Benchmarks continue to reel under pressure post negative European markets' start

Benchmarks continue to reel under pressure, with nasty cut of over half a percent since early deals in absence of any positive trigger and prevailing caution ahead of the release of Index of Industrial Production (IIP) data later in the day and Retail inflation data early next week, adding to the pessimistic milieu. On the macro-front, while consumer inflation rate is forecasted to have edged up slightly in March due to higher food prices, factory output in February is expected to have risen at its fastest annual pace in five months. Languishing in negative territory, both Sensex and Nifty are just about managing to hold above crucial 22,550 and 6,750 bastions respectively. Meanwhile, broader indices also somewhat succumbing to selling pressure have pared some portion of their early gains.

The sentiment at Dalal Street also remains to be downbeat due to mostly negative start of European markets, which receiving negative hand-over from Asian counterparts, were setting local indexes on course for their weekly loss in a month.

Closer home, the fall at local equity markets was led the most by stocks belonging from Capital Goods, Oil & Gas and banking counters which witnessing maximum selling pressure were the top losers of the session. Additionally, banking shares too were witnessing brunt of profit-booking after a Reserve Bank of India (RBI) panel recommended a slew of measures, including potentially changing how lending rates are set for the sector, raising worries about overall profitability. On the flip side, stocks from Healthcare, Consumer Durables and Metal counters emerging as the top performers of the session were limiting further downside of markets. The overall market breadth on BSE was supporting declines, which were outpacing advances by a little margin in the ratio of 904:940; while 17 shares remained

The BSE Sensex is currently trading at 22555.35, down by 159.98 points or 0.70% after trading in a range of 22642.05 and 22526.89. There were 7 stocks advancing against 22 stocks declining on the index, while 1 share remained unchanged.

The broader indices pared some gains; the BSE Mid cap index was up by 0.21%, while Small cap index up by 0.53%.

The gaining sectoral indices on the BSE were Healthcare up by 1.29%, Consumer Durables up by 0.96% and Metal up by 0.09%. While, Capital Goods down by 0.94%, Oil and Gas down by 0.82%, Bankex down by 0.71%, Auto down by 0.60% and Information Technology down by 0.51 were the losing indices on BSE.   

The top gainers on the Sensex were Sun Pharma up by 2.59%, Cipla up by 1.77%, Dr Reddy’s Lab up by 1.06%, Tata Steel up by 0.88% and Bharti Airtel up by 0.33%. On the flip side, HDFC down by 2.24%, Hero Motocorp down by 1.68%, Maruti Suzuki down by 1.60%, M&M down by 1.44% and Gail India down by 1.40%.

Meanwhile, in a move to bring greater transparency in the pricing of credit, the Reserve Bank of India (RBI) panel suggested a benchmark floating interest rate, especially for home loans. As per the panel’s draft report on Pricing of Credit, the Indian Banks Association (IBA) may develop a new benchmark for floating interest rate products, namely, the Indian Banks Base Rate (IBBR), which may be collated and published by IBA on a periodic basis. The RBI Deputy Governor Anand Sinha headed the panel which was set up recently to examine issues related to discrimination in the pricing of credit and recommend measures for transparent and appropriate pricing of credit under a floating rate regime. The RBI has invited feedback and comments on the recommendations in the draft report by May 16.

The panel draft noted that interest rates on floating rate loan will reset periodicity on particular dates only, irrespective of changes made to the base rate or minimum lending rate within the reset period. Banks are restricted to give loans below the base rate to any customer. The base rate (benchmark lending rate) should be linked to the marginal cost of funds if the average deposit tenure is on the lower side. Draft report further added that benefit of interest reduction on the principal on account of pre-payment should be given on the day the money is received by the bank without waiting for the next EMI cycle date to effect the credit.

Regarding retail loans, the draft highlighted that customers should have ‘exit’ and ‘sans exit’ options at the time of entering the contract. These exit option should be easily exercisable by the customer with minimum notice period and without impediments. Panel report further added that these recommendations will also enable informed decision-making by customers and improved asset-liability management at banks. The grievances redressal systems in banks should be made robust and responsive to customers' needs.

 The CNX Nifty is currently trading at 6,752.05, down by 44.35 points or 0.65% after trading in a range of 6,773.55 and 6,743.15. There were 14 stocks advancing against 34 declining on the index, while 2 stocks remained unchanged.

The top gainers of the Nifty were Sun Pharma up by 2.68%, NMDC up by 1.47%, Ultratech Cement up by 1.23%, Cipla up by 1.18% and Dr Reddy up by 1.04%. On the flip side, Indusind Bank down by 2.71%, HDFC down by 2.24%, Hero Motocorp down by 1.74%, Maruti down by 1.68%, and MCdowell-N down by 1.46% were the major losers on the index.

Asian equity indices were trading in red; Hang Seng down by 0.59%, Taiwan Weighted down by 0.45%, Nikkei 225 plunged by 2.38%%, Straits Times was down by 0.02% and Shanghai Composite down by 0.17% while, Jakarta Composite up by 0.44% was the lone loser on the index.

European markets got off to a mostly negative start; with CAC declining by 0.66%, DAX sliding by 0.55%, however FTSE 100 Index was trading higher by 0.10%.