Benchmarks trade flat ahead of November inflation numbers

Key benchmarks have made a quite opening as investors remained on the sidelines in the early deals ahead of November inflation numbers, scheduled to be announced later in the day. Global cues too remained sluggish as the US markets closed lower overnight, losing their pace in final hours as ongoing jitters over the ‘fiscal cliff’ negotiations kept investors nervous and they over looked jobless claims report which fell for the fourth-straight week and rise in retail sales in November. Moreover, Asian markets were trading mixed at this point of time, though some of the indices have recovered after a flash PMI data showed recovery in Chinese manufacturing, on the other hand the Japanese market was in losers list on report that showed worsening confidence among manufacturers in Japan.

Back home, both the frontline gauges were hovering near their pre-close level as investors stayed away from piling up any positions in risky assets on concern that inflation is likely to pick up pace in November as imported fuel got costlier due to weak rupee. Inflation grew at 7.45 percent in October and is likely to increase to 7.60 percent in November. The sentiments got some support after the government announced steps to accelerate approvals for mega projects, and approved a new law for land acquisition. The bill was given go-ahead at the Cabinet meeting presided by Prime Minister Manmohan Singh, making mandatory the consent of 80 per cent of people whose land is taken for private projects.

Meanwhile, shares of fertiliser companies rallied in initial deals after the Cabinet Committee on Economic Affairs (CCEA), approved a urea investment policy, which is likely to incentives fertiliser companies to set up new plants and expand existing capacity. On the sectoral front, realty witnessed the maximum gain in trade followed by capital goods and healthcare while, consumer durables, fast moving consumer goods and public sector undertaking remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks while, the overall market breadth has made a positive start; there were 978 shares on the gaining side against 673 shares on the losing side while 68 shares remain unchanged.

The BSE Sensex opened at 19,217.96; about 11 points lower as compared to its previous closing of 19,229.26, and has touched a high and a low of 19,263.63 and 19,195.23 respectively.

The index is currently trading at 19,243.86, up by 14.60 points or 0.08%. There were 22 stocks advancing against 8 declines on the index.

The overall market breadth has made a positive start with 56.89% stocks advancing against 39.15% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices rose 0.44% and 0.27% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 0.85%, CG up by 0.78%, Healthcare up by 0.64%, IT up by 0.60% and Metal up by 0.48%. On the other hand, CD down by 0.71%, FMGC down by 0.68 and PSU down by 0.02% were the few losers on the Sensex.

The top gainers on the Sensex were L&T up by 1.31%, Sun Pharma up by 1.03%, Hindalco Inds up by 0.69%, TCS up by 0.69% and Mahindra & Mahindra up by 0.67%.

On the flip side, ITC was down by 1.19%, ONGC was down by 0.94%, Hero MotoCorp was down by 0.54%, Tata Motors was down by 0.40% and Hindustan Unilever was down by 0.30% were the top loser on the Sensex.

Meanwhile, with the opposition party and government reportedly reaching an agreement on passing the Banking Regulation Amendment bill, the companies that were keen on banking licence may see the light of the day. Though, the government has been pushing the Reserve Bank of India (RBI) to issue a few bank licenses to corporate houses, but the central bank has been holding back on the grounds that the government should firstly pass the Banking Regulation Act 2012 for giving more powers to the central bank.

The new Banking Regulation Bill raises hopes for Non-Banking Finance Companies (NBFCs) along with new regulatory challenges. Based on the recommendations of a committee headed by Usha Thorat, RBI has issued new prudential norms. The new norms require NBFCs to have a tier-one capital adequacy ratio (CAR) of 12% by April 2014 as against the present tier-I requirement of 7.5% for NBFCs except those in infrastructure where CAR is 10% and for those NBFCs who is lending against gold CAR is already 12%.

As per the new norms, NBFCs will also have to adhere to the same norms as banks for classifying an advance as a bad loan. At present, if a borrower of NBFCs does not repay a loan for 180 to 360 days, the advance has to be classified as a bad loan compared to 90 days for banks. Further, the asset classification and provisioning norms should, in a phased manner, be made similar to that of banks for all registered NBFCs irrespective of size. Moreover, the implementation will also be done in phases like 120-day norm shall be applied from April 01, 2014 to March 31, 2015; 90-day norm thereafter and a one-time adjustment of the repayment schedule shall not amount to restructuring.

The New Banking Regulation Amendment bill will give RBI the power to replace bank boards. It will also allow the central bank to check the books of conglomerates that a bank have in their group. Once the amendments in banking bill gets passed in the cabinet, then any potentially large investor will have to take the permission of the RBI before buying shares of the bank.

The S&P CNX Nifty opened at 5,846.90; about 4.6 points lower as compared to its previous closing of 5,851.50, and has touched a high and a low of 5,861.60 and 5,840.65 respectively.

The index is currently trading at 5,854.60, up by 3.10 points or 0.05%. There were 34 stocks advancing against 16 declines on the index.

The top gainers of the Nifty were L&T up by 1.31%, DLF up by 1.03%, BPCL up by 0.91%, Sun Pharma up by 0.90% and Ultra Cement up by 0.81%.

On the flip side, ITC down by 1.34%, Bank of Baroda down by 1.32%, PNB down by 0.95%, Hero Moto down by 0.89% and ONGC down by 0.75%, were the top losers on the index.

Asian markets were trading mixed; KLSE Composite was down by 3.66 points or 0.22% to 1,649.09, Jakarta Composite was down by 28.49 points or 0.66% to 4,291.69, Seoul Composite was down by 4.41 points or 0.22% to 1,998.36, and Taiwan Weighted was trading down by 66.17points or 0.85% to 7,690.92.

On the other hand, Shanghai Composite was up by 59.36 points or 2.88% to 2,120.84, Straits Times was up by 5.37 points or 0.17% to 3,161.92, Hang Seng gained 133.64 points or 0.60% to 22,579.22 and Nikkei 225 up by 23.49 points or 0.24% to 9,766.22.