, with Apple's surge giving the Nasdaq its biggest gain of the year, while the Fed chairman reassured markets that the central bank would do more if necessary to lift the economy. Back home, covering-up of pending short positions by market participants as today being the last session of monthly expiry in the derivatives segment and selective buying by funds, helped Sensex inching towards its crucial 17,200 mark. On the sectoral front, consumer durables, realty and metal remained the top gainers while, fast moving consumer goods, PSU and software stocks were reeling under pressure. Moreover, the broader indices were going neck to neck with benchmarks. The market breadth on the BSE was positive; there were 817 shares on the gaining side against 632 shares on the losing side while 73 shares remained unchanged.

The BSE Sensex opened at 17,191.02; about 40 points higher compared to its previous closing of 17,151.29, and has touched a high and a low of 17,193.25 and 17,136.71 respectively.

The index is currently trading at 17,167.97, up by 16.68 points or 0.10%. There were 17 stocks advancing against 13 declines on the index.

The overall market breadth has made a positive start with 53.68% stocks advancing against 41.52% declines. The broader indices were trading in-line with benchmarks; the BSE Mid cap and Small cap indices rose 0.16% and 0.24% respectively.

The top gaining sectoral indices on the BSE were, CD up by 0.81%, Realty up by 0.34%, Metal up by 0.28%, HC up by 0.13% and Auto up by 0.12%. While, FMCG down by 0.31%, PSU down by 0.18%, IT down by 0.09%, Oil and Gas down by 0.06% and Power down by 0.02% were the top losers on the index.

The top gainers on the Sensex were M&M up by 1.09%, Cipla up by 0.95%, Tata Power up by 0.80%, ICICI Bank up by 0.58% and Bajaj Auto up by 0.54%.

On the flip side, BHEL was down by 1.38%, Maruti Suzuki was down by 1.10%, GAIL was down by 0.86%, HUL was down by 0.82% and Wipro was down by 0.52% were the top losers on the Sensex.

Meanwhile, credit ratings agency, Standard & Poor (S&P) has revised India's economic outlook to negative. The reason cited for the downgrade is the large fiscal deficit, low expectations of economic reforms and a slowing down of GDP growth. The ratings agency has slashed its outlook on India's long-term rating to negative from stable and affirmed its lowest investment grade rating of BBB (-). However, India was earlier rated at BBB levels by the agency.

S&P has further gone ahead and said that there is at least one-in-three likelihood of a ratings downgrade if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow in a weakened political setting (in the next two years). The reforms that the credit ratings agency is referring to is reducing fuel and fertiliser subsidies, introducing a nationwide goods and services tax, and easing of restrictions on foreign ownership of various sectors such as banking, insurance, and retail sectors.

S&P has also warned that government's policy reversals may diminish FIIs confidence. The rating agency has pegged India's GDP growth at 5.3% in 2012-13 as compared to the Indian government's expectation of over 7%. The agency is also not confident about the government achieving control over fiscal deficit. The fiscal deficit is targeted at 5.1% of GDP for the FY'13 and stood at 5.9% of GDP in FY'12, which is one of the highest amongst emerging economies.

On a slightly more positive note it has stated that India's favorable long-term growth prospects and high level of foreign exchange reserves support the ratings, but they are restrained by large fiscal deficits and debt, as well as its lower middle-income economy.

The government is of the opinion that the rating outlook change was not unanticipated and the good thing is that India's rating has not been downgraded. Moody's has a Baa3 rating on India, while Fitch rates India BBB (-). Both are also the minimum investment grade ratings, one step above so-called junk status. Moody's in December issued a stable outlook for India. 

The S&P CNX Nifty opened at 5,214.75; about 12 points higher compared to its previous closing of 5202.00, and has touched a high and a low of 5,215.60 and 5,196.65 respectively.

The index is currently trading at 5,203.45, up by 1.45 points or 0.03%. There were 26 stocks advancing against 24 declines on the index.

The top gainers of the Nifty were ACC up by 1.28%, M&M up by 1.21%, Grasim up by 1.19%, Ambuja Cement up by 1.13% and Cipla up by 0.91%.

On the flip side, BPCL down by 1.32%, IDFC down by 1.30%, BHEL down by 1.27%, Axis Bank down by 1.16% and Maruti Suzuki down by 1.15%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite was down 4.98 points or 0.21% to 2,401.83, KLSE Composite was down 0.69 points or 0.04% to 1,578.66, Nikkei 225 was down 6.30 points or 0.07% to 9,554.71, Straits Times was down 5.57 points or 0.19% to 2,974.21 and Taiwan Weighted was down by 11.13 points or 0.15% to 7,552.05.

On the flip side, Hang Seng was up 105.93 points or 0.51% to 20,752.22, Seoul Composite was up 3.12 points or 0.16% to 1,965.10 and Jakarta Composite was up by 29.67 points or 0.71% to 4,193.31.