Benchmarks continue weak trade; Nifty hover around 7,600 mark

Indian equity markets continued their weak trade in the late afternoon session on account of selling in front line blue chip counters. The sentiments were on pessimistic note despite United Nations (UN) in its latest report World Economic Situation and Prospects (WESP) 2016 projected India to record a 7.3% economic growth in 2016 and 7.5% in 2017, and said that India will continue to be the fastest growing economy in the world in 2016 and 2017. Investors maintained cautious approach ahead of October factory output data due later in the day and November inflation print to be released on Monday. Traders were seen piling position in Metal and IT stocks while selling was witnessed in Realty, Bankex and Power sector stocks. In the scrip specific development, Shilpa Medicare was trading in green after RBI stated that FIIs/RFPIs can now invest up to 30 percent of the paid up capital of the company.

On the global front, the Asian markets were trading mostly in red, while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 7,650 and 25,100 levels respectively. The market breadth on BSE was negative in the ratio of 882:1638 while 188 scrips remained unchanged.

The BSE Sensex is currently trading at 25031.40, down by 220.92 points or 0.87% after trading in a range of 24963.82 and 25316.14. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.01%, while Small cap index down by 0.81%.

The gaining sectoral indices on the BSE were Metal up by 0.38% and IT up by 0.06%, while Realty down by 2.47%, Bankex down by 2.22%, Power down by 1.48%, Capital Goods down by 1.36% and PSU down by 1.19% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.18%, Hindustan Unilever up by 1.39%, Infosys up by 0.41%, Vedanta up by 0.24% and TCS up by 0.18%.

On the flip side, ICICI Bank down by 4.08%, SBI down by 2.22%, Larsen & Toubro down by 2.08%, Axis Bank down by 2.01% and Tata Motors down by 1.88% were the top losers.

Meanwhile, Reserve Bank of India (RBI) in its latest notification has permitted 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 the fortnight beginning January 9, 2016. Thereafter, both the SLR and the HTM ceiling 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 time liabilities (NDTL), or total deposits, with effect from February 7, 2015. In order to align them, RBI has taken this decision to bring down the ceiling on SLR 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 cut in 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 till maturity are classified as HTM.

As announced in the fourth bi-monthly monetary policy statement, 2015-16, on September 29, 2015, it has been decided to progressively bring down SLR by 0.25 per cent every quarter till March 31, 2017 and concurrently reduce ceiling on SLR holdings under HTM in alignment with the SLR requirement.

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

The CNX Nifty is currently trading at 7600.90, down by 82.40 points or 1.07% after trading in a range of 7586.75 and 7703.05. There were 5 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 3.00%, Hindustan Unilever up by 1.42%, Infosys up by 0.22%, Ambuja Cement up by 0.11% and ACC up by 0.04%.  On the flip side, PNB down by 5.19%, Bank of Baroda down by 4.49%, Yes Bank down by 4.26%, ICICI Bank down by 4.17% and SBI down by 2.31% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 240.56 points or 1.11% to 21,464.05, Taiwan Weighted decreased 100.28 points or 1.22% to 8,115.89, Jakarta Composite decreased 56.19 points or 1.26% to 4,410.02, Shanghai Composite decreased 20.91 points or 0.61% to 3,434.58, KOSPI Index decreased 3.45 points or 0.18% to 1,948.62 and FTSE Bursa Malaysia KLCI decreased 1.37 points or 0.08% to 1,647.28.

On the other hand, Nikkei 225 increased 183.93 points or 0.97% to 19,230.48.

The European markets were trading in red; UK’s FTSE 100 decreased 14.39 points or 0.24% to 6,073.66, Germany’s DAX decreased 37.75 points or 0.36% to 10,561.18 and France’s CAC decreased 10.15 points or 0.22% to 4,624.91.