Thumbs down to RBI again; Sensex slips below 17K

Markets witnessed a complete turnaround in trade today and ended in red due to measures announced by the government to boost dollar inflows. Markets slipped and ended in red with Sensex falling 90 points and Nifty down by 31 points. Major Headlines: RBI takes steps to boost economy by raising ECB limits India rating stable despite challenges: Moody's RIL surges on buyback of equity shares Shareholders OKs Sesa Goa, Sterlite merger deal Indian indices: Markets witnessed a complete turnaround in trade today and ended in red due to measures announced by the government to boost dollar inflows. Markets slipped and ended in red with Sensex falling 90 points and Nifty down by 31 points. Indian equity benchmarks wiped out all of its morning gains and closed the session in the negative zone. Indian markets were trading higher throughout the day as there was all round buying in majority of the sectors and also due to appreciation in rupee as against the US dollar after the government said it would announce steps to check the rupee's slide. Later, the market reversed in the afternoon trade, as Reserve Bank of India ( RBI) on Monday (June 25, 2012) hiked the limit of external commercial borrowing ( ECB) to $10 billion. Moreover, the economy regulator also increased the limit of overseas investment in government bonds by $5 billion to $20 billion. Further heavy selling pressure and fall in the Rupee also weighed on the investor's sentiment. Markets were anticipating announcements that would perhaps give a boost to the economy, and support the rupee. But, RBI's measures turned out to be a move to support the currency, and not the broader economy. As a result, weakness persisted in majority of the sectors and heavyweights like ONGC, HDFC Bank, SBI, TCS, Hero Motocorp, ICICI Bank and M&M which were also part of the downfall. The Sensex closed at 16882.16, down by 90 points and the Nifty fell 31 points to close at 5114.65. Tracking today's stock specific action, Coal India gained as the company hiked prices in selected western blocks by 10-15%. Later the stock witnessed a fall and closed 0.24% lower in trade today. Another stock, Hindustan Construction Company (HCC) surged on reports that the bankers have agreed to give HCC additional loan of Rs1500 crore if promoters infuse Rs302 crore. The stock closed 1.28% higher in trade today. Today, the eyes were set on what would cook in minds of shareholders of Sesa Goa and Sterlite Industries - both controlled by London-listed miner Vedanta Resources. The shareholders approved the plan to merge the group's various Indian arms into a single unit, the two companies said today. At end of the market hours, Sesa Goa closed with marginal gain of 0.78% while Sterlite fell by 0.50%. The other major news was that the Moodys' has reaffirmed India's sovereign ratings at Baa3 with a stable outlook. Despite a slowdown in GDP growth, the ratings have been reaffirmed though Moody's expects India's growth to be below average in the next few quarters. Talking about the currency, the Indian rupee came off day's high to trade at 56.86, a rise of 26 paise over its previous closing value. It touched an intraday high of 56.42 a dollar as compared to a record closing low of (on Friday) 57.15 a dollar. Market sentiment The market breadth stood in favor of advances. Of the 2879 stocks traded on the BSE, 1420 (49.32%) rose, 1334 (46.34%) fell and 125 (4.34%) stocks remained unchanged. Sectoral & stock screening Among the 13 sectoral indices twelve closed in red zone, and only one sector closed in green zone. Gainer: BSE CD (up by 0.16%). Top Losers: BSE Bankex (down by 1.02%), BSE Power (fell by 0.94%), BSE PSU (down by 0.85%). Among 'A' group stocks, top three gainers were- Manappuram Finance (rose by 10.37%), Sun TV (up by 4.21%) and Jaypee Infra (surged by 3.98%). Top three losers were- Adani Enterprises (down by 3.62%), Reliance Power (declined by 2.88%), and Hero Motocorp (fell by 2.72%). Global signals: Asian markets fell on Monday on global jitters as euro zone policymakers appeared no closer to resolve the region's debt crisis. Weighing on the markets was the weakness in sectors sensitive to economic conditions. European equities fell for a third straight session on Monday, with fresh concerns about global economic growth and muted expectations ahead of a European Union summit later in the week prompting investors to scale back exposure to riskier assets. US stock index futures pointed towards a higher opening at the Wall Street on Monday. Market Outlook: Data to be released in the US on Monday: New Home Sales and Dallas Fed Manufacturing Survey.