Benchmarks sustain the uptrend; Sensex sails comfortably past psychological 18700 level

After witnessing a sharp uptick from intra-day’s low level, Indian equity markets now continue to trade in fine fettle largely thanks to broad gains in rate sensitive counters, viz, Auto, Bankex and Realty. Further, even improved risk appetite in backdrop of positive global set-up has kept the sentiment upbeat at Dalal Street. Besides, the hopes that central bank will respond with a 25 bps rate cut or a cash reserve ratio cut to complement the government's reform moves, expectation that sector specific measures in the upcoming monetary policy review, has given a shot of adrenaline to the stocks of rate sensitive’s counters. In the high volume session of trade, Sensex, is comfortably sailing above the psychological 18700 level, while 50 share index, Nifty, too is well place above the crucial 5700 level. Broader indices witnessing additional traction, is currently outperforming the frontline equity indices. Meanwhile, trade of over 1.18 lac crore was already done in terms of volume turnover, a week ahead of F&O expiry.

On the global front, Asian shares struck a seven-month high on Thursday as worries about a sharper slowdown in global growth eased after a slew of Chinese data signaled stabilization in the world's second largest economy. China's third-quarter gross domestic product, matching expectations, grew 7.4 percent from a year earlier, the slowest pace since the first quarter of 2009. While other Chinese data such as fixed asset investment, retail sales and industrial output slightly exceeded forecasts also provided the required impetus. However, European shares got off to a mixed start as investors awaited the outcome of a two-day summit of European Union leaders.

Closer home, defensive Health Care counter only acted as spoil sport among 13 sectoral indices on BSE. Additionally, even Telecom stocks were on seller’s radar, namely, Bharti Airtel, Idea Cellular, after the Telecom Commission recommended mobile phone carriers give up all their airwave holding in the 900 mega hertz band at the time of their permit renewals. Meanwhile, ahead of earnings, cement makers, ACC and Ambuja Cement too have lured traction. The overall market breadth was in the favour of advances which have thrashed declines in the ratio of 1494:959, while 126 shares remained unchanged.

The BSE Sensex is currently trading at 18746.36, up by 135.59 points or 0.73% after trading in a range of 18746.36 and 18576.41. There were 26 stocks advancing against 4 declines on the index.

The broader indices were trading in green; the BSE Mid cap and Small cap indices were trading higher by 0.94% and 0.60% respectively.

The top gainers on the BSE sectoral space were, Realty up by 2.00%, Auto up by 1.37%, Bankex up by 1.35%, Power up by 1.19% and CG up by 1.02% while HC down by 0.03% was the sole loser on the index.

The major gainers on the Sensex were Tata Power up by 2.94%, Tata Motors up by 1.96%, SBI up by 1.53%, Hindalco Industries up by 1.46%, and Maruti Suzuki up by 1.39%. On the other hand, Bharti Airtel down by 1.30%, Sun Pharma down by 1.04%, Wipro down by 0.74% and Jindal Steel down by 0.21% were major losers on the Sensex.   

Meanwhile, in a response to the demand of the banker’s, the Reserve Bank of India (RBI), easing the norms for Priority Sector Lending (PSL) by banks, has expanded the ambit of distribution of loans to agriculture and weaker sections of the society. These additions and amendments will be operational with effect from July 20, 2012.

As per the eased norms, loans to corporates including farmers’ producer companies of individual farmers, partnership firms and co-operatives of farmers directly engaged in Agriculture and Allied Activities, up to an aggregate limit of Rs 2 crore will be treated as lending for direct agriculture under priority sector lending (PSL) status. In case the loan limit per borrower is more than Rs 2 crore, the same should be treated as indirect finance to agriculture.

Further, bank loans to Micro and Small Enterprises (MSE) engaged in providing or rendering of services will be eligible for classification as direct finance to MSE Sector under priority sector up to an aggregate loan limit of Rs 2 crore per borrower/unit.

Moreover, loans to governmental agency for construction of dwelling units or for slum clearance and rehabilitation of slum dwellers up to Rs 10 lakh per dwelling unit also would come under the ambit of priority sector lending. Furthermore, loans to economically weaker sections and low-income groups, loans to housing finance companies for refinance, on-lending for purchase or construction or reconstruction up to a ceiling of Rs 10 lakh per dwelling would also be eligible for priority sector lending.

In the earlier guidelines issued in July, the central bank had completely of loans granted to Housing Finance Companies (HFCs) from priority sector lending tag. The decision was criticized by the stakeholders, including Deepak Parekh, the chairman of India’s largest HFC - HDFC.

However, RBI after holding discussions with CMD/CEOs of select banks and officers in-charge of PSL and receiving feedback, decided to make certain additions and amendments for priority sector lending.

 The S&P CNX Nifty is currently trading at 5,701.00, up by 40.75 points or 0.72% after trading in a range of 5,708.30 and 5,650.55. There were 40 stocks advancing against 10 declines on the index.

The top gainers of the Nifty were Tata Power up by 2.89%, Bank of Baroda JP Associates were up by 2.80%, DLF and Axis Bank were up by 2.51%. While, Bharti Airtel down by 1.50%, Sun Pharma down by 1.05%, Grasim down by 0.66%, Ranbaxy down by 0.56% and Wipro down by 0.54% were top losers on the index

Asian equity indices continued to trade in fine fettle; Kospi Composite gained 0.20%, Shanghai Composite surged 1.45%, Hang Seng added 0.74%, Jakarta Composite advanced 0.36%, KLSE Composite rose 0.24%, Nikkei 225 soared by 2.00%, Taiwan Weighted inched higher by 0.01% and Straits Times accumulated 0.53%.

European shares got off to a mixed start; with CAC 40 declining 0.15%, FTSE 100 adding 0.18% and CAC 40 losing 0.19%.