Post Session: Quick Review

Local equity markets witnessed sharp sell-off for yet another session on Tuesday as concerns over retrospective taxation that haunted foreign investors prevailed at D-Street amidst lack of positive triggers at home front which could otherwise lift the markets higher. Much of the selling pressure which was witnessed in the last hour of trade mainly led to heavy drubbing in local equity markets, with both Sensex and Nifty taking a hit by over three fourth of a percent, settling below psychologically crucial 27,700 and 8,350 levels respectively. Meanwhile, the session also was disappointing for broader indices, which went home with losses in the range of 0.30-0.45%.

On the global front, Asian shares rose broadly on Tuesday, drawing support from a rally in the US and European markets overnight after China unveiled fresh stimulus to shore up the world’s second largest economy. Sentiment was bolstered after China's securities regulator moved to allay fears of a clampdown, saying the new short-selling measures weren't intended to encourage short-selling or depress the market, but aimed at maintaining the healthy development of the market. Meanwhile, a raft of positive company earnings updates pushed European stock markets higher on Tuesday, with investors shrugging off broader market worries about Greece’s stalemate with international creditors.

Closer home, most of the sectoral indices on BSE ended into negative territory, with stocks from Healthcare, Auto and FMCG counters turning out to be prominent losers of the session. On the flip side, stocks from Metal and Consumer Durables were the prominent gainers of the session. Meanwhile, banking stocks which edged higher also slumped by close of trade. Likewise, telecom stocks which were ringing loud in early trade on renewed buying activities, edged lower by close of trade. However, encouraging data from China, world’s largest metal consumer and producer lifted the entire Metal pack higher. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1314:1383; while 132 shares remained unchanged.

The BSE Sensex concluded at 27676.04, down by 210.17 points or 0.75% after trading in a range of 27598.21 and 27976.93. There were 11 stocks advancing against 19 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.45%, while Small cap index down by 0.32%. (Provisional)

The gaining sectoral indices on the BSE were Metal up by 0.15% and Consumer Durables up by 0.13% while, Healthcare down by 3.24%, Auto down by 1.31%, FMCG down by 1.17%, Oil & Gas down by 1.08% and Power down by 0.73% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Wipro up by 2.27%, Axis Bank up by 1.65%, Sesa Sterlite up by 1.32%, SBI up by 1.23% and Tata Steel up by 1.00%. On the flip side, Sun Pharma down by 8.45%, Hindustan Unilever down by 3.95%, Hindalco down by 3.21%, Maruti Suzuki down by 3.00% and Dr. Reddys Lab down by 2.75% were the top losers. (Provisional)

Meanwhile, a Finance Ministry-appointed panel has recommended that small public sector banks (PSBs), with assets of less than Rs 2-lakh crore, should be readied for merger with five large PSBs. The Working Group on Consolidation and Restructuring of PSBs has though said that ahead of the consolidation, the small PSBs will need to reorient their portfolio and improve operational efficiencies over the next one year.

The Working Group has suggested that over the next one year all PSBs focus on four areas - improving risk management capabilities, shifting to profitability-linked performance metrics, leveraging technology to reduce costs, and developing capital-light business models. To rapidly reorient smaller PSBs, a performance assessment of their loan portfolio will be made so that they can exit areas where they are not strong or are unprofitable. The next step for these banks would be to define the target customer segments. After that, the large PSBs will identify the relevant acquisition targets based on complementary businesses and synergies. However, the panel suggested that any consolidation should be driven by market forces and decisions taken independently by the board of each bank.

The PSBs with less than Rs 2 lakh crore assets (loans plus investments) include Andhra Bank, Bank of Maharashtra, Dena Bank, Punjab & Sind Bank, Vijaya Bank, and United Bank of India, while on the other hand the large PSBs, with the capability to acquire these PSBs include Bank of Baroda, Bank of India, Canara Bank, Punjab National Bank and Union Bank of India.

The idea of consolidation among public sector banks was earlier pushed by P Chidambaram, when he was finance minister under the United Progressive Alliance (UPA) government. There are 27 public sector banks, including State Bank of India's five associate banks. Performance of banks has come to the fore after the government refused to recapitalize inefficient banks.

India VIX, a gauge for markets short term expectation of volatility rose 3.43% at 16.85 from its previous close of 16.29 on Monday. (Provisional)

The CNX Nifty settled at 8377.75, down by 70.35 points or 0.83% after trading in a range of 8352.70 and 8469.35. There were 16 stocks advancing against 34 stocks declining on the index. (Provisional)

The top gainers on Nifty were Sesa Sterlite up by 1.54%, Tata Steel up by 1.10%, Axis Bank up by 0.96%, Tech Mahindra up by 0.82% and Coal India up by 0.63%. On the flip side, Sun Pharma down by 8.78%, Hindustan Unilever down by 4.42%, HCL Tech. down by 3.64%, Maruti Suzuki down by 3.27% and Ambuja Cement down by 3.25% were the top losers. (Provisional)

European Markets were trading mostly in the green; Germany's DAX gained by 0.53% and UK's FTSE 100 was up by 0.02%, while France's CAC was down by 0.02%.

Most of the Asian equity indices ended the Tuesday’s trade in green terrain, drawing support from a rally in the U.S. and European markets overnight after China unveiled fresh stimulus to shore up the world’s second-largest economy. Chinese benchmarks edged higher by around two percent despite the growth slowdown and symptoms of overheating. Sentiment was bolstered after China's securities regulator moved to allay fears of a clampdown, saying the new short-selling measures weren't intended to encourage short-selling or depress the market, but aimed at maintaining the healthy development of the market. Meanwhile, Japanese Nikkei too edged higher by around one and a half percent as the yen weakened and investors bet on a stronger growth in company earnings. However, Seoul shares drifted lower on institutional selling amid concerns about a possible disappointing earnings season and lingering worries over Greece's future in the Eurozone.