Markets End In Red Despite RBI's Moves

The Indian markets saw a volatile trading day. The broader markets traded higher for most part of the day, but ended down by over 0.5%. In the last hour of trade, the RBI came out with measures to arrest further rupee depreciation. The regulator raised the limit of external commercial borrowing (ECB) to USD 10 billion. Moreover, it also increased the limit of overseas investment in government bonds by USD 5 billion to a total of USD 20 billion. Despite these measures, the rupee, which had initially appreciated on speculations that the RBI would take some strong steps, gave up most of its gains and is trading almost where it closed last week. D-street expected some bold moves from the RBI, which did not materialise.

All the sectors that were trading higher in early trades have now reversed their position, closing the day in the red zone. Only Consumer Durables finished in the green, marginally up by 0.16%.

The peer Asian markets also closed in the red zone today, with Hang Seng, Nikkei and Shanghai down in the range of 0.5%-0.6%. This is after media reports stating that Citigroup Inc. has cut China’s growth forecast on concerns of the European debt crisis, and the demand for the country's exports will see a fall. Citi expects the Chinese market to grow at 7.8% this year, compared with the previous estimate of 8.1%.

European markets are also trading in losses at the moment, with FTSE, CAC and DAX down in the range of 0.8%-1.75%. Investors are looking to the EU summit scheduled for Wednesday and Thursday to give further direction to the markets.

Dow Jones Futures is currently trading 82 points or 0.65% down at 12486, indicating a negative sentiment in the US markets.

Back home, Hero MotoCorp was the leading index loser, down 2.72% at Rs 2027.75. Other stocks like Hindalco, ONGC, Cipla closed the day over 2% down. Banking stocks like SBI and HDFC Bank closed lower by 1.94% and 1.27% respectively. Jindal Steel and Tata Steel also witnessed selling pressure as they closed 1.21% and 0.98% lower respectively. NTPC, Wipro, ITC and Coal India all ended marginally in the red zone.

On the other hand, Maruti Suzuki ended the day as the major index gainer, up 1.14% at Rs 1113.95. Others like RIL, HDFC, GAIL India etc. also closed in the positive territory.

The shares of SKS Microfinance closed 4.13% up at Rs 68.15 after the company announced that it has hired a strong number of new employees, which indicates huge expansion plans and robust growth in the coming years. Manappuram Finance is trading higher by 10.37% at Rs 27.15 after the company made an announcement saying that ICRA has held the company’s outlook on the long term rating as 'stable.

The market breadth, which indicates the overall health of the market, remained positive for today. Out of the 3176 stocks traded on the BSE, 1563 advanced, 1493 declined and 120 remained unchanged.

Watch out for the FM’s move on the pending reforms which could be given a green signal by tomorrow. We advise our readers to play with caution ahead of the June series expiry.