Domestic bourses trade flat ahead of RBI policy meet

After making flat-to-negative start, domestic equity indices are managing to keep their head above water ahead of Reserve Bank of India’s (RBI) mid-quarter monetary policy review to be announced on Dec 18. On the global front, US stocks fell on Friday as another slide in Apple took a toll and investors unloaded some shares because of the uncertainty surrounding the fiscal cliff negotiations. While, most of the Asian equity indices were trading in the red at this point of time amid profit-taking in certain markets after last week’s gain; though the Japanese market was outperforming its peers as yen weakened on hopes of more monetary policy by the central bank.

Back home, market-men remained on the sideline ahead of the central bank’s monetary policy review tomorrow amid fear that RBI may maintain status-quo and wait until January before cutting interest rates. Though, some support in the markets came from Prime Minister Manmohan Singh’s comment that the steps taken on the economic front were ‘only the beginning of a process’ and there would be no looking back, he said the government was committed to doing everything that is possible to alter the policy environment, accelerate economic growth and make growth socially and regionally more inclusive. Prime Minister further said that now reforms in GAAR, the IT, Railways and pharma sectors, land acquisition, taxation, disinvestment and subsidies are next on target. 

On the sectoral front, metal witnessed the maximum gain in trade followed by realty and healthcare while, consumer durables, technology and software remained the top losers on the BSE sectoral space. Moreover, the broader indices were outperforming benchmarks. The market breadth on the BSE was positive; there were 1,131 shares on the gaining side against 504 shares on the losing side while 77 shares remain unchanged.

The BSE Sensex opened at 19,290.92; about 26 points lower compared to its previous closing of 19,317.25, and has touched a high and a low of 19,341.38 and 19,284.03 respectively.

The index is currently trading at 19,334.04, up by 16.79 points or 0.09%. There were 19 stocks advancing against 10 declines while 1 remains unchanged on the index.

The overall market breadth has made a positive start with 66.06% stocks advancing against 29.44% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices rose 0.60% and 0.61% respectively.

The top gaining sectoral indices on the BSE were, Metal up by 0.95%, Realty up by 0.64%, Healthcare up by 0.54%, PSU up by 0.50% and Auto up by 0.42%. While, CD down by 0.43%, Teck down by 0.37%, IT down by 0.26% and Capital Goods down by 0.20% were the few losers on the index.

The top gainers on the Sensex were Hindalco up by 2.50%, Maruti Suzuki up by 1.94%, Tata Steel up by 1.13%, Tata Power up by 1.10% and Mahindra & Mahindra up by 0.93%. On the flip side, Bharti Airtel was down by 1.59%, TCS was down by 1.07%, Wipro was down by 0.92%, HDFC Bank was down by 0.76% and L&T was down by 0.45% were the top losers on the Sensex.

Meanwhile, according to the government, the effects of current macro economic situation grounds for the issue of bad loans in the Public sector banks (PSU), which went up from Rs 94,000 crore in 2011 to Rs 1.70 lakh crore as of September 2012.

The minister of state for finance Namo Narain Meena, stated that lower growth and high interest rates are the reasons for substantial increase of non-performing assets of these PSU banks. By adding further Meena said 'the government has recently advised PSU banks to take new initiatives to increase the pace of recovery and manage NPAs.' Appointment of nodal officers for recovery, conducting special drives for recovery of loss assets, putting in place early warning systems and replacing the system of post-dated cheques with electronic clearance system are some of the steps taken by the government to improve the bad loan issue. Moreover, the government also directed to constitute a board level committee for monitoring recovery. The ratio of gross NPAs to gross advances in respect of banks increased from 2.51% in March 2010 to 2.94% in March 2012 and 3.57% in September 2012. Concerned by the rising NPAs, the RBI had recently instructed banks to have a loan recovery policy which sets down the manner of recovery of dues, targeted level of reduction, norms for permitted waiver and factors taken into account before considering these waivers.

The S&P CNX Nifty opened at 5,860.50; about 19 points lower compared to its previous closing of 5,879.60, and has touched a high and a low of 5,885.60 and 5,860.20 respectively.

The index is currently trading at 5,884.10, up by 4.50 points or 0.08%. There were 33 stocks advancing against 17 declines on the index.

The top gainers of the Nifty were Hindalco up by 2.71%, Maruti Suzuki up by 1.83%, Tata Steel up by 1.22%, Tata Power up by 1.15% and Cipla up by 0.99%.

On the flip side, Bharti Airtel down by 1.79%, TCS down by 1.28%, Wipro down by 0.98%, Ultra Tech Cement down by 0.84% and HDFC Bank down by 0.81%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng declined by 84.19 points or 0.37% to 22,521.79, KLSE Composite was down by 5.21 points or 0.32% to 1,646.77, Straits Times was lower by 6.21 points or 0.20% to 3,162.22, Seoul Composite was down by 11.79 points or 0.59% to 1,982.35 and Taiwan Weighted was trading lower by 90.23 points or 1.17% to 7,607.88.

On the other hand, Shanghai Composite was up by 10.92 points or 0.51% to 2,161.55, Jakarta Composite was higher by 2.25 points or 0.05% to 4,311.43 and Nikkei 225 has surged by 140.86 points or 1.45% to 9,877.84.