Post session - Quick review

The Indian markets consolidated after a big rally in last session and though the trade remained range bound the indices snapped the session with marginal gains. Around the noon the markets were seen going for big gains but profit taking took them lower and in the last hours the markets slipped into deep red touching their lows of the day. However, the day once again remained jubilant for the realty sector that surged by over four percent. The day started on a flat note as the US markets closed with marginal gains and the Asian markets under impression of European debt crisis remained flat in early trade. Later the European markets themselves made a mixed start and weighed on the sentiments of the domestic markets.

The trade at the Dalal Street remained rangebound since morning, but the indices managed to remain majority of the session in green zone. There weren’t many triggers from the global front but the markets remained buzzing on the domestic cues. Initially all the rate sensitives’ surged extending their last session gains on expectations that easing inflation pressure will pave the way for the central bank to begin unwinding tight monetary policy this month. However, it was reported that RBI has ruled out the possibility of a cut in the cash reserve ratio in its monetary policy review on January 24, as lowering CRR will be contradictory to the anti-inflationary stance of the apex bank. Metal sector remained in limelight tailing their global peers on strong metals demand from China. The retail sector too remained in jubilant mood after the government’s notification of 100 per cent foreign direct investment (FDI) in single brand retail. Stocks like Koutons, Pantaloon, shoppers stop etc. were up by 4-8% for the day. However the one sector that remained in somber mood was IT and bellwether Infosys lost over a percent, a day ahead of its third quarter earnings announcement, other major IT companies like TCS, Wipro, and HCL Technology too lost between 1-2 percent. However, the broader indices, outperforming their larger peers showed consistent performance and closed with gains of over a percent.

The BSE Sensex gained 5.19 points or 0.03% and settled at 16,170.28. The index touched a high and a low of 16,244.70 and 16,127.77 respectively. 16 stocks advanced against 13 declining ones while 1 stock remained unchanged on the index (Provisional)

The BSE Mid-cap index gained 0.89% while Small-cap index was up by 1.23%. (Provisional)

On the BSE Sectoral front, Realty up 4.48%, Metal up 2.29%, Bankex up 1.22%, Oil & Gas up 0.99% and Capital Goods up 0.78% were the top gainers while It down 1.57%, TECk down 1.34% and FMCG down 0.65% were the only losers.

The top gainers on the Sensex were Hindalco up 5.69%, Sterlite up 4.49%, DLF up 2.76%, Tata Steel up 2.74% and Hero MotoCorp up 1.77%.

On the flip side, TCS down 2.81%, Jindal Steel down 2.18%, M&M down 1.94%, Bharti Airtel down 1.62% and Infosys down 1.61% were the only losers in the index. (Provisional)

Meanwhile, a cut in the cash reserve ratio (CRR) seems improbable in the upcoming monetary policy review meet of the Reserve Bank of India (RBI) on January 24 as the Indian central bank’s deputy governor has indicated that lowering the amount of funds that the banks have to keep with RBI will be contradictory to the anti-inflationary stance that RBI has taken. Select bankers, who participated in the customary pre-policy meeting held by the RBI, had sought a cut in CRR so that liquidity pressures that are likely to surface in the near future are taken care of.

Though the amount kept with the bank under CRR does not characteristically earn the banks any interest, however the bankers have requested RBI to pay interest on it. Bankers are of the view that liquidity still remains under stress and a cut in the CRR which is at 6% is justified as borrowings from the RBI's daily liquidity adjustment facility, or LAF, have been beyond the central bank's comfort zone of +/- 1% of the banking system's net demand and time liabilities (NDTL) for quite some time.

The bankers have also sought for concessions from the RBI in the second round of restructuring for loans given to textile and steel companies while the asset quality of banks have also been adversely affected amid the indications of slowing economic growth and thirteen interest rate hikes by the RBI since march 2010. Stress on the asset quality is one of the main concerns that banks are focusing on and are hoping that credit monitoring mechanism is strengthened substantially.

India VIX, a gauge for market’s short term expectation of volatility gained 0.54% at 24.54 from its previous close of 24.00 on Tuesday. (Provisional)

The S&P CNX Nifty gained 8.70 points or 0.18% to settle at 4,858.25. The index touched high and low of 4,877.20 and 4,841.60 respectively. 29 stocks advanced against 21 declining ones on the index. (Provisional)

The top gainers on the Nifty were Hindalco up 6.01%, Sesa Goa up 5.67%, Axis Bank up 5.39%, Sterlite up 5.11% and BPCL up 4.83%.

On the other hand, Power Grid down 2.58%, TCS down 2.50%, Jindal Steel down 2.49%, Grasim down 2.31% and Cipla down 1.65% were the top losers. (Provisional)

The European markets traded on a mixed note, with France's CAC 40 up 0.54%, Germany's DAX down 0.11% and Britain’s FTSE 100 down 0.17%.

Most of the Asian markets ended higher on Wednesday, with resource and financial-sector stocks underpinning the gains after a strong performance for global equities and commodities a day earlier. Overall market sentiment remained cautious about the prospects of Europe extricating itself from its deep-rooted debt problems any time soon. Meanwhile, Nikkei edged higher, taking comfort from a rise on Wall Street, though the debt turmoil in the euro zone capped gains. However, South Korean stocks ended lower, dragged down by computer-driven programme selling a day before options expiry. Chinese stocks declined for the first time in four trading days, as coal miners returned some of this week’s advances on profit-taking.