Benchmarks reverse early gains; still manage to hold their neck in green

Reversing most of their early gains, barometer gauges were just about holding their neck in green, with slender gains of over one tenth of a percent on bout of selling pressure at higher levels as worries over deficient monsoon were offsetting the early optimism seen on account of 29 month low June Retail inflation data. Despite slipping at day’s low, both Sensex and Nifty were trading above the crucial 25,050 and 7,450 bastions respectively. However, broader indices showing a degree of outperformance were trading with gains of over 3 /4 of a percent.

On the global front, Asian shares rose on Tuesday, with Japan leading the region higher, after an upbeat overnight session in the U.S. Additionally, European stocks got off to a negative start ahead of German sentiment and British inflation data.

Closer home, majority of the sectoral indices on BSE were holding into positive territory, with stocks from Consumer Durables, banking and Capital Goods counters outperforming rest of the peers. Bank stocks gained across the board after the latest data showed easing of retail inflation in June 2014, reigniting hopes that RBI could consider slashing rates in its third bi-monthly monetary policy on August 5, 2014. On the flip side, stocks from Metal, Fast Moving Consumer Goods and Power counters were the top losing indices on the BSE. The overall market breath on BSE is in the favour of advances which thumped declines in the ratio of 1347:521; while 41 shares remained unchanged.

The BSE Sensex is currently trading at 25060.33, up by 53.35 points or 0.21% after trading in a range of 25026.67 and 25236.66. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.79%, while Small cap index up by 0.96%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.41%, Bankex up by 1.28%, Capital Goods up by 0.89%, Oil & Gas up by 0.89%, PSU up by 0.65% while, Metal down by 0.50%, FMCG down by 0.38%, Power down by 0.35%, IT down by 0.17% and TECK down by 0.02% were the losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 2.45%, SBI up by 1.82%, GAIL India up by 1.46%, Bajaj Auto up by 1.35% and ONGC up by 1.22%. On the flip side, NTPC down by 2.84%, Dr. Reddys Lab down by 2.63%, Hindalco down by 2.51%, Sesa Sterlite down by 2.05% and Hero MotoCorp down by 1.84% were the top losers.

Meanwhile, the government has rejected P J Nayak committee recommendations of lowering government holding in banks below 50 percent. Department of Financial Services Secretary G S Sandhu has asserted that the government wants to maintain public sector character of the banks and thus want to keep shareholding of the government at minimum 51 percent in PSU banks. However, the government is considering issues related to greater autonomy to bank including raising tenure of Chairman and Managing Directors (CMDs) of banks to five years and better quality of independent directors with domain knowledge for strengthening of board. In order to comply with Basel-III norms, public sector banks requires Rs 2,40,000 crore of equity capital over next 5 years. Further, G S Sandhu added that the government would disinvest in two or three PSU banks in the current fiscal and would come out with detailed blue print for disinvestment within the next two months. 

The RBI has set-up a committee under chairmanship of former Axis Bank chairman P J Nayak to Review Governance of Boards of Banks in India. The panel’s report criticized the way in which the lenders are currently being governed and suggested the government to cut its holding in public sector banks to below 50 percent. 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. 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.

The CNX Nifty is currently trading at 7469.80, up by 15.65 points or 0.21% after trading in a range of 7459.35 and 7524.20. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 2.43% and SBI up by 1.86% and United Spirits up by 1.57% and Bank Of Baroda up by 1.52% and Bajaj Auto up by 1.40%. On the flip side, NTPC down by 2.91%, Dr. Reddys Lab down by 2.63%, Hindalco down by 2.54%, Sesa Sterlite down by 1.85% and Asian Paints down by 1.76% were the top losers.  

Asian markets were trading mostly into positive territory; FTSE Bursa Malaysia KLCI rose by 1.72 points or 0.09% to 1,884.87; KOSPI Index added 18.84 points or 0.94% to 2,012.72; Jakarta Composite advanced 27.86 points or 0.55% to 5,048.92; Taiwan Weighted gained 48.87 points or 0.51% to 9,569.17; Hang Seng added 82.05 points or 0.35% to 23,428.72; Nikkei 225 increased 98.34 points or 0.64% to 15,395.16. On the flip side, Straits Times down by 1.53 points or 0.05% to 3,289.45 and Shanghai Composite slid by 0.05 points or 0% to 2,066.59.

European markets were trading into negative territory; with France’s CAC 40 index trading lower by 0.15%. Germany’s DAX sliding by 0.14% and United Kingdom's FTSE 100 sliding by 0.02%.