Post session - Quick review

Carnage protracted for Indian equity markets for fifth straight session in a row as benchmark equity indices, after flip flopping for the entire session, snapped the choppy day of trade hazardously in the red zone. Bolting from the blue, barometer gauges after recuperating almost all the losses in the noon deals, again slipped back in negative territory to end the day near day’s lowest point. Continued selling by foreign funds and slowing domestic growth prospects sent the benchmark indices plummeting below two year’s low, with the 50 share barometer index- Nifty-tumbling to a 28 month low- its lowest since August 21, 2009.

Bucking the jubilant trend witnessed in regional counterparts, Indian equity markets’ investors chose to sit on sidelines near support levels after the recent sharp correction. Meanwhile, Asian equity markets staged a comeback after an initial decline on Tuesday after Richmond Federal Reserve President Jeffrey Lacker forecast U.S. economic growth of between 2 per cent and 2.5 per cent in 2012. Asian pacific markets also modestly higher Tuesday, amid scattered deal-making and receding worries the death of North Korean leader Kim Jong-il might spur instability on the Korean peninsula.

However, European shares extending their two-week slide, slipped in early trade on nagging concerns about the region's debt crisis after European Central Bank President Mario Draghi quashed hopes for more aggressive bond purchases.

Back on the home turf, worries from the European front too played their share of spoilsport as ECB President’s remarks, that the European economic outlook faced substantial downside risks, intensified doubts about a solution to Europe's debt woes. However, even depreciating rupee on the home turf amidst Europe's continuing debt crisis added to the investor’s woes.

Differing from trend, however, media shares surged to higher levels on the buzz that Mukesh Ambani, head of oil and gas major Reliance Industries is eyeing to buy a stake in Network 18. Reports that RBI has allowed micro finance institutions to raise funds via external commercial borrowings (ECBs) up to $10 million or equivalent during a financial year for permitted end-uses under the automatic route also helped SKS Microfinance to trade on a positive note.

However, on the flip side, stocks from Metal, Auto and Public Sector Undertaking counters were amongst the worst hit of the day. Following the suite, banking shares too edged lower. Banks globally are pressured on concerns that efforts to contain the euro zone debt crisis were faltering and tougher rules to strengthen banks' capital would further undermine their profits.

Thus by the end of the trade, 30 share barometer index- Sensex-plummeting over 200 points settled below the psychological 15200 level. Similarly, 50 share barometer index- Nifty- on NSE declining over 50 points ended sub 4600 level. The broader indices too were clobbered out of shape and went home with a loss of over 1%. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 927:1794 while 134 scrips remained unchanged. (Provisional)

The BSE Sensex lost 197.29 points or 1.28% and settled at 15,182.05. The index touched a high and a low of 15,448.13 and 15,135.86 respectively. 5 stocks advanced against 25 declining ones on the index (Provisional)

The BSE Mid-cap index lost 1.81% while Small-cap index was down by 1.37%. (Provisional)

On the BSE Sectoral front, FMCG up 0.35% was the only gainers while Capital Goods down 3.43%, Metal down 3.38%, Realty down 2.64%, Auto down 2.45% and Consumer Durables down 2.23% were the top losers. (Provisional)

The top gainers on the Sensex were ONGC up 2.73%, HDFC Bank up 2.20%, ITC up 1.34%, BHEL up 1.04% and HDFC up 0.69%. (Provisional)

On the flip side, JP Associates down 8.12%, L&T down 5.70%, Tata Steel down 5.70%, Hero MotoCorp down 5.68% and Tata Power down 4.82% were the top losers on the index. (Provisional)

Meanwhile, in its bid to help and widen the fund raising sources of capital-starved micro finance institutions (MFIs), the Reserve Bank of India (RBI) on December 19, allowed MFIs to raise funds via external commercial borrowings (ECBs) up to $10 million or equivalent during a financial year for permitted end-uses under the automatic route.

The MFIs eligible for the same will be those registered under the Societies Registration Act, 1860; those registered under Indian Trust Act, 1882; MFIs registered either under the conventional state-level cooperative acts, the national level multi-state cooperative legislation or under the new state-level mutually aided cooperative acts and not being a co-operative bank; non-banking finance companies (NBFCs) categorized as ‘non-banking finance company-micro finance institutions' (NBFC-MFIs) and companies registered under section 25 of the Companies Act, 1956, and involved in micro finance activity.

Further, the MFIs registered as societies, trusts and co-operatives and engaged in micro finance activities should have a satisfactory borrowing relationship for at least 3 years with a scheduled commercial bank authorized to deal in foreign exchange; and would require a certificate of due diligence on ‘fit and proper' status of the board/committee of management of the borrowing entity from the designated authorized dealer (AD) bank.

Currently only non-government organizations, which function as microfinance institutions are allowed to raise up to $5 million. The new notification will cover all microfinance lenders. The Microfinance industry, which has witnessed one of its toughest years on account of the crackdown by the Andhra Pradesh government, tough new regulatory requirements laid down by the RBI and a shortage of funds, could see some improvement in its prospects and bring stability to the market.

The notification further said ECB funds should be routed through normal banking channels. NBFC-MFIs will be permitted to avail of ECBs from multilateral institutions, such as IFC, ADB etc. Companies registered under section 25 of the Companies Act and engaged in micro finance will be permitted to avail of ECBs from international banks, multilateral financial institutions, export credit agencies, foreign equity holders, overseas organizations and individuals.

Last week, RBI issued new guidelines for NBFC-MFIs to have minimum net owned funds of Rs 5 crore, up from Rs 2 crore earlier and capital adequacy ratio (CAR) of 15%, up from 12% earlier. According the new rules, the MFIs which have a 25% exposure to Andhra Pradesh, must achieve 12% capital adequacy by April 2012.
 
India VIX, a gauge for market’s short term expectation of volatility lost 0.16% at 30.53 from its previous close of 30.58 on Monday. (Provisional)

The S&P CNX Nifty lost 64.40 points or 1.40% to settle at 4,548.70. The index touched high and low of 4,637.25 and 4,531.15 respectively. 10 stocks advanced against 40 declining ones on the index. (Provisional)

The top gainers on the Nifty were Ranbaxy up 3.24%, ONGC up 2.45%, HDFC Bank up 2.22%, ITC up 1.27% and SAIL up 0.91%. (Provisional)

 On the other hand, JP Associates down 8.15%, Hero MotoCorp down 6.05%, L&T down 6.03%, Tata Power down 5.90% and Tata Steel down 5.72% were the top losers. (Provisional)

The European markets are trading on a mix note, with France's CAC 40 up 0.85%, Germany's DAX up 0.59% and FTSE 100 down 0.20%.

Most of the Asian equity indices edged higher on Tuesday, winning back some of Monday's losses as fears aroused in the wake of North Korean leader Kim Jong-il death subsided, although European woes continued to cast a pall. With attention turning to the leadership succession in Pyongyang, markets were relieved that there seemed to be no internal turmoil in the nuclear-armed state, providing dealers an opportunity for bargain hunting. Meanwhile, China’s main stock index closed marginally lower by 0.1 percent, trading narrowly on Tuesday as investors remained cautious while, Japan’s Nikkei average gained about half a percent as short-term players bought back shares that had been sold.