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Nifty ends below 8,800; RBI monetary policy in focus

Benchmark indices closed lower on Monday as caution prevailed a day before the RBI policy review. Further, slower growth in Indian factory activity dampened market sentiment.

The 30-share Sensex ended lower by 61 points at 29,122 mark and the 50-share Nifty slipped by 12 points to close at 8,797.

However, broader markets outperformed the benchmark indices- BSE Midcap and the Smallcap indices ended up between 0.5-1.2%.

Market breadth ended positive on the BSE with 1,623 shares advancing and 1,288 shares declining.

Meanwhile, foreign portfolio investors sold shares worth a net Rs 771.55 crore on Friday, as per provisional stock exchange data.

Key Events:

India had revised up its economic growth to 6.9 per cent from 4.7 per cent in the fiscal year to March 2014 on Friday after the government changed the formula to measure the economy.

Growth in India’s factory activity slipped in January from December’s two-year high as new orders rose at a weaker rate despite factories keeping price increases to a minimum, a business survey showed on Monday.  PMI declined to 52.9 points in January, compared with 54.5 in December. The index had stood at 53.3 points in November

China’s manufacturing sector was in a poor state in January, a private survey confirmed on Monday, amid increasing speculation that policymakers will intervene with fresh measures to spur the economy. HSBC Purchasing Managers’ Index (PMI) fell to 49.7, a touch below its 49.8 flash reading, and after dipping to 49.6 in December.

Local Currency:

The rupee weakened by nine paise to 61.95 against the dollar in early trade on Monday at the Interbank Foreign Exchange due to high demand for the US currency from importers.

Crude Oil:

Crude oil prices fell on Monday to $ 47after U.S. unions called a refinery strike and traders cashed in on strong price gains last week when the market soared on a sharp drop in U.S. drilling

Global Markets:

Asian shares languished on Monday, after the latest gauge of China’s factory sector activity raised concerns about the world’s second-largest economy. Hong Kong shares inched down on Monday after surveys showed activity in China’s factory sector unexpectedly shrank for the first time in nearly 2-1/2 years in January.

The Hang Seng index fell 0.1%, to 24,484.74, while the China Enterprises Index lost 1.2%, to 11,578.30 points.
 

On the other hand, European equities were higher in morning trade on Monday as a brief rally in the price of oil and some corporate earnings managed to boost investor sentiment.. FTSE 100, DAX and CAC 40 are up between 0.1-0.4%.

Key Stocks:

On the sectoral front, BSE FMCG index emerged as the top losing index down nearly 1.8% followed by BSE Oil & Gas and Metal which ended lower by 0.5% each. However, BSE Capital Goods was the top gaining index up 1.3% followed by IT and Consumer Durables and Auto indices  up 0.5% each.

A mixed trend was observed among the rate sentive stocks in today’s trade ahead of the RBI monetary policy due tomorrow.

Banking shares which were reeling under pressure in the early trades rebounded in the noon deals on hopes of further rate cuts. Axis Bank and HDFC twins surged between 0.4-3.5.5%. HDFC Bank is likely to raise Rs 10,000 crore on Tuesday. The private lender is said to have appointed Bank of America Merrill Lynch to manage the share sale.

Engineering conglomerate L&T climbed 2% on hopes to build nuclear reactors in partnership with Westinghouse Electric Company and is exploring other partnerships after India and the US cleared the way for implementing a bilateral agreement signed in 2008. Its peer BHEL gained 0.7%.

A depreciating rupee helped the technology pack to inch higher in today’s trade. Wipro and TCS advanced between 1-3%. 

Index heavyweight Tata Motors reported a 5.19 per cent increase in total sales at 42,582 units in January, as against 40,481 units in the same month last year. The stock climbed nearly 1.2%.

Sun Pharma soared over 1.3% as U.S. Federal Trade Commission (FTC) completed its review of the proposed acquisition of Ranbaxy by Sun Pharma and granted early termination of the waiting period.

GAIL, Maruti Suzuki and Hindalco were some of the notable gainer and were up between 1-4%.

On the flip side, Dr Reddys Lab declined over 3.5% after its quarterly results came below market expectations. Credit Suisse downgraded the stock to “neutral” from “outperform”.

Coal India declined around 1.7% after the government raised Rs 22,557.63 crore from the sale of its 10 per cent shareholding in Coal India.

Shares of ICICI Bank ended down 2.5% on asset quality concerns post the announcement of its Q3 results.

Shares of Bajaj Auto dipped over 1.6% after the company reported 9% year-on-year decline in total sales at 288,746 units in January 2015 as compared to 318,171 units in January 2014.

Auto major Mahindra & Mahindra reported six per cent decline in total sales at 39,930 units in January. The stock lost 1.5%.

FMCG major HUL dropped over 2.4% as the potential for sales growth of the company through product price hikes is dwindling as a result of cheaper raw materials. Its peer ITC dipped 2%.

Metal stocks reeled under pressure with Tata Steel and Sesa Sterlite down 1.6% on slower factory growth in India and China.

Bharti Airtel, Hero Motocorp and NTPC were some of the prominent names in red and lost between 1-3.5%.

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