Markets continue to grind lower in range-bound session of trade

Indian equity markets continue to grind lower in the absence of any major catalyst. Listless cues from global front also are dissuading market-men from taking any position in risky asset class such as equities. Brushing aside set of good Q2 numbers; benchmarks are showcasing sideways trend right from the dawn of the trade in light of F&O expiry on Thursday. Stocks of private sector lender, Yes Bank, has spurted over 2%, after the bank’s net profit grew by 30.2 percent year-on-year - in-line with expectations - to Rs 306 crore in the quarter ended September 2012, helped by fall in non-performing assets.

Thus, in the range-bound session of trade, 30 share index, Sensex, is trading below the 18800 level, while 50 share index, Nifty, despite declining quarter percentage, is sailing past the crucial 5700 level. A degree of outperformance is staged by broader indices, which are trading with gains of over 0.20%. On the BSE sectoral chart, Capital Goods, Realty and Healthcare counters have emerged as investor’s favorites, while Consumer Durable and Fast Moving Consumer Goods and Information Technology are bearing the brunt of profit-booking.

On the global front, most of the Asian shares are trading lacklustre with the corporate reporting season getting underway in the region, and also as investors stayed cautious after global shares faltered overnight on weak earnings reports and outlook. Meanwhile, European shares too have got off to a cautious start as investors digest a blockbuster deal that leaves British oil group BP with nearly a fifth of the Russian giant Rosneft, and also took stock of a souring outlook from the heavy equipment maker Caterpillar.

Closer home, the BSE Sensex is currently trading at 18757.47, down by 35.97 points or 0.19%. There were 12 stocks advancing against 18 declines on the index.

The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1282:1189, while 112 shares remain unchanged on the index.

The broader indices continued to stage outperformance; the BSE Mid cap and Small cap indices were up by 0.22% and 0.33% respectively.

The top gaining sectoral indices on the BSE were, CG up by 1.26%, Realty up by 0.86%, HC up by 0.38%, PSU up by 0.24% and Bankex was up by 0.04%. On the other hand, CD down by 1.03%, FMCG down by 0.76%, IT down by 0.56%, Auto down by 0.51% and Oil & Gas down by 0.48% were the top losers on the BSE.

The top gainers on the Sensex were L&T up by 1.91%, ICICI Bank up by 0.87%, Bharti Airtel up by 0.85%, Coal India up by 0.84% and Cipla up by 0.54%.

On the flip side, Hero MotoCorp down by 1.75%, ITC down by 1.26%, Jindal Steel down by 1.09%, Tata Power down by 0.99% and Infosys down by 0.94% were the top losers on the Sensex.

Meanwhile, the Reserve Bank of India (RBI) is examining whether a part of banks’ investment in government securities (SLR) can be considered for the purpose of calculating liquidity under the Basel III regulatory norms, aimed at preventing a recurrence of 2008 like financial crisis. The first sign that central bank may dilute the Basel III norms on capital and liquidity comes in backdrop of strong opposition of the banking industry.

Basel-III norms prescribe banks to build a liquidity coverage ratio. However, banks in India are already mandated to maintain the minimum liquidity at 23 per cent of net demand and time liabilities as the Statutory Liquidity Ratio (SLR) under RBI norms.

Hence, as per the central bank’s governor, Anand Sinha, redefining liquidity coverage ratio will not make a substantial change in the Indian context since banks are mandated to own 23% of their deposits in government bonds, but cannot be traded. Further, the deputy governor also pointed out the concern that banks might raise lending rates to compensate for the increase in cost of capital.

The guidelines that would come into effect in a phased manner starting January 1 next year, would have to be fully implemented by March 31, 2018. Further, Sinha underscored that, there have been studies by the Basel-III committee that the macroeconomic impact of new regulations are modest if the implementation is phased over a transition period.  The S&P CNX Nifty is currently trading at 5702.15, down by 15.00 points or 0.26%. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were Siemens up by 2.01%, L&T up by 1.79%, Lupin up by 1.21%, BPCL up by 1.05%, and Bharti Airtel up by 0.86%.

On the flip side, Hero MotoCorp down by 1.77%, Kotak Bank down by 1.63%, ITC down by 1.34%, Jindal Steel down by 1.14% and Bajaj Auto down by 1.06% were the major losers on the index.

Asian markets were trading mixed, Shanghai Composite lost 0.92% Kospi Composite declined 0.76%, Taiwan Weighted shed 0.48% and Jakarta Composite shed 0.01%. On the other hand, KLSE Composite gained 0.14%, Nikkei 225 added 0.04% and Straits Times gained 0.37%.  Meanwhile, Hong Kong markets are closed for a holiday today.

European markets got off to a cautious start; with CAC 40 adding 0.11%, DAX declining by 0.71% and FTSE 100 sliding 0.22%.