Markets were trading flat after opening marginally lower tracking weak Asian peers on lack of agreement on US debt deal, and investors turning jittery ahead of Reliance Industries June quarter earnings today and Reserve Bank of India policy on rate hike on Tuesday.
After touching a low of 5,616 during opening trades, the Nifty was trading flat at 5,628, down 5 points at 09:49 hours. The BSE benchmark Sensex was down 15 points, at 18,706.
Asian markets posted losses during the Monday morning session as the United States government, over the weekend failed to reach a consensus on debt ceiling. Investors turned risk averse on concerns of a possibility of debt default by US, unless an agreement was reached to raise the debt ceiling by $2.4 trillion by August 2nd.
Japan's The Nikkei Stock Average declined 0.6%, China’s Shanghai Composite Index was off 0.9% and Hong Kong’s Hang Seng Index shed 0.7%.
Back in India, Reliance Industries surged 1%, to Rs 883, after the cabinet approved the largest foreign investment deal between Reliance Industries and British Petroleum, at $7.2 billion on Friday evening. Through this venture, BP will acquire stake in 23 oil & gas blocks of RIL for drilling and exploration. Meanwhile, RIL is also expected to report June quarter earnings after market hours today. Analysts have estimated that the net profit will rise 16.6%, to Rs 5,658 crore year-on-year led by 28.7% rise in revenues, at Rs 74,960 crore. Analysts expect RIL to report gross refining margins between $10-11 per barrel for the June quarter.
Retail shares such as Pantaloon Retail, advanced 4%, Cantabil Retail rallied 4.5%, Brand House retail zoomed 10%, Vishal Retail added 7.7%, Shoppers Stop gained 5%, and Trent was up 1.5% this morning after the committee of secretaries recommended 51% Foreign Direct Investment in multi-brand retail on Friday. The secretaries’ decision stills needa a cabinet approval.
Reserve Bank of India policy review tomorrow will also set the tone for the markets. The central bank has increased rates ten times in last one year to rein in inflation, which has been stubbornly high at 9% for June, below the government target of 8% for FY12. Economists expect RBI to raise rates by another 25 bps point and pause thereafter.
Rate sensitives-banking and realty indices were trading marginally lower, down 0.4% each.
Prominent losers from the bankig space were Union Bank, down 1.6%, Kotak Mahindra declined 1.3% and Yes Bank, down 0.8%. Top losers from the realty space were Godrej Properties, down 1.3%, Orbit Corporation lost 1.1% and DLF declined 0.7%.
Top gainers on Sensex were Reliance Communications, up 3%, Bharti Airtel added 2.8% and Mahindra & Mahindra was up 1.5%. Prominent losers were ITC, Infosys and DLF, down 1% each.
Midcap and smallcap indices were up 0.4% and 0.6% each.
Market breadth was positive 997 stocks advanced,for 578 stocks which declined.
