Markets extend previous session’s southward journey

Extending previous session’s southward journey, Indian equity benchmarks have made a dismal start and are trading lower by around half a percent in early deals on Friday. Sentiments remained dampened on International Monetary Fund’s report stating that India’s declining economic growth, which has touched a decade's low of 4.5 percent in 2012-13, is mainly due to internal factors. In its World Economic Outlook, it said that External factors have generally been much less important compared with internal factors for relatively large or closed economies such as China, India and Indonesia.

On the global front, the US markets ended modestly lower in last session ahead of the release of monthly jobs report on Friday. Sentiments were down on account of the report showing a bigger than expected increase in weekly jobless claims. Most of the Asian markets were trading lower at this point of time, awaiting US payrolls data, a much stronger numbers could reignite speculation of an earlier rate hike from the US Fed.

Back home, on the sectoral front, consumer durables, realty and healthcare witnessed the maximum gain in trade, while capital goods, oil and gas and banking remained the top losers on the BSE sectoral space. The broader indices, however, were outperforming benchmarks, while the market breadth on the BSE was positive; there were 926 shares on the gaining side against 680 shares on the losing side while 69 shares remain unchanged.

The BSE Sensex opened at 22522.46; about 13 points higher compared to its previous closing of 22509.07, and touched a high and a low of 22525.21 and 22378.49 respectively. The index is currently trading at 22407.34, down by 101.73 points or 0.45%. There were 10 stocks advancing against 20 declines on the index.

The overall market breadth has made a strong start with 55.28% stocks advancing against 40.60% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.28% and Small cap gained 0.36%. 

The top gaining sectoral indices on the BSE were, Consumer Durables up by 1.00%, Realty up by 0.70 %, Healthcare up by 0.39%, IT up by 0.36% and Teck up by 0.26%, while Capital Goods down by 0.97%, Oil & Gas down by 0.92%, PSU down by 0.82%, Bankex down by 0.65% and Auto down by 0.60% were the top losers on the sectoral index.

The top gainers on the Sensex were Hindustan Unilever up by 0.84%, Hindalco up by 0.80%, Wipro up by 0.64%, Cipla up by 0.44% and TCS up by 0.38%. On the flip side, Gail India was down by 2.19%,  BHEL was down by 1.79%, ONGC was down by 1.41%, L&Twas down by 1.32% and  ICICI Bank was down by 1.05% were the top losers on the Sensex.

Meanwhile, in order to strengthen bank’s credit appraisal process in the wake of frauds committed by certain unscrupulous jewellers, the Reserve Bank of India (RBI) has issued additional guidelines for banks offering gold metal loans (GML) to jewellers.

The central bank has suggested lenders to check the track record and credit worthiness of borrowers, collateral securities against the loan and the trade cycle of the manufacturing activity before sanctioning GMLs. Further, the banking regulator has clarified that such loans can be availed of only by those who manufacture gold jewellery themselves and also advised banks disbursing GML to carry out independent credit appraisal of the borrower and not rely solely on stand-by letter of credit/bank guarantee (LC/BG) issued by other banks.

The RBI’s notification highlighted that the jewellers cannot sell the gold borrowed under GML scheme to any other party for manufacture of jewellery. Warning banks for not carrying out detailed credit appraisal, the RBI directed banks to carry out proper quality check of the gold stock and verify the insurance cover which can be pursued jointly by or on rotation basis by the GML providing bank and the stand-by LC/BG issuing bank.

Banks have been directed to fix the credit limit for new borrowers after carrying out a detailed credit appraisal and due diligence. In case of existing customers, gold metal loans under the scheme may be carved out within the credit limit sanctioned by the bank. Further, banks disbursing GML should open current account of the borrowers which will facilitate repayment process.

The CNX Nifty opened at 6,741.85; about 5 point higher as compared to its previous closing of 6,736.10, and has touched a high and a low of 6,741.85 and 6,699.25 respectively. The index is currently trading at 6,705.85, down by 30.25 points or 0.45%. There were 17 stocks advancing against 33 declines on the index.

The top gainers of the Nifty were IDFC up by 1.04%, Hindustan Unilever up by 0.98%, Jindal Steel up by 0.90%, IndusInd Bank up by 0.83% and DLF up by 0.73%. On the flip side, Gail down by 2.24%, Asian Paint down by 1.94%, BHEL down by 1.84%, ONGC down by 1.70% and L&T down by 1.34% were the top losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng declined 57.50 points or 0.25% to 22,507.58, Jakarta Composite dropped by 41.08 points or 0.84% to 4,850.23, Nikkei 225 crumbled 19.51 points or 0.13% to 15,052.37, Straits Times slipped by 7.85 points or 0.24% to 3,212.21 and KOSPI Composite was down by 3.73 points or 0.19% to 1,989.97.

On the flip side, Shanghai Composite increased 7.30 points or 0.36% to 2,051.00 and KLSE Composite was up by 2.16 points or 0.12% to 1,857.79.

Taiwan markets remained shut for the trade today for Children's Day holiday.