Post session - Quick review

Indian equity markets witnessed a lackadaisical session of performance, as every attempt of recovery was reciprocated with profit booking. However, consolidation came natural to the bourses post previous session’s sparkling rally, as bourses facing resistance near higher level, settled lower by the close of trade.  Absence of fresh trigger in the market amidst sluggish global set-up mainly encouraged risk- off sentiment at Dalal Street. 

In the range-bound but high volume session of trade, 30 share barometer index of Bombay Stock Exchange (BSE), Sensex, despite losing over 50 points, settled above the 17800 level, while the 50 share index of  National Stock Exchange (NSE), Nifty, almost negotiating a flattish close, too managed to shut shop above the 5400 crucial level, albeit with negative bias. However, broader indices too ended in red, with cut of over 0.15%. Meanwhile, trade of over 1.5 lakh crore was done in terms of market turnover.

On the global front, Asian stocks dropped in the early trade after Japan reported a wider-than-expected trade deficit and as investor’s awaited developments from a euro-area finance ministers meeting this week to discuss details of the bailout package for Greece. Meanwhile, European shares slipped from 13-month highs on Wednesday as investors weighed up whether signs of progress in the euro zone debt crisis warranted the recent surge and as Japan provided a reminder of the slump blighting top economies. Japan's exports fell an annual 8.1 percent in July, the deepest drop in six months, dragged down by collapsing shipments to Europe and a sharp plunge in sales to China.

Much of the pressure was inserted from the stocks belonging to Realty, Power and Capital Goods counters, which emerged as the weak links of the trade. However, stocks from Health Care, Auto and Public Sector Undertaking counters, limited the downside of the bourses. Additionally, Airline stocks flew higher ahead of meeting of newly-formed United Progressive Alliance (UPA) coordination committee today to discuss foreign direct investment (FDI) in aviation sector. Reacting to these reports, were stocks of Kingfisher Airline, Spicejet and Jet Airways, which rallied in the range of 2.5-4%.The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1324:1475 while 153 scrips remained unchanged. (Provisional)

The BSE Sensex lost 38.62 points or 0.22% and settled at 17,846.64. The index touched a high and a low of 17,912.08 and 17,800.29 respectively. 12 stocks were seen advancing against 17 declining ones while 1 stock remained unchanged on the index (Provisional)

The BSE Mid-cap index lost 0.15% while Small-cap index was down 0.18%. (Provisional)

On the BSE Sectoral front, Health Care up 0.46%, Auto up 0.34%, PSU up 0.23%, IT up 0.23% and Bankex up 0.05% were the top gainers, while Realty down 0.81%, Power down 0.74%, Capital Goods down 0.34%, TECk down 0.34% and Consumer Durables down 0.25% were the top losers in the space.

The top gainers on the Sensex were Coal India up 1.31%, Dr. Reddy’s Lab up 1.18%, Infosys up 1.08%, Hero MotoCorp up 0.94% and Bajaj Auto up 0.86% while, Bharti Airtel down 3.89%, NTPC down 1.38%, Sterlite Industries down 1.32%, HDFC down 0.87% and RIL down 0.80% were the top losers in the index. (Provisional)

Meanwhile, in a bid to prevent the 'unhealthy practices' and distribute risk to a wide spectrum of investors, the Reserve Bank of India (RBI) has tightened the non-banking finance company (NBFC) securitization norm, by setting a 95 per cent cap on the loans it is selling to another company. Thus with the new norm, the NBFC will have to retain a minimum 5 per cent of the loan being sold to another entity, with a further condition of not selling or securitizing a loan unless three monthly installments have been duly paid by the borrower.

In order to prevent unhealthy practices surrounding securitization viz., origination of loans for the sole purpose of securitization and in order to align the interest of the originator with that of the need that originators should retain a portion of each securitization originated. Further, these guidelines are expected to be implemented by NBFCs in two phases by October end.

As per the new guidelines, loan up to two years could be securitized only after three monthly installments have been duly paid by the borrower. The limit for loans between two and five years is pegged at six months and above five years, would be 12 months. With regard to minimum retention requirement (MRR) for securitization, RBI mandated NBFC’s selling loans to retain 5 per cent of the amount, if the loan is for less than two-year period and 10 per cent if it is of over two years.

Further according to the guidelines, NBFCs should formulate policies regarding the process of due diligence to be exercised by their own officers to satisfy the Know Your Customer (KYC) requirements and credit quality of the underlying assets.

India VIX, a gauge for markets short term expectation of volatility lost 1.84% at 16.00 from its previous close of 16.30 on Tuesday. (Provisional)

The S&P CNX Nifty lost 6.15 points or 0.11% to settle at 5,414.85. The index touched high and low of 5,433.35 and 5,394.80 respectively. 24 stocks advanced against 26 declining ones on the index. (Provisional)

The top gainers on the Nifty were Ranbaxy Laboratories up 4.28%, BPCL up 2.67%, Bank of Baroda up 1.52%, Infosys up 1.27% and Dr. Reddy’s Lab was up 1.05%. On the other hand, Bharti Airtel down 3.98%, IDFC down 1.73%, Sesa Goa down 1.68%, NTPC down 1.58% and Sterlite Industries down 1.49% were the top losers. (Provisional)

The European markets were trading in red, with France's CAC 40 down 0.74%, Germany's DAX down 0.75% and Britain’s FTSE 100 down 1.02%.

Most of the Asian markets ended in the negative zone, on the back of wider-than-expected Japan’s trade deficit. Before making any string position, investors are waiting for developments from a euro-area finance ministers meeting this week to discuss details of the bailout package for Greece. Fall in Hang Seng market continued with weakness in resource stocks, Shanghai Composite fell with the property sector suffering the biggest percentage fall of the index’s five main industry groups.