Key gauges continue bearish trend in late trade

Indian equity benchmarks continued to trade with a cut of over half a percent in last leg of trade despite firm opening in European markets. Selling in Metal and Auto stocks mainly dragged the key indices lower. Traders failed to get any relief with report that India Inc has expressed hopes that the move would encourage banks to lower lending rates, thereby stimulating consumption and investment demand to boost the country’s Gross Domestic Product (GDP) growth. Market participants shrugged off report that the Reserve Bank of India (RBI) has decided to reduce risk weights for bank lending to NBFCs with an aim to facilitating flow of credit to well-rated non-banking financial companies (NBFCs). The RBI has decided that rated exposures of banks to all NBFCs, excluding Core Investment Companies (CICs), would be risk-weighted as per the ratings assigned by the accredited rating agencies, in a manner similar to that for corporates.

On the global front, European markets are trading in green after Germany's exports rebounded at a faster-than-expected pace in December, exceeding expectations, while imports followed suit. Exports rose a calendar and seasonally adjusted 1.5 percent from November, when they declined 0.3 percent. Imports climbed 1.2 percent month-on-month, recovering from a 1.3 percent slump in November. However, Asian counters ended in red terrain on Friday.

Back home, in scrip specific developments, Tata Motors hit its fresh 52-week low, a day after the auto major reported the biggest quarterly loss among Indian corporates as it was hit by asset impairment in its UK subsidiary, Jaguar Land Rover (JLR) Automotive in the December quarter. Shares of Raymond edged higher after the company released clarification over a media report alleging 'curious transactions' by the Indian firm was ‘misleading’.

The BSE Sensex is currently trading at 36758.51, down by 212.58 points or 0.57% after trading in a range of 36581.93 and 36885.58. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.97%, while Small cap index was down by 0.59%.

The few gaining sectoral indices on the BSE were Telecom up by 1.77%, Realty up by 0.92%, TECK up by 0.25% and IT up by 0.06%, while Metal down by 2.63%, Auto down by 2.63%, Industrials down by 2.26%, Capital Goods down by 1.64% and Basic Materials down by 1.48% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 1.80%, Bajaj Finance up by 1.17%, Bharti Airtel up by 0.96%, HDFC Bank up by 0.90% and HCL Tech up by 0.65%. On the flip side, Tata Motors down by 17.25%, Tata Motors - DVR down by 13.77%, Vedanta down by 5.81%, Tata Steel down by 2.84% and Larsen & Toubro down by 2.65% were the top losers.

Meanwhile, with an aim to help small and marginal farmers, the Reserve Bank of India (RBI) has increased the limit of collateral-free agricultural loans to Rs 1.6 lakh from the current limit of Rs 1 lakh. Earlier, in 2010, the collateral-free limit for crop loans and term loans was hiked to Rs 1 lakh from Rs 50,000.

Keeping in view the overall inflation and rise in agriculture input costs since then, the RBI has decided to raise the limit for collateral-free agriculture loans to Rs 1.6 lakh. The central bank in its ‘Statement on Developmental and Regulatory Policies’ said this will enhance coverage of small and marginal farmers in the formal credit system. It added that a circular in this regard will be issued shortly. The apex bank further said agricultural credit growth has been significant over the years. In spite of this, there remain issues related to agricultural credit such as regional disparity and the extent of coverage, among others.

In order to review agricultural credit and arrive at a workable policy solution, the central bank also decided to set up an internal working group (IWG). The IWG will examine issues related to agricultural credit and arrive at workable solutions and policy initiatives. Besides, the Union Budget had also announced measures to boost the farming sector in addition to annual payment of Rs 6,000 to small and marginal farmers.

The CNX Nifty is currently trading at 11002.35, down by 67.05 points or 0.61% after trading in a range of 10951.75 and 11041.20. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 6.03%, Kotak Mahindra Bank up by 1.81%, Bajaj Finance up by 1.22%, HDFC Bank up by 1.00% and Bharti Airtel up by 0.79%. On the flip side, Tata Motors down by 17.50%, Vedanta down by 6.09%, Indiabulls Housing Finance down by 4.16%, Grasim Industries down by 4.11% and Eicher Motors down by 3.78% were the top losers.

All the Asian markets were trading in red; Nikkei 225 slipped 418.11 points or 2.01% to 20,333.17, Hang Seng decreased 43.89 points or 0.16% to 27,946.32, KOSPI fell 26.37 points or 1.20% to 2,177.05, Jakarta Composite dropped 14.80 points or 0.23% to 6,521.66 and Straits Times was down by 3.40 points or 0.11% to 3,197.24.

European markets are trading in green; FTSE rose 19.80 points or 0.28% to 7,113.38, CAC jumped 16.04 points or 0.32% to 5,001.60 and DAX was up by 13.84 points or 0.13% to 11,035.86.