Benchmarks pare some early losses; still continue to trade in red

Recovering from day’s low, benchmark equity indices have gained momentum however were still trading below the neutral line on account of selling in frontline blue chip counters, tracking weak Asian markets. Sentiments remained down-beat with a private report stating that consumer sentiments in India fell for the fourth consecutive month in December to the lowest on record, as consumers reported a further deterioration in their personal finances amid rising inflation. Trading sentiments were weakened further on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 1236.95 crore on January 08, 2015.  Besides, the depreciating rupee against the dollar also negatively impacted sentiment in the domestic market. The rupee was trading lower by 29 paise at 66.92 against the American currency in early trade. However, investors got some strength with a World Bank report stating that India will continue to be the bright spot of the global economy and is projected to grow at a robust 7.8 percent in fiscal 2016-17, more than a percentage point higher than China’s.

On the global front, after enjoying some minor relief on Friday, Asian  markets’ trading floors were once again swathed in red as panicking investors dumped equities while oil prices also headed south, sitting around 12-year lows. Sentiments got undermined after Wall Street suffered its worst starting week in history and doubts over Beijing's economic competence sent investors into the arms of the safe-haven yen and sovereign bonds.

Back home, all the sectoral indices were trading negative. Metal, Realty, Banking and Teck stocks were among the worst hit in the sell-off on the Indian bourses this morning. In scrip specific development, shares of 8K Miles Software Services have gained after the company reported 29% Q-o-Q jump in consolidated net profit at Rs 11.27 crore for the third quarter ended December 2015. Furthermore, Ashok Leyland has gained after the company bagged an order worth $50 million.

The market breadth on BSE was negative, out of 2405 stocks traded, 868 stocks advanced, while 1422 stocks declined on the BSE. 

The BSE Sensex is currently trading at 24762.23, down by 172.10 points or 0.69% after trading in a range of 24598.90 and 24787.11. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.70%, while Small cap index down by 0.57%.

The top losing sectoral indices on the BSE were Metal down by 1.33%, TECK down by 1.04%, IT down by 1.00%, PSU down by 0.96% and Bankex down by 0.93%, while there were no gainers in the space.

The top gainers on the Sensex were Reliance Industries up by 2.22%, Axis Bank up by 1.27%, NTPC up by 1.25%, Tata Motors up by 1.19% and Maruti Suzuki up by 0.48%. On the flip side, Cipla down by 2.53%, Mahindra & Mahindra down by 2.00%, BHEL down by 1.98%, Bharti Airtel down by 1.82% and HDFC down by 1.63% were the top losers.

Meanwhile, the entire direct benefit transfer (DBT) scheme for distribution of government subsidy is likely to be handled by the Post Bank - the new payments bank which will be under the Department of Posts (DoP). Public Investment Board (PIB) will consider this proposal in its meeting on January 15 and then send its recommendation to Cabinet Committee on Economic Affairs for final approval. The postal department expects to finalise consultant for setting up of payment banks by end of this month.

As many as 40 international financial conglomerates, including World Bank and Barclays, have shown interest to partner with Postal Department for the payments bank. The DoP has shortlisted six consultants including McKinsey, KPMG, Ernst and Young and PricewaterhouseCoopers.

The Reserve Bank of India (RBI) has granted Payments Bank permit to the postal department, which has 1.55 lakh branches across country which already provides financial services. Earlier initial capital approval sought for setting up Post Bank was about Rs 300 crore which has been increased to Rs 800 crore as there is proposal now that entire DBT scheme should be handled by it as well as saving accounts currently handled by DoP should also be moved under it.  At the end March 2015, the DoP housed around 20 lakh saving accounts which held total deposit of about Rs 47,800 crore. The payment bank wing of DoP is also proposed to manage these accounts.  According to guidelines of RBI, payments banks will offer a limited range of products such as demand deposits and remittances. They will be allowed to issue ATM or debit cards as also other prepaid payment instruments, but not credit cards. However, they will not be allowed to undertake lending activities and will initially be restricted to holding a maximum balance of Rs 1 lakh per individual customer.

Under DBT scheme government directly transfer subsidies into bank account of people eligible for it. Subsidies of around 35-40 government schemes are covered under it including that provided on domestic LPG connections. Pilot for the Payments Bank is set to start from January 2017 while full-fledged operations are to start from March 7, 2017.

The CNX Nifty is currently trading at 7538.10, down by 63.25 points or 0.83% after trading in a range of 7494.35 and 7539.25. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 2.17%, NTPC up by 1.43%, Tata Motors up by 1.34%, Axis Bank up by 1.28% and Vedanta up by 1.11%. On the flip side, Cipla down by 2.60%, Idea Cellular down by 2.52%, Mahindra & Mahindra down by 2.25%, Bank of Baroda down by 2.17% and ONGC down by 2.13% were the top losers.

Asian markets were trading in red; Hang Seng was down by 2.45%, Taiwan Weighted down by 1.2%, Shanghai Composite down by 2.4%, Jakarta Composite down by 1.66%, KOSPI Index down by 0.78% and FTSE Bursa Malaysia KLCI down by 0.75%.