Sensex up 139 points,Capital goods, healthcare stocks major gainers.

Though RBI Governor D. Subbarao played safe keeping the CRR and repo rate unchanged, the stock market took the shock in its chin as it was more or less anticipated.

The Reserve Bank of India, in its mid-quarter monetary policy review, has kept the repo rate unchanged at 7.25 per cent and cash reserve ratio at 4 per cent. It has also left the reverse repo rate unchanged at 6.25 per cent.

At 1.25 p.m., the 30-share BSE index Sensex was up 82 points (0.43 per cent) at 19,259.93 and the 50-share NSE index Nifty was up 25.4 points (0.44 per cent) at 5,833.80.
On the BSE, capital goods and healthcare stocks were the major gainers and were up 1.07 per cent and 0.86 per cent, respectively, followed by consumer durables 0.84 per cent and auto 0.81 per cent.

On the other hand, metal and PSU stocks lost investors' support and were down by 0.16 per cent and 0.12 per cent, respectively.

Among 30-share Sensex, M&M, Sun Pharma, Bharti Airtel, HDFC and BHEL were the top five gainers, while the top five losers were Tata Motors, Hindalco, Sterlite, Dr Reddy's and TCS.

No change Policy....RBI keeps the rates unchanged.

Reserve Bank of India (RBI) keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0
per cent of their net demand and time liabilities; and
 keep the policy repo rate under the liquidity adjustment facility (LAF)  unchanged at 7.25 per cent.
 Consequently, the reverse repo rate under the LAF will remain unchanged at  6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.25 per cent.

Nifty slips 33 points down trading at 5775, Sensex losses 80 points.

Points considered in Policy:
Global economic activity has slowed and risks remain elevated, most recently on account of uncertainty over policies of systemic central banks. On the domestic front, macroeconomic conditions remain weak, hamstrung by infrastructure bottlenecks, supply constraints, lacklustre domestic demand and subdued investment sentiment. Inflation has moderated as projected. However, upside pressures on the way forward from the pass-through of rupee depreciation, recent increases in administered prices and persisting imbalances, especially relating to food, pose risks of second-round effects.

Global growth has been patchy and uneven. Among advanced economies (AEs), during Q1 of 2013, growth in US and Japan improved while that in the euro area contracted. Growth in most emerging and developing economies (EDEs) has been relatively resilient, although in some large emerging economies, sluggish external demand and stalled domestic investment are dragging down economic  activity. Inflation has been easing in the AEs due to weak demand conditions.
EDEs, however, present a mixed picture: inflation remains elevated in the BRICS except China. Commodity prices, other than the price of crude, have generally softened in recent months.

Eye on Mahindra & Mahindra

Shares of Mahindra Forgings Ltd and Mahindra Composites Ltd may continue to trade with positive momentum. The promoter-Mahindra Group-announced a share swap under which it will hand control of its domestic components business to the Spanish company. The Spanish company announced an open offer, which is at a premium to Friday’s closing price of the target companies.
Mahindra & Mahindra is an Indian automobile manufacturing corporation,It is one of the largest vehicle manufacturers  by production in India.

MNM trading at Rs.968, opens at Rs.961.20 up by 2.29% from Friday's closing Rs.947.45,
Mahforg trading at Rs.69.25 up by 3.66%  from Friday's closing Rs.66.85,
Mahincomp is locked under upper circuit of  Rs.34.45.

Central banks could hold sway over markets

Actions of two central banks could determine the direction of Indian stocks in the week ahead. While the Reserve Bank of India (RBI) decision on policy rates is likely to set the tone for domestic stocks this week, the outcome of the US Fed’s two-day meet ending Wednesday — which could give some clarity on its monetary policy outlook — could have wider implications on  global financial markets.

   Hopes of a policy-rate or repo rate-cut by RBI have diminished following the recent decline in the rupee against the dollar. So, if the Indian central bank keeps the repo rate (at which it lends to banks) intact, markets would not be disappointed, said fund managers.

 After RBI’s meeting, investors will closely watch the US Federal Open Market Committee meeting. If Fed chairman Ben Bernanke signals that the US central bank might cut down its bond buying programme known as Quantitative Easing 3 (QE3), it could weigh down sentiment in emerging market equities including India’s. The liquidity from QE3 has made its way to equity and bond markets worldwide.

       Investors, however, think RBI might cut the cash reserve ratio (CRR) — the minimum amount banks need to hold with the central bank, to ease liquidity.

“A CRR cut of 25 bps is what some quarters of the market are looking forward to,.“With the declining rupee situation, high current account deficit numbers, markets are not expecting a repo rate cut.”