Benchmarks continue to trade marginally in red

Indian equity benchmarks were trading slightly in red in the afternoon session due to profit-taking by funds and retail investors after the markets hit record highs in the previous session. Though most of the sectoral indices were trying to remain in green, the sharp profit booking in the oil and gas and capital goods stocks was keeping the major indices in negative territory. Sentiments got a hit as the OECD in its latest report has stated that major emerging economies including India are expected to witness weak growth. Investors also turned cautious ahead of the general elections results due on Friday amid views that any disappointment will see the markets react sharply on the downside on May 16. However, the gain in realty, metal and consumer durables stocks has provided support to the markets. The shares of public sector banks were on buyers’ radar as the latest RBI panel report has stated that the government should cut its holding in public sector banks to below 50 percent in order to create a condition for its banks to compete more successfully. The broader markets once again outperformed the benchmarks with both mid and small cap indices were trading up by over 0.80%.

Strong buying was witnessed in the shares of real estate and infrastructure companies with many of them trading at their 52-week high amid expectations that a new government at the centre would give the much-needed thrust to economic recovery. Bharti Airtel was trading up by around 1.3% to Rs 324 after the country’s largest telecom operator by subscribers said it had raised about $2 billion (Rs 11,928 crore) in dual-currency international bonds. On the other hand, Dr Reddy’s Laboratories was the top loser on BSE down by around 2.52% to nearly Rs 2,545 after reporting a lower than 15.6% year on year (yoy) drop in consolidated net profit at Rs 482 crore for Q4FY14.

On global front, Asian equity indices were trading in green with Hang Seng up by 1.15% and Taiwan Weighted up by 0.65%. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,150 and 23,900 levels respectively. The market breadth on BSE was positive, out of 2,507 stocks traded, 1,323 stocks advanced, while 1,061 stocks declined on the BSE.

The BSE Sensex is currently trading at 23,826.81 down by 44.42 points or 0.19% after trading in a range of 23,964.67 and 23,795.16. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.87%, while Small cap index up by 1.17%.

The gaining sectoral indices on the BSE were Realty up by 3.03%, Metal up by 1.45%, Consumer Durables up by 0.83%, FMCG up by 0.50% and Power up by 0.30%. On the flip side, Oil and Gas down by 0.84%, Capital Goods down by 0.78%, Auto down by 0.48% and IT down by 0.12% were the losing indices on BSE.   

The top gainers on the Sensex were Tata Steel up by 3.09%, Bajaj Auto up by 1.98%, Bharti Airtel up by 1.28%, Hindalco Inds up by 1.19% and ITC up by 1.01%. On the flip side,  Dr Reddy’s Lab down by 2.52%,  M&M down by 2.51%, BHEL down by 2.10%, Maruti Suzuki down by 1.28% and L&T down by 1.22%.

Meanwhile, the Reserve Bank of India (RBI) panel, in its latest report has stated that the government should cut its holding in public sector banks to below 50 percent. Criticizing the way in which the lenders are currently being governed, the panel has said that governance at the 26 Public Sector Banks (PSBs) suffers due to several ‘externally imposed constraints’ like dual regulation by the Finance Ministry and RBI and external vigilance by agencies like the CVC and CAG among others.

The panel further highlighted that if the Government reduces its stake to less than 50 percent, together with certain other executive measures, all these external constraints would disappear. Further, the move would also benefit the government as it would continue to be the dominant shareholder and create a condition for its banks to compete more successfully. The Panel report further added that the government should repeal the present Bank Nationalisation Acts of the 1970 and 1980, together with the SBI Act and the SBI (Subsidiary Banks) Act, and all banks should be incorporated under the Companies Act. Further, the report added that bank Investment Company should be constituted where the government holding in all the banks should be transferred. The panel also recommended the government to take some radical reforms to improve the selection process for directors in the state run banks.

Further, the panel also recommended expanding single investor shareholding caps to beyond the current practice by making a new category of investors called 'authorised bank investors' (ABI). As per the panel report, ABI should be permitted a 20 percent equity stake without regulatory approval or 15 percent if it also has a seat on the bank board. All other financial investors should be permitted to invest up to 10 percent in banks.

Indian banking industry is the most dominant segment of the country’s financial sector and plays an important role in the economic development of the country. Banks help to boost economic growth by allocating savings to investments that have potential to yield higher returns.

The CNX Nifty is currently trading at 7,104.45 down by 4.30 points or 0.06% after trading in a range of 7,142.25 and 7,095.05. There were 34 stocks advancing against 16 declining on the index.

The top gainers of the Nifty were Tata Steel up by 3.13%, Jindal Steel up by 2.58%, NMDC up by 2.54%, PNB up by 2.37% and Bank of Baroda up by 2.27%. On the flip side, M&M down by 2.93%, Dr Reddy’s Lab down by 2.48%, BHEL down by 2.15%, HCL Tech down by 1.49% and Maruti Suzuki down by 1.22% were the major losers on the index.

Asian equity indices were trading in green; Hang Seng up by 1.15% to 22,608.94, Taiwan Weighted up by 0.65% to 8,875.16, Straits Times up by 1.17% to 3,259.98 and Jakarta Composite up by 0.93% to 4,966.82. While, Shanghai Composite down by 0.13% to 2,048.89 and Nikkei 225 down by 0.22% to 14,393.91.