The key equity indices have once again started drifting down after the RBI's monetary policy after making a soft start tracking weak global cues. As widely expected, the Reserve Bank of India (RBI) raised repo and reverse repo rates by 25 basis points despite some international uncertainties as domestic inflation scenario remains the biggest concern. The new repo and reverse repo rates are 6.75% and 5.75% respectively. This was eighth increase in benchmark policy rates by the central bank in current financial year. However, the CRR has been left unchanged at 6%. Meanwhile, annual food inflation for the week ended March 5 eased to 9.42% from 9.52% recorded in the previous week as prices of onions and milk fell, while fuel inflation accelerated, on a jump in coking coal prices, from 9.48% a week earlier to 12.79%. The primary articles price index was up 12.31%, compared with an annual rise of 13.96% in the prior week. On the sectoral front Capital Goods, Power, Consumer Durables are leading the upmove.
The market breadth on the BSE was in favour of declines in a ratio of 1233:1342 while 116 scrips remained unchanged.
The BSE Sensex was down 93.78 points or 0.51% at 18,264.91. The index touched a high and a low of 18,354.27 and 18,209.05, respectively.
The BSE Mid-cap index was down 0.05% while Small-cap index gained 0.07%.
The sectoral indices on the BSE are trading mix. Capital Goods up 0.52%, Power up 0.38%, Consumer Durables (CD) up 0.33%, and Health Care (HC) up 0.02% were the major gainers.
Meanwhile global ratings agency Standard & Poor's said that Asian economies will continue to grow strongly this year even as Japan struggles with the aftermath of a devastating earthquake and tsunami.
Interest rate sensitive sectors like Banks, Realty and Auto are down 0.29%, 0.39% and 0.56% respectively.
Among the BSE Bankex space Bank of India, Axis Bank and ICICI Bank fell the most by 2.76%, 1.23% and 1.12% respectively, while on BSE Realty space DLF, Sunteck Realty and Unitech fell the most by 1.85%, 1.70% and 1.69% respectively.
Among the BSE Auto space Maruti Suzuki, Apollo Tyres and Exide Industries declined by 2.73%, 2.35% and 1.78% respectively.
Government's decision of not to hike prices of diesel despite the surge in global crude prices has while saved the common man already burdened under high inflation from another round of prices rises, it has also resulted in mounting losses of the government controlled oil marketing companies (OMCs).
According to the ministry of petroleum, the under-recovery being incurred by the fuel retailers on diesel has increased to a record high level of Rs 15.79 a litre. Overall under-recoveries of the OMCs in all the regulated fuels are likely to be close to Rs 80,000 crore for the current financial year. At present the three state controlled fuel retailers are together losing about Rs 285 crore in revenue everyday on the sale of diesel below the cost.
There was a hope that the finance ministry will cut customs and excise duty on fuels to contain the impact of a spurt in global crude oil prices, which are still ruling relatively high despite some recent correction seen following the Japan earthquake. By cutting the duties, the government could have kept prices from rising while at the same time cutting down losses of OMCs. However, that would have resulted in heavy losses to the exchequer, and therefore the finance ministry dropped the proposal.
The publically controlled OMCs sell diesel and cooking fuels at prices that are generally lower than the cost. These are generally compensated by upstream companies and the government but such compensation is often not complete and OMCs have to absorb some loses. While the government has historically born 33% of the oil subsidy, the oil ministry has been asking the government to hike its share given the surge in under-recoveries.
The S&P CNX Nifty lost 27.90 points or 0.51% at 5483.25. The index touched high of 5510.05 and a low of 5453.90 respectively.
The top gainers on the Nifty were RCom up 3.01%, Ambuja Cement up 2.77%, BHEL up 2.03%, Reliance Capital up 1.36% and Kotak Bank up 1.11%.
On the other hand, Maruti down 2.71%, HDFC down 2.24%, Hinadalco down 1.94%, Jindal Steel down 1.45% and IDFC down 1.33% were the major losers on the index.
The majority of the other Asian markets were trading in red. Shanghai Composite down 1.13%, KLSE Composite down 0.35%, Seoul Composite gained 0.05%, Nikkei 225 down 1.44%, Straits Times down 0.96% and Taiwan Weighted down 0.50%; while, Hang Seng plunged 1.90% and Jakarta Composite lost 1.68%.
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