Benchmarks make steady start amid mixed global cues

The Indian equity markets have made a steady start as it being the penultimate day of February F&O series expiry amid global uncertainty as the global cues are not giving any clear indication. The US markets made a mixed closing overnight while, most of the Asian equity indices were trading in the negative terrain at this point of time. Back home, markets started off marginally higher led by index heavyweights ONGC and Reliance Industries. ONGC up by about 3.5 percent, extending its previous day’s 4 percent rally on reports that the Empowered Group of Ministers (EGoM) is expected to meet on February 24 to chalk out roadmap for the company’s stake auction. On the sectoral front, oil and gas witnessed the maximum gain in trade followed by realty and power while, banking and software remained the only losers on the BSE sectoral space. In the scrip specific action, Kingfisher Airlines stocks jumped over 2.5 percent on reports that the debt laden carrier is likely to get Rs 1,200 crore bailout from State Bank of India (SBI). Kingfisher shares had plunged over 20% in intraday trade yesterday before making a smart recovery. Meanwhile, the broader indices were outperforming benchmarks. The market breadth on the BSE was positive; there were 1,166 shares on the gaining side against 558 shares on the losing side while 67 shares remained unchanged.

The BSE Sensex opened at 18,490.87; about 62 points higher compared to its previous closing of 18,428.61, and has touched a high and a low of 18,523.78 and 18,455.49 respectively.

The index is currently trading at 18,486.55, up by 57.94 points or 0.31%. There were 23 stocks advancing against 7 declines on the index.

The overall market breadth has made a strong start with 65.10% stocks advancing against 31.16% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 0.71% and 0.76% respectively.

The top gaining sectoral indices on the BSE were Oil and Gas up by 0.64%, Realty up by 1.66%, Power up by 1.61%, PSU up by 1.06% and Auto up by 1.01%. While Bankex down by 0.18% and IT down by 0.02% remained the only losers on the index.

The top gainers on the Sensex were ONGC up by 3.39%, BHEL up by 1.46%, Tata Motors up by 1.40%, Tata Power up by 1.34% and Sun Pharma up by 1.31%.

On the flip side, SBI was down by 1.17%, L&T was down by 0.73%, ICICI Bank was down by 0.61%, Infosys was down by 0.61% and HDFC was down by 0.28% were the top losers on the Sensex.

Meanwhile, Finance Minister, Pranab Mukherjee has recently stated that the government is keen to bring Indian public sector unit (PSU) banks at par with their global peers while catering to the needs of our economy. He has appreciated the resilience shown by Indian banks during the global economic crisis but has cautioned that there is no room for complacency as the global environment is still uncertain. The minister further said that the government is taking steps to ensure that public sector banks have adequate capital to meet global risk norms.

By adding further, the finance minister said, the government was committed to maintain a minimum of 8% Tier-I capital (equity capital) in all public sector banks (PSBs), which is over and above the regulatory requirement of 6%. He said the government had provided capital to state- owned banks last fiscal, and it was taking necessary steps to keep banks adequately capitalised in 2012-13 as well. He said the Basel III capital regulations would be implemented from the beginning of next year.

BASEL III is a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk agreed upon by the members of the Basel Committee on Banking Supervision in 2010-11. Basel III strengthens bank’s capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage. The draft guidelines on Basel III capital regulations was released December 30, 2011 and it is scheduled to be implemented from January 1, 2013.

In 2010-11, the government provided capital support to the tune of Rs 20,157 crore to public sector banks. They include Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank. This fiscal, the government will infuse over Rs 7,900 crore in SBI. It is further slated to capitalise more banks by March.

On the government's financial inclusion programme, the finance minister said that banking services to un-banked villages with a population of 1,000 or more will be provided within a couple of years. He added that banks can play a very major role through inclusive programmes like Swabhimaan, and by extending facilities to the large number of rural population. Commenting on the leakages due to subsidies the minister said that if these subsidies are provided through the banking network and institutional financial networks, the leakage will be reduced substantially.

Mukherjee said the government was in the process of implementing an e-payment system for direct credit of dues from the central government to the beneficiaries and the new payment system would bring transparency and expedite direct payments for subsidies from central paying units to the targeted beneficiaries of fertiliser, kerosene and cooking gas.

The S&P CNX Nifty opened at 5,609.75; about 3 points higher compared to its previous closing of 5,607.15, and has touched a high and a low of 5,629.95 and 5,609.15 respectively.

The index is currently trading at 5,619.75, higher by 12.60 points or 0.22%. There were 40 stocks advancing against 10 declines on the index.

The top gainers of the Nifty were ONGC up by 3.55%, Sesa Goa up by 2.47%, Rpower up by 2.10%, Cairn up by 2.00% and RCom up by 1.63%.

On the flip side, Ambuja Cement down by 1.16%, SBI down by 1.12%, L&T down by 1.09%, Axis Bank down by 0.82% and Infosys down by 0.61%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng was down 17.81 points or 0.08% to 21,460.91, Jakarta Composite was down 16.57 points or 0.41% to 3,986.38, KLSE Composite was down 2.54 points or 0.16% to 1,561.24, Straits Times was down 10.93 points or 0.36% to 3,014.14 and Seoul Composite was down by 1.18 points or 0.06% to 2,023.06.

On the flip side, Shanghai Composite was up 10.73 points or 0.45% to 2,392.16, Nikkei 225 was up 64.39 points or 0.68% to 9,527.41 and Taiwan Weighted was up by 79.58 points or 1.00% to 8,001.08.