Sensex closes flat ahead of RBI credit policy

Mumbai : A benchmark index of Indian equities markets ended flat Monday a day ahead of the Reserve Bank of India’s policy statement. Capital goods, power and public sector undertaking (PSU) stocks fell the most.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 18,656.00 points, closed at 18,635.82 points, 10.48 points or 0.06 percent up from its previous day’s close at 18,625.34 points.

Even the announcement by Finance Minister P. Chidambaram about a five-year plan to cut India’s fiscal deficit from an expected 5.3 percent in the current fiscal to three percent by 2017 did little to cheer the markets.

Chidambaram’s plan for a reduction in fiscal deficit comes a day after a major cabinet reshuffle meant to boost the government’s performance and a day before the central bank’s half-year policy review.

Chidambaram hoped that the Reserve Bank of India (RBI) would take notice of the efforts meant to contain deficit and cut key lending rates to spur growth.

However, the central bank is not expected to cut rates as high levels of food inflation restrict its options.

Overall food inflation last month stood at 7.86 percent against 9.62 percent in the corresponding period of last year. Inflation of primary articles was 8.77 percent.

The Sensex touched a high of 18,743.41 points and a low of 18,572.02 in intra-day trade. However, BSE midcap index was down by 28.38 points while the smallcap index was lower by 42.62 points.

On the sectoral front, the BSE capital goods index was down by 191.47 points followed by PSU index, down 40.82 points, banks index, down 36.75 points, and metal index, down 21.66 points.

The major Sensex gainers were Wipro, up 2.56 percent at Rs.344.75; Hero MotoCorp, up 1.95 percent at Rs.1,905.60; Tata Power, up 1.82 percent at Rs.106.55; Dr Reddys Lab, up 1.62 percent at Rs.1,696.15; and Reliance Industries Limited (RIL), up 1.53 percent at Rs.811.20.

The main losers included BHEL, down 6.19 percent at Rs.227.25; Sterlite Inds, down 2.28 percent at Rs.98.55; Tata Motors, down 1.80 percent at Rs.256.75; Coal India, down 1.11 percent at Rs.350.95; and Larsen and Toubro (L&T), down 1.08 percent at Rs.1,687.40.

The wider 50-scrip S&P CNX Nifty of the National Stock Exchange (NSE) was flat at 1.30 points or 0.02 percent up at 5,665.60 points.

Among other Asian markets too, the trend remained flat — Japan’s Nikkei was down 0.04 percent, while Hong Kong’s Hang Seng ended trading 0.16 percent lower. Shanghai’s Composite Index was down 0.35 points.

At closing bell here, London’s FTSE 100 was down 0.56 percent. German DAX and French CAC 40 were also trading 0.61 and 0.89 percent lower, respectively.