Sensex Off 52-Week High Ahead Of RBI Meet

The government has bombarded the economy with reforms at a pace rarely seen, that too at a time when the global markets have created a perfect backdrop for the markets to soar to new highs. The Indian markets today touched a 52-week high of 18715.03 shortly after opening. Currently, the Sensex is trading higher by 123.80 points or 0.67% at 18588.07 and the Nifty is trading higher by 39 points or 0.70% at 5616.65.

Welcoming the decision over the third round of quantitative easing (QE3) by the Federal Reserve wherein they would be buying mortgage-backed securities (MBS) worth USD 40 billion per month, the Asian markets saw significant gains on Friday. The market direction in Asia has been rather subdued and mixed for today. At the moment, while Nikkei is trading higher by 1.82%, Shanghai Composite is down by 1.31%. Hang Seng is flat, having moved up by 0.01%.

Chinese stocks have been quite pressured on speculations over the government not easing the monetary policy. There are increasing fears of the slowdown extending into next year if the rates are left untouched by the Peoples’ Bank of China. The country has been facing difficulties, as highlighted by recent data suggesting a decline in home sales and slumping exports. This has resulted in the Shanghai witnessing negative trades, though markets saw some hefty gains on Friday.

Hong Kong has been worried because of a mammoth rise in home prices since 2009. The announcement of QE3 is believed to increase the risk of fuelling asset bubbles, and the economy is now trying to increase its efforts towards easing home prices. Thus, Hang Seng is one of the markets that has not been enthused by QE3.

On the domestic front, following an increase in the foreign investment limit in retail and aviation, stocks in these sectors have witnessed steep gains today. Jet Airways, Kingfisher and SpiceJet are trading higher by 2.05%, 19.98% and 12.90% respectively. On the retail end too, stocks are trading significantly higher. Among others, Shoppers Stop, Pantaloons and Provogue are up by 10.67%, 17.70% and 10.72% respectively.

In the sectors, Realty, Capital Goods and Banking are the top gainers, up by 5.70%, 2.98% and 2.85% respectively. 4 of the 13 sectors are currently in the red. IT was the highest loser, witnessing a decline of 2.28% – the index was heavily weighed down by scrips like HCL Tech, Hexaware Tech, TCS and Infosys.

The markets have lost their day’s high ahead of RBI’s monetary policy review scheduled at around 11 am today. The street is not expecting a rate cut decision today because of action on the fiscal front combined with inflation data that came in a tad higher than previous readings. While the markets continue trading high, announcements on the monetary front will define the market direction.