Post Session: Quick Review

Recovery which took place in the wee hours of trade mainly led to third straight session of gains, albeit slender at Dalal Street on Tuesday, which lifted both Sensex and Nifty higher above psychologically crucial 27,400 and 8,200 levels respectively. Local equity markets, which gyrated in thin band for large part of the session, smartly recovered losses in the dying hours of trade to shut shop into positive territory for yet another session. However, the gains remained limited on account of somber global cues which to some extent offset optimism over additional reforms a day after the government passed an executive order to ease land-acquisition rules. Nevertheless, the session turned out to be largely productive for broader indices, which went home with gains in the range of 0.15%-0.55%. Volumes remained tepid for yet another session as investors stayed on the sidelines given that most global markets will have a shorter trading week.

On the global front, Asian shares fell on Tuesday as a stronger dollar fueled a further selloff in commodities, and as political uncertainty in Greece made investors less willing to take risks in the final trading days of 2014. Activity was thin ahead of the New Year's holiday, with many traders having closed out positions and Japanese markets remaining shut from Wednesday to Friday. Meanwhile, European stock markets slipped on Tuesday, weighed by intensifying concern over the political future of Greece and a renewed slide in the price of oil.

Closer home, in the extremely range-bound session of trade, most of the sectoral indices on BSE concluded into positive, however, stocks from Oil & Gas, Metal and Auto counters were the top losers of the session. Auto stocks tanked after reports suggested that excise concessions to the industry will be withdrawn from January 1, 2014. On the flip side, maximum demand was witnessed by stocks from Consumer Durables, Power and Capital Goods counters were the prominent gainers of the session. Besides, gains in bourses were also led by shares of banking counter, which recovered from early losses after RBI in its Financial Stability Report (FSR) suggested that while Indian economy was in better position on account slowing inflation, political stability and a lower current account deficit, however the banking sector remains subdued owing to weak demand for credit and pressure on asset quality. Additionally, Infra and Power stocks gained ground after Union Cabinet approved an ordinance to amend the contentious land acquisition act, which would relax some limitations including a 'consent clause' which so far has acted as obstacle for power, highways, housing, defence and infrastructure projects, thereby holding up the economy's growth potential. Moreover, participants also lapped up transformer makers' stocks, which shot up smartly. Indo Tech Transformers,  Bharat Bijlee and Alstom T&D gained in the range of 2%-8%.The overall market breadth on BSE was in the favour of advances, which thumped decliners in the ratio of 1444:1415, while 1136 shares remained unchanged (Provisional).

The BSE Sensex ended at 27403.54, up by 7.81 points or 0.03% after trading in a range of 27312.29 and 27478.30. There were 18 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.54%, while Small cap index up by 0.17%. (Provisional)

The gaining sectoral indices on the BSE were Consumer Durables up by 1.38%, Power up by 1.14%, Capital Goods up by 1.03%, Infrastructure up by 0.69% and Bankex up by 0.68% while, Oil & Gas down by 1.22%, Metal down by 1.09%, Auto down by 0.27%, Realty down by 0.24%, FMCG down by 0.04% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were BHEL up by 1.57%, Dr. Reddys Lab up by 1.24%, Axis Bank up by 1.16%, NTPC up by 1.11% and SBI up by 1.06%. On the flip side, Hero MotoCorp down by 1.81%, Tata Steel down by 1.81%, Reliance Industries down by 1.71%, ONGC down by 1.43% and Bajaj Auto down by 1.36% were the top losers. (Provisional)

Meanwhile, in not so encouraging development for the banking industry, Reserve Bank of India (RBI), in its Financial Stability Report (FSR), pointed that, while the Indian economy was in better position on account slowing inflation, political stability and a lower current account deficit, the banking sector remained subdued owing to weak demand for credit and pressure on asset quality.

India’s Apex Bank pointed that even though liquidity scenario in the banking system had improved since the publication of the previous FSR in June, 2014, the risks arising out of deterioration in asset quality and soundness of banks persisted.

The stress tests showed that the overall gross non-performing assets (GNPAs) of all scheduled commercial banks could decline to 4% by March 2016 from 4.5% as of end September 2014 if the economy improves, but also pointed to the chances of GNPA level worsening to 6.3% during the same period, if the recovery failed to materialize. Until September, Indian banks have about Rs 2.7 lakh crore worth of GNPAs, while the total restructured loans under the corporate debt restructuring channel alone stands about Rs 2.6 lakh crore.

Going by the stressed assets, under a severe stress scenario, among various sectors, the engineering sector is expected to register the highest GNPA ratio at 12.0 percent by March 2016 followed by the cement sector (10.6 percent), the RBI noted. The report also underscored that PSBs (public sector banks) continued to record the highest level of stressed advances at 12.9% of their total advances in September 2014, followed by their private peers at 4.4%.

It warned that the system level of Capital to Risk Weighted Asset Ratio (CRAR) could decline to 9.8% by March, 2016 from 12.8% in September, 2014, under such severe stress scenario.

India VIX, a gauge for markets short term expectation of volatility surged 1.76% at 14.84 from its previous close of 14.59 on Monday. (Provisional)

The CNX Nifty ended at 8248.25, up by 1.95 points or 0.02% after trading in a range of 8220.55 and 8268.25. There were 27 stocks advancing against 23 stocks declining on the index. (Provisional)

The top gainers on Nifty were BHEL up by 1.51%, Dr. Reddys Lab up by 1.33%, NTPC up by 1.32%, NMDC up by 1.32% and Bank Of Baroda up by 1.31%. On the flip side, Hero MotoCorp down by 2.07%, Tata Steel down by 1.93%, Reliance Industries down by 1.88%, Cairn India down by 1.78% and Jindal Steel & Power down by 1.72% were the top losers. (Provisional)

European Markets were trading in red; UK’s FTSE 100 was down by 0.71%, France’s CAC was down by 0.80% and Germany’s DAX was down by 0.68%.

The Asian equity benchmarks ended mostly in red on Tuesday, with Japanese shares slipping on their final trading day of the year. Japan’s ruling coalition has approved a tax reform plan that will cut corporate taxes from April and pledges further reductions in coming years in a bid by Prime Minister Shinzo Abe to boost profitability and bolster economic growth. The plan approved would cut the overall effective corporate tax rate by 2.51% points to 32.1% from April and then to 31.3% the following year.  South Korea’s current account surplus rose to a monthly record in November as slumping oil prices slashed the value of imports.  The preliminary figure of $11.4 billion shattered the previous monthly record of $11.1 billion set in October 2013. The current account - the broadest measure of foreign trade in goods and services - has been in the black for two years and nine months - the longest streak of surplus since 1989. South Korean Industrial Production fell to a seasonally adjusted annual rate of -3.4%, from -3.2% in the preceding month.