Mkt awaits RBI policy, Metal stocks up; Sensex ends in red

After a mildly bullish trade on Friday, the equity benchmarks witnessed lacklustre activity and closed marginally in the red on Monday as traders preferred to keep their position light in the absence of supportive cues. Bharti Airtel, TCS and BPCL dragged the market down, losing 3.69%, 2.83% and 1.58%, respectively. Barring a meaningful run by metals, auto and realty counters, the market on Monday remained largely subdued with negative bias.
 
The 30-share Sensex closed down 73 points at 19244.42 and the Nifty ended at 5857.90, 21 points below its previous close.

 Among the sectoral indices, the BSE Metal Index closed 1.69 percent higher and the BSE Auto Index closed up 0.56 percent. BSE Realty also moved up with DB Realty shooting up 7.52%. The BSE IT Index closed down 1.35 per cent, the BSE Oil & Gas Index fell 0.69 per cent and the BSE FMCG Index declined 0.56 per cent. The BSE Midcap Index was up 0.60 percent and the BSE Smallcap Index gained 0.47 percent.

Metal names like Sterlite, Hindalco and Jindal Steel remained on top of a day trader's buy chart and closed with 4.42%, 3.38% and 1.79% gains, respectively. The sudden spurt of interest in mining and metals stocks was on account of rising prices on the London Metals Exchange. For the past few weeks, these stocks had got hammered on low international price and a mining ban at home.

In Auto, Maruti and Bajaj Auto closed up with 1.74% and 1.2% gains, respectively.

Experts say benchmarks are awaiting direction from the Reserve Bank which is meeting for its credit policy review on Tuesday, but banking stocks remained subdued throughout the day. The street is expecting a CRR cut but not policy rate cut. In its mid-year economic review, the government said uncertainty over stake sales in state-run companies and soaring subsidies pose a challenge to reducing the fiscal deficit, which has put in peril the country's investment grade credit rating. The revelation made investors wary who chose to stay in the sidelines for the rest of the day.

The mood slackened further late afternoon when the government lowered the growth projection for the current financial year to 5.7-5.9 percent from 7.6 percent estimated earlier, impacting sentiment.

HDFC twins, having significant weight on the Nifty, ended in red with a near 2 percent cut. Public sector banks like SBI and PNB, and private sector banks ICICI and Axis traded with marginal gains and closed flat. Indian Overseas Bank (IOB), which is soon expecting capital infusion from the Centre, too remained flat. Both IOB and Axis Bank were lenders to GMR Ltd for its cancelled Male airport contract and may seek $175 million in compensation as part of the over $800 million compensation package sought by GMR from the Maldives government.

The rupee, meanwhile, was hovering around 54.77 to a dollar.

The BSE Sensex is down 0.33 percent while the Nifty falls 0.34 percent.

Tata Consultancy Services falls 3 percent on caution ahead of a scheduled meeting between the management and analysts later in the day amid concerns the software services provider will deliver a downcast view on the sector. Infosys falls 0.6 percent.

However, some interest-rate sensitive stocks gain ahead of the central bank's policy review on Tuesday.

Although RBI is not expected to ease policy then, traders say it could cut the cash reserve ratio or sound more dovish on inflation.

Rate-sensitive stocks such as State Bank of India gains 1 percent while the ICICI Bank is up 0.8 percent.

Tata Motors gains 0.8 percent, up for a third day on JLR's November sales.

Metal and mining stocks were seeing active buying interest in a market which has remained subdued in the absence of supportive cues. Traders have prefered to keep their positions light ahead of Reserve Bank of India's Credit Policy review scheduled on Tuesday, which may not offer any surprise.

At 13.10 am, the Sensex was down 41.59 points or 0.22% to trade at 19275.66, and the Nifty was down 12.30 points or 0.21% at 5867.30.

Top Sensex gainers remained Hindalco, Sterlite and Jindal Steel, buoyed by a price upmove on the LME. Bharti Airtel, TCS, Wipro, HDFC Bank  and BPCL were the top losers on Nifty.

Midcap, however, was seeing good buying interest. Honeywell Automotive, Fortis Healthcare and DB Realty were buzzing with 16.36%, 6.93% and 5.21% gains.

In the absence of cues, Indian equity benchmarks have been trading flat since morning. Despite less-than-expected WPI inflation numbers for November, the Reserve Bank of India is not expected to announce a rate cut in Tuesday's monetary policy meet. Headline inflation eased to an annual rate of 7.24% in November, down from 7.45% in October. The sub 8% number was the lowest since January. According to a CNBC-TV-18 poll, RBI's policy action will be limited to a CRR cut, which is not motivating enough for the equity markets.

At 11.08 am, the Sensex was trading down 13.90 points or 0.07% at 19303.35, while the Nifty glided down 5.55 points or 0.09% to trade 5874.05.

There has been some buying interest in the auto counter on the BSE. Maruti, Mahindra and Mahindra, Bajaj Auto were trading with 1.89%, 1.71% and 1.40% gains respectively. However, Hindalco was the top gainer on the Sensex with 2.46% rise. The recent gains in non-ferrous metal players like Hindalco  is due to an upmove in commodity prices on the London Metals Exchange (LME). NMDC, Sterlite Industries, Jindal Steel and Hindustan Zinc were all trading up with mild gains.

Banking counters have remained flat with SBI, ICICI Bank, Axis Bank and PNB trading with marginal gains. Meanwhile, INR has inched back above 54/USD levels and the 10-year paper moved up slightly. Brent has bee trading at 109/BBL, while gold was trading flat. However, broader market has been witnessing a bit of upmove.

Globally, lack of positive catalysts and an absence of a solution to the fiscal cliff problem have overshadowed US economic data. European market, which ended flat on Friday, is expected to remain muted.

Shares of Jet Airways and Fortis Healthcare surged in early trade Monday, while key equity benchmarks Nifty and Sensex were almost flat.

According to media reports, Jet is close to finalizing the deal for a stake sale to Gulf carrier Etihad, providing it with the much-needed equity infusion. Jet shares were up 3% to Rs 627.

Shares of Fortis Healthcare climbed over 6% following the company's decision to sell a majority stake in its Australian dental Care firm to UK's Bupa for Rs 1,555 crore. The proceeds from the sale will be used to lower the debt on Fortis' books.

The Sensex was up 13 points at 19,330 and the Nifty was up 3 points at 5882.

In sectoral trends, metal, healthcare and realty shares were among the better performers. Capital goods and IT shares were under pressure as the near term outlook for both sectors continues to be gloomy.

The widely held view is that the Reserve Bank of India will not cut benchmark rates at its policy review meeting tomorrow. But, the market is betting on a cut in cash reserve ratio.

''We continue to expect the RBI to cut CRR 25 basis points on December 18 to pull down lending rates to support growth. After all, India is the only BRIC where lending rates are almost at their 2008 peak. Just-released RBI data shows that deposit growth has plummeted to 12.8% y-o-y on November 30, while loan demand still remains relatively robust at 16.8%,'' said the Merrill note.