Markets continue to trade weak due to profit-booking in select stocks

Indian equity benchmarks continued to trade lower in early noon session, due to profit-booking in select stocks by participants ahead of the IIP data to be released later in the day. Depreciation in the rupee too dampened the sentiment. The rupee depreciated by 7 paise to 66.78 against the US dollar in early trade today due to appreciation in the American currency overseas with the Fed meeting coming within a week and US monetary policy expected to be tightened.  However, some losses were capped with the UN report that India's economy is projected to grow by 7.3 percent next year and will continue to be the fastest growing economy in the world in 2016 and 2017 amid a volatile global financial condition.

On the global front, Asian markets were trading mostly in red, as plunging crude prices and a tumble in China's yuan to almost 4-1/2-year lows added to worries about receding global growth. Back home, both the sensex and Nifty were trading below their crucial 25,250 and 7,700 levels respectively. In scrip specific development, share of Texmaco Rail & Engineering was trading higher by over 6% after the company’s consortium with Hitachi Japan, Mitsui & Co. and Hitachi India won a contract for the design and construction of signal and telecom works - STP5 (the project) worth Rs 1,800 crore.

The market breadth on BSE was positive, out of 2391 stocks traded, 1334 stocks advanced, while 898 stocks declined on the BSE.

The BSE Sensex is currently trading at 25203.95, down by 48.37 points or 0.19% after trading in a range of 25189.74 and 25316.14. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.06%, while Small cap index gained 0.23%.

The top gaining sectoral indices on the BSE were Metal up by 1.20%, IT up by 0.56%, Consumer Durables up by 0.41% and TECK up by 0.28%, while Realty down by 0.79%, Capital Goods down by 0.60%, FMCG down by 0.51%, Bankex down by 0.47% and Power down by 0.40% were the losing indices on BSE.
 
The top gainers on the Sensex were Tata Steel up by 4.31%, Vedanta up by 1.56%, Infosys up by 1.35%, Hindalco up by 1.32% and Hindustan Unilever up by 0.58%. On the flip side, ITC down by 1.56%, ONGC down by 1.48%, Axis Bank down by 1.07%, Larsen & Toubro down by 1.05% and BHEL down by 0.98% were the top losers.

Meanwhile, Reserve Bank of India (RBI) in its latest notification haspermitted the banks to bring down the statutory liquidity ratio (SLR)securities under held-to-maturity (HTM) category by 1.25 per cent from 22 percent of their deposits to 20.50 per cent. It will come into effect from thefortnight beginning January 9, 2016. Thereafter, both the SLR and the HTMceiling will be brought down by 0.25 per cent every quarter till March 31,2017.

SLR was reduced to 21.50 per cent of net demand and timeliabilities (NDTL), or total deposits, with effect from February 7, 2015. Inorder to align them, RBI has taken this decision to bring down the ceiling onSLR securities under HTM. This move is expected to unlock funds for lending.SLR cuts will mean banks will have more money in hand for lending and the cutin HTM would mean banks have to mark to market more securities that they hold.The securities acquired by the banks with the intention of holding them tillmaturity are classified as HTM.

As announced in the fourth bi-monthly monetary policystatement, 2015-16, on September 29, 2015, it has been decided to progressivelybring down SLR by 0.25 per cent every quarter till March 31, 2017 andconcurrently reduce ceiling on SLR holdings under HTM in alignment with the SLRrequirement.

SLR is the portion of deposits that banks have tonecessarily maintain in assets, such as cash, gold valued at a price notexceeding the current market price, dated securities and treasury bills issuedby the Government of India and State development loans of State Governments. Atpresent, banks are permitted to hold investments under the HTM category inexcess of the limit of 25 per cent of their total investments, provided theexcess comprises only SLR securities and the total SLR securities held underthe HTM category are not more than 22 per cent of total deposits.

The CNX Nifty is currently trading at 7664.40, down by 18.90 points or 0.25% after trading in a range of 7659.75 and 7703.05. There were 20 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 4.31%, Ambuja Cement up by 2.16%, Vedanta up by 1.50%, Hindalco up by 1.45% and Infosys up by 1.35%. On the flip side, Idea Cellular down by 1.64%, ITC down by 1.60%, ONGC down by 1.59%, Power Grid Corpn. down by 1.38% and ICICI Bank down by 1.26% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 173.8 points or 0.8% to 21,530.81, Taiwan Weighted decreased 100.28 points or 1.22% to 8,115.89, Jakarta Composite decreased 43.26 points or 0.97% to 4,422.95, Shanghai Composite decreased 26.48 points or 0.77% to 3,429.01, KOSPI Index decreased 6.54 points or 0.34% to 1,945.53 and FTSE Bursa Malaysia KLCI decreased 3.24 points or 0.2% to 1,645.41, while Nikkei 225 increased 183.7 points or 0.96% to 19,230.25.