Sensex rebounds on rupee appreciation, positive European cues

Stock markets in India showed sign of recovery in Wednesday afternoon trades with the benchmark equity indices rebounding from the day’s lows to touch the high point of the day. Supportive cues from the European markets were propelling the domestic markets to higher levels as the key gauges looked set to regain the psychological 5,150 (Nifty) and 16,950 (Sensex) levels. Domestic markets got off to a quiet start as sentiments across global space remained uninspiring. Markets across the Asian region traded on a positive note with slight gains market participants remained in positive mood on growing speculations that central banks globally could make further moves to stimulate the world economy and spur more rapid jobs growth. Though, investors took cue from one of Chicago Federal Bank’s President’s comments of favoring an accommodative policy, however, anxiety over Greek general elections scheduled later this week kept investors on the sidelines. On the domestic front, investors speculations that the Reserve Bank of India in its mid-quarter policy review on June 18 will be compelled to cut key interest rates irrespective of what the headline inflation number may show on Thursday, in order to bring Asia’s largest economy out of the doldrums. Meanwhile, the beleaguered rupee, which extended its streak of depreciation in morning, strengthened in afternoon trades and eased investors’ concerns to some extent. Moreover, investors were busy squaring off their positions from the rate sensitive Automobile counter amid reports that the government is contemplating the idea of imposing an additional tax on diesel fuelled vehicles which would increase the prices of diesel cars upto Rs 2.5 lakh and prove to be a double whammy for car manufacturers. Stocks of auto majors like Maruti and Mahindra & Mahindra took severe beating in the session as they plunged over two and half a percent. However, investors continued to show some buying interests in Capital Goods counter which surged over a percent led by heavyweight L&T. The defensive plays like FMCG and Healthcare too found takers in the session as they traded with close to a percent gains.

Moreover, the broader markets traded on a positive note with around a quarter percent gains and performed slightly better than their larger peers. The bourses inched up on good volumes of over Rs 0.7 lakh crore while the market breadth on BSE was in favor of advances in the ratio of 1335:1050 while 147 scrips remained unchanged.

The BSE Sensex is currently trading at 16,871.82 up by 9.05 points or 0.05% after trading as high as 16,898.88 and as low as 16,792.87. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index rose 0.20% and Small cap index gained 0.38%.

On the BSE sectoral space, Capital Goods up 1.23%, Healthcare up 0.87%, FMCG up 0.73%, IT up 0.55% and TECk up 0.48% were the major gainers, while Auto down 1.42%, Consumer Durables down 0.57%, Realty down 0.47%, Oil & Gas down 0.40% and Metal down 0.04% were the laggards in the space.

HUL up 1.83%, L&T up 1.80%, Sun Pharma up 1.51%, BHEL up 1.39% and ICICI Bank up 1.22% were the major gainers on the Sensex, while Maruti down 3.14%, M&M down 2.66%, Hero Moto down 1.52%, Tata Motors down 1.42% and Sterlite down 1.39% were the major losers in the index.

Meanwhile, Pranab Mukherjee, the Union Finance Minister, in his review meeting of the Chief Executive Officers (CEOs) of Public Sector Banks (PSBs) and Financial Institutions (FIs), urged public sector banks and financial institutions to employ various measures at their command and keep a tight control over their non-performing assets (NPAs) in accordance with the guidelines of the Reserve Bank of India. Appreciating their performance in the last quarter ending March 2012, he directed them to keep up the momentum and continue to take efforts to reduce the bad loans, known as NPAs in industry parlance.

While cautioning the financial institutions to check the steep rise of bad loans in their portfolio, the finance minister also instructed them not to choke the flow of credit to the sectors which require the uninterrupted flow of credit. Commending PSBs’ pro-activeness and good performance, Mukherjee cited recent decisions on restructuring of loans to the textile sector and power distribution companies are good examples of NPA management.

Stating that banks have managed to bring down their NPAs to 3.1 percent in the January-March period of 2011-12 from 3.18 percent in the previous quarter, the finance minister also underscored that priority sector lending grew by 16.37% as against 13.49% last year; recovery against outstanding dues in the last quarter of year 2011-12 was unprecedented; net profit grew to Rs.49,512 crores as against Rs.44,900 crore last year, registering an increase of 10.27%.

Highlighting Oriental Bank of Commerce’s recent decision to waive charges for electronic banking transactions like real time gross settlement (RTGS) and national electronic fund transfer (NEFT), Pranab Mukherjee also called other PSBs to follow this initiative and waive all charges for electronic banking transactions.

The S&P CNX Nifty is currently trading at 5,122.40, higher by 6.50 points or 0.13% after trading as high as 5,128.35 and as low as 5,095.45. There were 29 stocks advancing against 21 declines on the index.

The top gainers on the Nifty were HUL up 2.05%, L&T up 2.04%, Ambuja Cement up 1.83%, Sun Pharma up 1.63% and IDFC up 1.62%.

Maruti down 2.97%, M&M down 2.64%, Sterlite down 1.87%, Hero Moto down 1.52% and Tata Motors down 1.34% were the major losers on the index.

In the Asian space, Shanghai Composite surged 1.10%, Hang Seng advanced 0.33%, Jakarta Composite added 0.18%, KLSE Composite rose 0.19%, Nikkei 225 climbed 0.60%, KOSPI Composite Index gained 0.25% and Taiwan Weighted increased 0.24%.

On the other hand Straits Times Index eased 0.26%.

The European markets got off to a positive start as France’s CAC 40 advanced 0.34%, Germany’s DAX rose 0.37% and the United Kingdom’s FTSE 100 added 0.14%.