Benchmarks end volatile session with modest gains

A session after a distressing performance, Indian equity benchmarks consolidated on Friday and ended the volatile day of trade with modest gains. Sentiments got some support with RBI Governor Raghuram Rajan’s statement that the ongoing clean-up of bank balance sheets will help spur economic growth and improve the lenders’ profitability. He has also said that while the profitability of some banks may be impaired in the short-run, the system, once cleaned, will be able to support economic growth in a sustainable and profitable way. Also, the RBI assured banks that it would inject adequate cash in view of the tight liquidity conditions in the market. Some support also came with Union Minister Venkaiah Naidu expressing confidence that bills pertaining to formation of a realty regulator and the much-awaited indirect taxation reform GST will be passed in the upcoming Budget session, and hoped that Congress will cooperate in ensuring the functioning of Parliament. However, heavy selling by the foreign investors, absence of any fresh positive trigger and below expected third quarter results, halted markets upward movement. In addition, decline in the rupee coupled with a slide in the crude oil prices also kept market-participants on the tenterhooks. Indian rupee weakened by 7 paise to quote at an over 29-month low of 68.37 against the dollar on sustained demand for the American currency from importers and banks. Meanwhile, some investors opted to remain on sidelines ahead of Consumer Price Index (CPI) and Index of Industrial Production (IIP) data scheduled to be released later in the day.

On the global front, Asia markets dropped sharply on Friday, with the Nikkei tumbling, after a weak closing on Wall Street as mounting concerns about the health of European banks further threatened a global economic outlook already under strain from falling oil prices and slowdown in China and other emerging markets. Financial counters led the losses globally as disappointing earnings from Societe Generale added to the gloomy mood brought on by poor results from Deutsche Bank last month. However, European stocks rose Friday, coming back from a sharp selloff in the previous session, ahead of the release of economic growth figures for the eurozone.

Back home, the local markets got a positive start and moved higher, showing a good pullback after massive sell-off in last session. However, the indices failed to capitalize on the initial momentum and continued to see-saw around the neutral line for most part of morning trades. The selling pressure accentuated in the mid afternoon trades as investors took to across the board risk aversion. However, late short covering in blue-chip stocks and supportive leads from European markets ensured that local bourses go home with small gains. Eventually the NSE’s 50-share broadly followed index Nifty, settled with single digit gains below the crucial 7,000 support level, while Bombay Stock Exchange’s Sensitive Index Sensex added thirty four points and closed above the psychological 22,950 mark. However, the broader markets finished on a daunting note with around a percent losses, underperforming their larger peers by a high margin. On the BSE sectoral space, the Auto index remained the top gainer in the space and settled with about one and half percent gains followed by the sectors like FMCG and IT, which too went home with moderate gains. But the High beta Capital Goods sector remained the top laggard in the space with over three percent cuts. While counters like Oil & Gas and PSU too suffered severe pounding. The market breadth remained pessimistic as there were 881 shares on the gaining side against 1702 shares on the losing side while 130 shares remained unchanged.

Finally, the BSE Sensex gained 34.29 points or 0.15% to 22986.12, while the CNX Nifty rose 4.60 points or 0.07% to 6,980.95. 

The BSE Sensex touched a high and a low 23161.15 and 22600.39, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 0.78%, while Small cap index ended down by 1.21%

The top gaining sectoral indices on the BSE were Auto up by 1.72%, TECK up by 1.02%, FMCG up by 0.39% and IT up by 0.25%, while Capital Goods down by 3.05%, Oil & Gas down by 2.47%, PSU down by 1.63%, Realty down by 1.26% and Metal down by 1.25% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 8.34%, Bharti Airtel up by 5.40%, Mahindra & Mahindra up by 3.77%, Axis Bank up by 3.52% and NTPC up by 2.44%. On the flip side, BHEL down by 13.13%, Adani Ports &Special down by 5.20%, ONGC down by 4.56%, Larsen & Toubro down by 3.53% and Tata Steel down by 3.18% were the top losers.

Meanwhile, the government is set to align interest rates on small savings schemes with market rates and revise them on a quarterly basis, effective from April 1. Economic Affairs Secretary Shaktikanta Das has said that the decision has been taken and the executive order and notification will be issued in a day or two. Currently, Small savings rates are linked to government securities’ interest rates which are readjusted every year.

Das further said that the alignment of interest rates of the schemes will be done with G-sec rates of comparable maturities and added that the interest rate reduction would mostly affect schemes at the lower end of the maturity curve. The rates under the girl child scheme Sukanya Samriddhi Yojana and the senior citizen scheme will remain unaltered. Besides he said that whatever spreads they have over the G-Sec rates will not be altered. Similarly, all long term savings more than five years will continue to have the existing spreads.

Das further said that the Finance Ministry has finalized suggestions that were made by various stakeholders, including banks and other ministries and brought it up during the pre-budget meetings with country’s top banks and leading economists suggesting changes in the small savings rate.

At present, the returns on small savings schemes are benchmarked to the yield on government securities. Small savings schemes include the National Savings Scheme, Kisan Vikas Patra, post office deposits, and Public Provident Fund. The interest rates for these schemes range from 8.4 per cent for a one-year deposit to 9.3 per cent for the five-year Senior Citizen Savings Scheme.  Earlier, on Sept 29, following the rate cut by Reserve Bank of India,  Finance Minister Arun Jaitley had announced that the centre would review small savings schemes to enable transmission of the central bank’s rate cut by banks.

The CNX Nifty touched a high and low 7,034.80 and 6,869.00 respectively. 

The top gainers on Nifty were Idea Cellular up by 8.26%, Tata Motors up by 7.13%, Bharti Airtel up by 5.98%, Cairn India up by 4.72% and M&M up by 3.63%. On the flip side, BHEL down by 14.35%, BPCL down by 5.46%, PNB down by 5.39%, Adani Ports &Special down by 5.38% and ONGC down by 4.73% were the top losers.

European markets were trading in green; France’s CAC increased 52.37 points or 1.34% to 3,949.08, UK’s FTSE 100 surged 89.03 points or 1.61% to 5,626.00 and Germany’s DAX was up by 120.06 points or 1.37% to 8,872.93.

Asian markets ended mostly lower on Friday as concerns about the health of European banks further threatened a global economy already under strain from falling oil prices and slowdowns in China and other emerging markets. Japanese shares stumbled to a fresh 16-month low in heavy trade and posted the biggest weekly drop since 2008 as investors scrambled to dump risky assets after the dollar dived to a 15-month low against the yen. The markets in China and Taiwan remained closed for the Lunar New Year holiday.