Post session - Quick review

Being a part of the global rally, Indian equity markets too managed to protract their up move to the fresh week. Frontline equity indices after flip flopping for the entire session, clinched back the slipping trajectory to end the first session of the week on an optimistic note. Although the benchmark equity indices failed to hold on to their high levels approaching the wee hours of trade, never the less, a upright start to the fresh week was something investor’s were looking forward too. Immense resilience which came at the crucial psychological level of 17, 750 (Sensex) and 5350 (Nifty) respectively, worked as a liberator for the Indian equity markets, which earlier had adopted wait and watch approach.

Investors were on the periphery ahead of the inflation data for January, scheduled to be released on Tuesday, which is likely to offer clues on the likely direction of policy interest rates. The expectation is that headline inflation rate, based on wholesale prices, may have fallen to 6.60 percent year-on-year in January from 7.47 percent in December.

However, sanguine close of regional counterparts despite negative close of Wall Street on Friday, proved to be booster for Indian equity markets. Asian stock markets ended higher on Monday after Greece's parliament approved a new set of austerity measures that were required by international lenders in exchange for an emergency bailout. Drastic cuts in civil service jobs, minimum wages and pensions were among the measures approved by lawmakers in Greece in order to collect a second, urgently needed rescue loan for the country, led to serious violence break out on the streets of Athens, highlighting the tough challenge the government faces to pursue the reforms.

However, the passage of the austerity bill now puts the spotlight on a meeting of euro-region finance ministers on February 15 that must decide whether to approve the second aid package. Resolution of the negotiations, which started in July, would help contain the threat that speculators will target debt-saddled nations, including Italy and Portugal.

Meanwhile, futures on the Standard & Poor’s 500 Index rose 0.4 percent, indicating the gauge may rebound from its first weekly fall in six. The gauge slipped 0.7 percent at the end of last week amid concern plans to help Greece avoid default was unraveling.

Back home, in stocks moving on news flow, the stock of country's biggest lender--State Bank of India --plummeted over 2% despite beating market expectations with a 15 percent rise in third-quarter net profit as interest income rose. State-run SBI, which is exposed to some of India's biggest troubled borrowers, reported a net profit of Rs 3260 crore for the three months to December 31, up from Rs 2830 crore a year earlier. However, NPA of the bank proved to be dampener. The gross non-performing asset (NPA) ratio of the bank stood at 4.61% as against 4.19% in the previous quarter (Q2). The net NPA stood at 2.22% versus 2.04% in Q2.

Meanwhile, SAIL too plunged over 2.00% as the state owned steel giant reported a 43% fall in net profit on the back of higher input costs and forex losses. Its Q3 net profit declined at Rs 632.12 crore against Rs 1,107.47 crore year-on-year. Net sales dipped 5% at Rs 10,593.84 crore against Rs 11,143.2 crore. Earnings before interest, depreciation, tax and amortization grew at 15.5% against 16.1% (YoY).

However, Coal India amassed gains of over 1% after reporting its Q3 numbers. The whole lot of fertilizer stocks such as RCF, Chambal Fertilizers ended in high spirits. The stocks from Metal, Auto and Consumer Durable counters, however, remained the star performers of the day, taking the 30 share index- Sensex- higher by 15 points to end above its 17,750 level. Stocks from Capital Goods, TECk and IT counters remained a drag on the market. The widely followed 50 share index- Nifty-too managed to negotiate a positive close for the day, by ending above the 5350 level.  The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1469:1397 while 99 scrips remained unchanged. (Provisional)

The BSE Sensex gained 16.48 points or 0.09% and settled at 17,765.17. The index touched a high and a low of 17,849.64 and 17,665.89 respectively. 18 stocks advanced against 12 declining ones on the index (Provisional)

The BSE Mid-cap index gained 0.37% while Small-cap index was up by 0.13%. (Provisional)

On the BSE Sectoral front, Metal up 0.85%, Auto up 0.81%, Consumer Durables up 0.54%, Health Care up 0.35% and Bankex up 0.30% were the top gainer while Capital Goods down 0.73%, TECk down 0.32%, IT down 0.22% and PSU down 0.11% were the only losers. (Provisional)

The top gainers on the Sensex were Hero MotoCorp up 2.59%, Sun Pharma up 2.19%, Tata Steel up 2.15%, Hindalco Industries up 1.76% and M&M up 1.73%.

On the flip side, Tata Power down 2.71%, Wipro down 2.63%, SBI down 2.32%, Cipla down 2.16% and Maruti Suzuki down 1.62% were the top losers in the index. (Provisional)

Meanwhile, in an effort to boost demand in the housing sector and align tax deductions to rising interest rates, the Parliamentary Standing Committee on Finance has suggested that the government should consider raising the tax exemption on interest paid on housing loans to up to Rs 3 lakh annually from the existing limit of Rs 1.5 lakh in the coming budget. If the proposal is implemented, individual borrowers can hope to have extra disposable income of anything between Rs 15,000 and Rs 45,000 a year which in turn could boost consumption spending as well as savings.

Currently, a deduction of up to Rs 1.5 lakh is allowed from taxable income towards interest on loans taken to purchase a house. Besides, borrowers also enjoy tax exemption on the payment of the principal amount. The government is considering a proposal to double the tax deduction limit on interest on home loans to Rs 3 lakh per annum. CII Director General Chandrajit Banerjee has recommended that the existing tax deduction limit on income tax of an individual be increased from the current level of Rs 2.5 lakh to at least Rs 5 lakh. Of this, Rs 3 lakh should be towards interest payments to offset the impact of high interest rates, and the remaining Rs 2 lakh be exclusively towards principal loan repayment as the present limit of Rs 1 lakh is already overcrowded with several other items.

As per other media reports, the Standing Committee has also favoured a higher limit for deduction of house rent. It is believed that the Committee feels that since the cost of renting out accommodation is rising for a common man, the proposed monetary limit of Rs 2,000 a month for deduction in respect of rent paid should be enhanced to Rs 5,000 a month. It has also advised to revise the limit periodically to keep it in sync with the prevailing market conditions.

The draft report is being discussed by the Committee and is expected to approve the report by March 2, 2012 post which it will be submitted to the Lok Sabha Speaker.

India VIX, a gauge for market’s short term expectation of volatility lost 0.50% at 23.71 from its previous close of 23.83 on Friday. (Provisional)

The S&P CNX Nifty gained 0.95 points or 0.02% to settle at 5,382.55. The index touched high and low of 5,421.05 and 5,351.40 respectively. 27 stocks advanced against 23 declining ones on the index. (Provisional)

The top gainers on the Nifty were Reliance Infrastructure up 5.18%, Sesa Goa up 4.47%, Kotak Bank up 4.08%, Power Grid up 2.77% and Tata Steel up 2.16%.

On the other hand, SAIL down 3.27%, Wipro down 2.86%, Tata Power down 2.71%, Cipla down 2.47% and SBI down 2.16% were the top losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 0.41%, Germany's DAX up 0.71% and Britain’s FTSE 100 up 0.93%.

All the Asian equity indices barring Shanghai Composite rose on Monday after Greece’s parliament approved a new set of austerity measures that were required by international lenders in exchange for an emergency bailout. The news that Greek lawmakers approved a package of austerity measures, which international backers had demanded before signing off on euro130 billion ($176.6 billion) worth of fresh aid, triggered fresh gains in Asia. The vote came amid violent protests in Athens against the latest round of deep spending cuts and public-sector job layoffs.

Chinese equity index Shanghai Composite ended flat as the country’s real estate companies were on the back foot after reports that the city of Wuhu in Anhui province had rolled back housing subsidies announced just last week. However, comments by Premier Wen Jiabao in state media that China will start to fine-tune economic policies in the first quarter probably helped financials on the day.