Indian shares end flat; banking on an RBI rate cut

Mon Jan 28, 2013 4:45pm IST

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* India's benchmark indexes end flat
    * RBI seen easing rates by 25 basis points-Poll
    * Axis Bank gains ahead of expected share sale

    By Abhishek Vishnoi
    MUMBAI, Jan 28 (Reuters) - Indian shares ended flat on
Monday, as gains in some interest rate-sensitive stocks such as
ICICI Bank and DLF, a day before the central
bank is widely expected to ease monetary policy, were offset by
profit-taking in oil and gas stocks.
    Investors are widely anticipating the Reserve Bank of India
will cut interest rates by 25 basis points on Tuesday, easing
for the first time since April 2012, after inflation last month
eased to a three-year low. 
    The prospect of rate cuts, along with continued fiscal
reforms from the government, have sparked solid gains in Indian
shares this month, leaving markets vulnerable to a sell-off
should the RBI surprise by keeping rates on hold.
    The BSE has gained 3.5 percent so far this month, thanks in
a large part to continued strong foreign buying. Foreign
institutional investors have bought $3 billion in the first 23
days of the month, marking a record high for that time period,
according to a Goldman Sachs report on Monday.
    The RBI decision comes ahead of what is expected to be a
volatile week, with continued earnings results and the expiry of
derivatives on Thursday, while the Federal Reserve is set to
conclude its two-day meeting on Wednesday.
    "The market has already priced in a rate cut of at least 25
basis points," said Dipan Shah, Head of research at Kotak
Securities.
    The post-policy market will be driven by October-December
earnings, the Fed meeting announcement on Wednesday and
derivatives expiry in near term, Shah added.
    The benchmark BSE index ended flat at 20,103.35
points, while The broader NSE index ended unchanged at
6,074.80.
    Private sector banks led the gains, with ICICI Bank ending
1.5 percent higher, gaining 4.6 percent in 2013.
    Shares in Axis Bank Ltd gained 1.9 percent on
expectations that its up to $1 billion share sale, expected as
early as on Monday, will attract solid demand. 
    Yes Bank Ltd shares rose 3.8 percent after Nomura
upgraded the stock to "buy" from "neutral", saying the 146 new
branch licenses it was granted by the RBI should help improve
returns on assets. 
    Real estate developer DLF Ltd rose 2.7 percent while Unitech
Ltd also ended 2.3 percent higher on hopes a potential
rate cut would help sales in the sector.
    Among other gainers, Maruti Suzuki India Ltd 
gained 0.5 percent after UBS upgraded its ratings to "buy" from
"neutral," noting the weakening Japanese yen over the
past three months would boost earnings. 
    Maruti said on Friday its third quarter profit more than
doubled. 
    MCX-SX rose 3.4 percent, after it said in a
statement that it will begin trading of cash equities and
equities derivatives on Feb. 11. 
    However, among stocks that fell, oil and gas stocks declined
on profit-taking, with Oil and Natural Gas Corp Ltd 
falling 1.8 percent, having gained 27.3 percent in January after
the government's move to allow higher diesel prices and due to
expected changes to gas pricing.
    Reliance Industries fell 1.6 percent after gaining
8.65 percent in January, on a better-than-expected 24 percent
jump in third-quarter net profit. 
    Among other decliners, Idea Cellular Ltd shares
fell 0.5 percent a day ahead of its October-December quarter
earnings.
       For additional stocks on the move double click    
   
     
   FACTORS TO WATCH                                             
* Euro near 11-mth high as crisis fears fade, yen soft    
* Oil near 3-month high at $113 on economic optimism       
* Euro, shares stall as investors turn cautious      
* Foreign institutional investor flows          
* For closing rates of Indian ADRs                       
                       
   ASIA-PACIFIC STOCK MARKETS:                                  
Pan-Asia........ Japan.......   S.Korea... 
S.E. Asia.......        Hong Kong...  Taiwan.... 
Australia/NZ....        India.......  China..... 
                        
   OTHER MARKETS:                                               
Wall Street ....         Gold ....... Currency.. 
Eurostocks.....         Oil ........  JP bonds... 
ADR Report .....       LME metals. US bonds.. 
Stocks News US.. Stocks News Europe     
                       
   DIARIES & DATA:                                              
Indian Data Watch   Asia earnings diary 
U.S. earnings diary     European diary       
Indian diary          Wall Street Week Ahead  
Eurostocks Week Ahead                                   
                         
   TOP NEWS:                                                    
   For top Asian company news, double click on:       
   U.S. company news  European company news  
   Forex news        Global Economy news  
   Technology news  Telecoms news        
   Media news       Banking news           
   Politics/General    Asia Macro data      <ECONASIA 

 (Additional reporting by Manoj Dharra; Editing by Anupama
Dwivedi)
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