Markets erase major gains during FM Budget speech; banking leading rally

Indian equity markets erased major gains during Pranab Mukherjee’s Union Budget 2012-13 speech. Meanwhile, Finance Minister said Coal India has been advised to sign fuel supply agreement with power plants on which Coal India rose by 4.20 points. He says FDI in aviation is under consideration, which is positive for Kingfisher Airlines, which gained by 2%. He emphasized more on allowing ECB for low cost affordable housing projects, which is positive for Housing Development and Infrastructure, rose 2%. To boost infrastructure sector, FM increased limit for tax free bonds doubled to Rs 60,000 crore, which is positive for IDFC, REC and PFC. SKS Microfinance gained 3% as FM said the government would introduce new law for microfinance companies. On the sectoral front banking stocks rose the most with Mukherjee announcing that public sector banks, including regional rural banks, would receive Rs 15,888 crore for re-capitalisation purposes. Realty, capital goods and FMCG were trading higher while consumer durables, oil and auto sector stocks were trading lower. On the global front, the Asian shares steadied and the dollar took a breather after its recent broad rally spurred some profit-taking, but a fresh batch of data suggesting the US economy may be picking up momentum underpinned investor sentiment. Back home, the market breadth favoring the positive trend; there were 1,462 shares on the gaining side against 997 shares on the losing side while 108 shares remained unchanged. 

The BSE Sensex is currently trading at 17,760.96, up by 85.11 points or 0.48%. The index has touched a high and a low of 17,871.00 and 17,656.81 respectively. There were 23 stocks advancing against 7 declines on the index.

The broader indices continued to outperform benchmarks; the BSE Mid cap and Small cap indices surged 0.58% and 0.41% respectively.

The top gaining sectoral indices on the BSE were, Bankex up by 1.43%, Realty up by 1.26%, Capital Goods (CG) up by 0.91%, FMCG up by 0.58% and Health Care (HC) up by 0.55%. While Consumer Durable (CD) down by 1.25%, Oil & Gas down by 0.59%, Auto down by 0.39% remained the top losers on the index.

The top gainers on the Sensex were BHEL up by 2.59%, DLF up by 2.02%, HDFC Bank up by 2.02%, Coal India up by 1.98% and ICICI Bank up by 1.91%.

On the flip side, NTPC down by 1.14%, Tata Motors down by 1.12%, Jindal Steel down by 1.11%, RIL down by 1.03% and Hero MotoCorp down by 0.85% were the top losers on the Sensex.

Meanwhile, the Reserve Bank of India (RBI) has kept its policy rates unchanged in its mid-quarter monetary policy review. Even though the apex bank had recently slashed the CRR rate to ease liquidity, it has kept the interest rates unchanged due to the still uncomfortable levels of inflation. Going forward, the focus shall remain on growth, but the timing and magnitude of rate cuts shall be determined by the levels of inflation, as per the apex bank.

As per the RBI, on the domestic front, while most indicators suggest that the economy is slowing down, the performance in Q4 of 2011-12 is expected to be better than that in Q3. Inflation has broadly evolved along the projected trajectory so far. However, upside risks to inflation have increased from the recent surge in crude oil prices, fiscal slippage and rupee depreciation. Besides, there continues to be significant suppressed inflation in fuel, fertilizer and power as administered prices do not fully reflect the costs of production. While corporate sales growth in Q3 of 2011-12 was robust, margins moderated, reflecting increasing difficulty in passing on rising input prices.

The Central Bank has given a slightly positive outlook on the global economy. It has stated that the recent macroeconomic data for the US economy has shown some positive signs, in particular for the labour market. Immediate financial market pressures in the Euro area have also eased due to the European Central Bank (ECB) injecting liquidity of more than 1 trillion euros. However since the emerging and developing economies (EDEs) are showing signs a slowdown, the global growth for 2012 and 2013 is expected to be lower than earlier anticipated. Oil prices continue to remain a concern.

The S&P CNX Nifty is currently trading at 5,414.65, higher by 34.15 points or 0.63%. The index has touched a high and a low of 5,445.65 and 5,379.50 respectively. There were 38 stocks advancing against 11 declines on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were IDFC up by 3.45%, HDFC Bank up by 2.09%, BHEL up by 2.06%, Reliance infra up by 1.95% and JP Associates up by 1.92%.

On the flip side, Tata Motors down by 1.45%, Jindal Steel down by 1.45%, Hero Motocorp down by 1.21%, RIL down by 1.00% and NTPC down by 0.89%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng declined by 0.24%, Jakarta Composite slid by 0.05%, Nikkei 225 inched lower by 0.01%, Straits Times shed 0.12%, Seoul Composite surrendered 0.34% and Taiwan Weighted lost 0.82%.

On the flip side, Shanghai Composite gained 0.12% and KLSE Composite rose 0.06%.