Post Session: Quick Review

Intra-day trend reversal which took place during the second half of the trading session mainly led to a green close of local equity markets on Monday, which took both Sensex and Nifty higher above psychologically crucial 27,150 and 8,100 levels respectively, with gains of around half a percent. The markets after making a gap-down start traded lackluster till afternoon deals on the back of an uninspiring session on Wall Street post Federal Reserve Bank President Richard Fisher's statement that Federal Reserve should start raising U.S. interest rates in the spring, which was earlier than expected. However, the trend reversal, which took place in the second half of trading session as market-participants indulged in lower level buying, aided the sentiment of Indian equity markets, which clocked a total turnover of Rs 5.9 lakh crore, the fifth largest ever at the start of F&O expiry week. Meanwhile, broader indices managing to keep their head above water for the entire trading session went home with gains in the range of 0.20%-0.50%.

On the global front, Asian shares got off on the back foot on Monday as investors awaited data this week that could provide more evidence of a slowdown in China. Reports suggest that China's flash manufacturing PMI reading on Tuesday could come in below the 50 level, indicating that manufacturing activity is contracting. Meanwhile, European shares also tanked early in trade, tracking fall of Asian counterparts as China’s finance minister damped speculation his government will boost economic stimulus. Quelling speculation that weaker economic data will spur further stimulus in the world’s second-biggest economy China’s Finance Minister Lou Jiwei reiterated that his government would not make any major policy adjustments in response to changes in individual economic indicators, even as he said growth faces downward pressure.

Closer home, despite it being the broad session of gains, most of the sectoral indices on BSE concluded in negative territory, nevertheless much of the beating was taken by stocks from Metal, Healthcare and Realty counters. Metal shares came under pressure after prices of industrial metals and iron ore declined in global market on Monday, while pharma stocks tanked after the government capped prices of 36 drugs, including major anti-infectives, gastro drugs and vaccines. These medicines add to the list of ‘348’ drugs that are deemed as ‘essential’ and therefore subject to price caps and cover up-to 30% of the total drugs sold in the country.

On the flip side, gains in Auto sector were led by rally in Tata Motors stocks, which hit a new high in today’s trade after Moody's Investors Service upgraded ratings of half a dozen Tata group companies, including Tata Consultancy Services (TCS) and Tata Motors, on account of Tata Sons' track record in providing timely support to these firms. In stock-specific activity, Textile stocks like Raymond, Morarjee Textiles, Shri Lakshmi Cotsyn, Alok Industries, Arvind and Vardhman Textiles rallied despite Prime Minister’s Office rejecting the Textile Ministry’s request for linking the entire sector to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA), even as it approved linking of the scheme to specific sectors within the textile industry such as handicraft and handloom. Among them, Kitex Garments and Digjam shot up by 20% in trade. Meanwhile, gold jewellery stocks, PC Jeweller, Tribhovandas Bhimji Zaveri (TBZ), Gitanjali Gems, Tara Jewels, Lypsa Gems & Jewellery and Shree Ganesh Jewellery House also gained ground in otherwise weak market ahead of festive season as Consumer spending appetite traditionally increases during the Dussehra and Diwali festivals that are considered auspicious for buying big-ticket items, especially gold jewellery. The market breadth on the BSE remained in the favour of advances; where advancing and declining stocks were in a ratio of 1661:1366, while 102 scrips remained unchanged. (Provisional)

The BSE Sensex ended higher by 103.79 points or 0.38% at 27194.21 after trading in a range of 26918.93 and 27254.80. There were 11 stocks advancing against 18 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.08%, while Small cap index up by 0.45%. (Provisional)

The gaining sectoral indices on the BSE were Consumer Durables up by 3.12%, FMCG up by 1.97%, Auto up by 1.02%, Oil & Gas up by 0.82% and PSU up by 0.53% while, Metal down by 1.23%, Healthcare down by 1.08%, Realty down by 0.93%, Infrastructure down by 0.93% and Power down by 0.67% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Motors up by 3.85%, ONGC up by 3.33%, ITC up by 3.17%, Hero MotoCorp up by 1.72% and HDFC up by 1.18%. On the flip side, BHEL down by 2.36%, Tata Steel down by 2.04%, Cipla down by 1.82%, Infosys down by 1.36% and Sun Pharma down by 1.34% were the top losers. (Provisional)

Meanwhile, as a part of the overall strategy to strengthen the recovery mechanism, finance ministry has asked state-run banks to tighten the noose on their defaulting corporate borrowers to monetize their non-core assets for repaying loans. The moves comes on the heels of the ministry earlier urging these banks to constitute board-level committees to monitor recovery and put in place guidelines for an early warning system as part of their non-performing assets (NPA) management.

According to the ministry, the lenders, if needed, should pressurize defaulting borrowers to exit out of such ventures. Testifying theses views, it added that banks are already putting pressure on the debt-laden Bhushan Steel to sell its non-core assets, while Neeraj Singal, the company's vice-chairman and MD, was arrested by the Central Bureau of Investigation in an alleged cash-for-loan scam, in which Syndicate Bank chairman SK Jain is one of the accused.

Around 35 banks, including the country's biggest State Bank of India, have an exposure of around Rs 40,000 crore to Bhushan Steel. In yet another case, state-run lenders are already battling in courts to declare the now beleaguered Kingfisher Airlines and its promoter Vijay Mallya as wilful defaulters.

Further, in a plan to reduce the pile up of bad loans at state-run banks, the government is also looking at speeding up the procedure to try loan default cases of over Rs 100 crore. Also, the ministry has constituted under VK Bhasin, former secretary in the law ministry's legal department, to suggest measures to deal with high-value wilful defaulters.

India VIX, a gauge for markets short term expectation of volatility declined 1.49% at 11.71 from its previous close of 11.88 on Friday. (Provisional)

The CNX Nifty ended higher by 17.45 points or 0.21% at 8,138.90 after trading in a range of 8064.80 and 8159.90. There were 20 stocks advancing against 29 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Motors up by 3.94%, ONGC up by 3.70%, ITC up by 3.23%, BPCL up by 2.09% and Indusind Bank up by 1.96%. On the flip side, DLF down by 3.40%, Asian Paints down by 2.75%, Tata Steel down by 2.34%, BHEL down by 2.25% and Zee Entertainment down by 2.25% were the top losers. (Provisional)

European Markets were trading in the red; France's CAC was down by 0.13%, Germany's DAX was down by 0.18% and UK's FTSE 100 was down by 0.49%.

Asian markets ended in red on Monday, after China’s Finance Minister Lou Jiwei damped speculation that government will boost economic stimulus. Lou Jiwei stated that the government won’t change its economic policies drastically merely because of weakness in one economic indicator. The biggest Chinese banks are set to win better ratings for their Basel III bond offerings than some overseas peers with similar credit scores amid mounting signs of government support for state-owned lenders. Moody’s Investors Service plans to grade subordinated debt from the nation’s banks one level below their standalone rating, compared with its standard grading two steps below. Japan’s All Industries Activity Index fell to a seasonally adjusted -0.2%.

Indonesian Finance Minister Muhammad Chatib Basri stated that Asia’s developing nations may have to sacrifice some growth next year and focus on keeping their economies stable amid potential fallout from higher US interest rates. Former Finance Minister Sri Mulyani Indrawati stated that Indonesia’s economy can grow more than 7% annually, provided that the next government dares to take unpopular policy steps, especially with regard to reducing the burden of fuel subsidies on the state budget.