Market trims gains

Key benchmark indices trimmed almost entire intraday gains and were trading a tad above the flat line in afternoon. At 13:25 IST, the barometer index, the S&P BSE Sensex was up 11.75 points or 0.04% at 31,202.31. The Nifty 50 index was up 3.55 points or 0.04% at 9,640.70. Cement stocks rose. IT stocks dropped sharply. Investors maintained caution ahead of the Reserve Bank of India's (RBI) monetary policy review today, 7 June 2017.

After opening with small gains, key indices held firm after extending gains and hitting fresh intraday high in morning trade. Metal & mining stocks gained on bargain hunting after the recent losses. Stock pared almost entire intraday gains in afternoon trade.

The S&P BSE Mid-Cap index rose 0.22%. The S&P BSE Small-Cap index advanced 0.6%. Both these indices outperformed the Sensex.

The breadth indicating overall health of the market was positive. On the BSE, 1,392 shares rose and 1,084 shares fell. A total of 143 shares were unchanged.

IT stocks dropped sharply. TCS (down 3.42%), Infosys (down 2.98%), Wipro (down 3.38%), HCL Technologies (down 1.7%), Oracle Financial Services Software (down 0.06%), Tech Mahindra (down 2.68%), MindTree (down 3.37%) and MphasiS (down 0.21%) fell.

Hexaware Technologies fell 5.34% to Rs 244.70, with the stock sliding on profit booking after recent rally. The stock had rallied 10.12% in the preceding four trading sessions to settle at Rs 258.50 yesterday, 6 June 2017, from its closing of Rs 234.75 on 31 May 2017.

Cement stocks rose. Ambuja Cements (up 0.45%), ACC (up 0.52%), UltraTech Cement (up 0.64%) gained. Shree Cement (down 0.4%) fell.

Grasim Industries was up 0.1%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.

Meanwhile, the second stage forecast of Southwest monsoon seasonal rainfall was issued by Indian Meteorological Department (IMD) in New Delhi yesterday, 6 June 2017. IMD has forecast that quantitatively, the monsoon seasonal rainfall for the country as a whole is likely to be 98% of the long period average (LPA) with an error of 4%. The forecast was 2 percentage points higher than the April forecast. The monsoon delivers about 70% of India's annual rainfall, critical for the farm sector. In April, the IMD had forecast this year's monsoon rains at 96% of the 50-year average of 89 centimetres.

Investors will closely watch the Reserve Bank of India's (RBI) monetary policy review scheduled today, 7 June 2017. The central bank is widely expected to keep policy rates unchanged.

Overseas, European stocks opened lower as investors remained cautious ahead of Thursday's UK election and the European Central Bank's policy decision. Most Asian stocks rose although investors remained noticeably risk averse ahead of several major political and economic events later this week.

While pollsters still expect British Prime Minister Theresa May to win the most seats in the Thursday election, a tight result could throw the country into political deadlock just days before formal Brexit talks with the European Union are due to begin on 19 June 2017.

Meanwhile, expectations are growing that the ECB could strike a less dovish tone at its meeting tomorrow, 8 June 2017 after recent economic reports indicated that the recovery in the euro area is deepening.

US stocks closed lower yesterday, 6 June 2017 for a second session as investors exercised caution ahead of the UK elections and political uncertainties over former Federal Bureau of Investigation director James Comey's testimony this week.

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