Weakness in global markets drag domestic bourses lower in early deals

After garnering over a percent gains in the previous session, key Indian benchmarks have made a flat-to-negative start as investors opted to book some profit amid weakness in global markets. The US markets ended lower overnight with tech heavy NASDAQ taking a big hit after heavyweight Google plunged badly on a weak earnings that missed analysts’ estimates while, most of the Asian equity indices were trading in the red at this point of time as traders cashed in profits after a week of upbeat data out of China and rising hopes for the future of the euro-zone.

Back home, despite soft opening, both the gauges managed to trade slightly above their crucial 18,750 (Sensex) and 5,700 (Nifty) bastions. The sentiments got bashed after sugar stocks like Shree Renuka Sugar, Parrys Sugar and Rana Sugar declined after Union Government’s warning to mills to sell non-levy quota of October-November in time or face consequences. Meanwhile, the sentiments also remained dampened in the early trade after provisional data released by the stock exchanges showed that foreign institutional investors (FIIs) were net sellers of Indian stocks on October 18, 2012. FIIs sold shares worth a net Rs 68.87 crore on Thursday, as per provisional data from the stock exchanges. However, losses remain capped in the initial deals supported by some encouraging results posted by Ambuja Cement and Hindustan Zinc. Ambuja Cement posted a rise of 77.26% in its net profit at Rs 303.97 crore for the third quarter ended September 30, 2012 while, Hindustan Zinc registered a rise of 14.51% in its net profit at Rs 1539.79 crore for the second quarter ended September 30, 2012.

On the sectoral front, consumer durables witnessed the maximum gain in trade followed by auto and realty while, power, oil and gas and metal remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks while, the market breadth on the BSE was positive; there were 909 shares on the gaining side against 639 shares on the losing side while 80 shares remain unchanged.

The BSE Sensex opened at 18,768.00; about 23 points lower compared to its previous closing of 18,791.93, and has touched a high and a low of 18,769.59 and 18,725.86 respectively.

The index is currently trading at 18,753.86, down by 38.07 points or 0.20%. There were 7 stocks advancing against 13 declines on the index.

The overall market breadth has made a positive start with 55.84% stocks advancing against 39.25% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices rose 0.29% and 0.33% respectively.

The top gaining sectoral indices on the BSE were, CD up by 0.53%, Auto up by 0.22%, Realty up by 0.08%, FMCG up by 0.07% and HC up by 0.06%. While, Power down by 0.39%, Oil and Gas down by 0.38%, Metal down by 0.33%, CG down by 0.29% and TECk down by 0.20% were the top losers on the index.

The top gainers on the Sensex were Tata Motors up by 1.02%, Dr Reddy up by 0.89%, Bajaj Auto up by 0.72%, ICICI Bank up by 0.56% and Wipro up by 0.51%.

On the flip side, Tata Power was down by 1.17%, Jindal Steel was down by 1.10%, Sun Pharma was down by 1.00%, M&M was down by 0.91% and Tata Steel was down by 0.81% were the top losers on the Sensex.

Meanwhile, with an attempt to make the banking industry more competitive, Chairman of Prime Minister's Economic Advisory Council C Rangarajan has urged Reserve Bank to come up with entry norms for issuing new banking licenses. He pointed out that periodic entry of new banks is inevitable to ensure competitiveness in the domestic banking system, as closed system can only make an oligopolistic market.

The former RBI governor cautioned that such situations have to be avoided, and proposed the central bank to set up criteria for new entrants. He has urged that the decision to allow new entrants should be taken by considering the economic needs over the next several decades, for ensuring the sector’s competency.

The apex bank, which had issued draft norms for new banks last year, is yet to come up with the final guidelines as it sought statutory powers to supersede the boards of erring banks, which can happen only through an amendment to the Banking Regulations Act, pending before Parliament.

Rangarajan also affirmed that new capital adequacy regulations such as Basel III is necessary in the long term prospects, and indicated that the RBI's projection on Basel-III capital requirement in its annual report is an underestimate.

While, the RBI Governor in the financial stability report released in August had pegged the capital need of banks at about Rs 1.75 trillion by March 2018 to conform to Basel III.  He also blamed economic slowdown for the rising NPAs.

The S&P CNX Nifty opened at 5,703.30; about 15 points lower compared to its previous closing of 5,718.70, and has touched a high and a low of 5,711.70 and 5,696.90 respectively.

The index is currently trading at 5,702.80, down by 15.90 points or 0.28%. There were 15 stocks advancing against 35 declines on the index.

The top gainers of the Nifty were Ambuja Cement up by 2.02%, Tata Motors up by 0.89%, Dr Reddy up by 0.66%, ACC by 0.58% and ICICI Bank up by 0.55%.

On the flip side, Tata Power down by 1.21%, HCL Tech down by 1.11%, Jindal Steel down by 1.07%, Sun Pharma down by 0.97% and M&M down by 0.94%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite was marginally down by 1.54 points or 0.07% to 2,130.15, Jakarta Composite was down by 13.68 points or 0.31% to 4,343.29, Nikkei 225 was lower by 12.30 points or 0.14% to 8,970.56, Straits Times declined by 9.27 points or 0.30% to 3,051.09, Kospi Composite plunged by 16.28 points or 0.83% to 1,942.84 and Taiwan Weighted lost 48.28 points or 0.65% to 7,417.13.

On the other hand, Hang Seng gained 26.09 points or 0.12% to 21,544.80 and KLSE Composite added 2.65 points or 0.14% to 1,667.78.