Benchmarks slip to intra-day low; Mid-year economic review weighs

Losing more strength, benchmark equity indices slipped to intra-day’s low level after the country’s official growth forecast was lowered to between 5.7 and 5.9 per cent for this fiscal year, in the Finance Ministry's mid-year economic review. The budgeted forecast for GDP growth in the 2012-13 fiscal year was 7.6 per cent, but growth was just 5.4 per cent in the first half of the year. Finance Minister P. Chidambaram, however, recently projected growth of between 5.5 and 6 per cent for the year. Meanwhile investor’s cautious approach ahead of next big trigger, RBI’s monetary policy review, scheduled to be held tomorrow, also added the pessimistic milieu. In the cautious session of trade, 30 share index, Sensex, was trading below the 19250 level, while 50 share index, Nifty, managed to float above 5850 bastion albeit with loss of over 0.15%. Broader indices continued to outperform frontline equity indices.

Further, lack of positive global cues also kept the sentiment somber at D-street. Asian pacific shares were set for mostly negative close, with the Japanese market proving to be an exception after Sunday's election result weakened the yen and bolstered the stock market. Liberal Democratic Party won a landslide victory in Japan's general election on Sunday, mid expectations that the new government will introduce aggressive monetary easing. On the other hand, European Shares hinted at optimism over 'Fiscal Cliff' progress. The 'fiscal cliff' talks could shift a gear after the House of Representatives Speaker, John Boehner, said Republicans are prepared to accept a tax rate increase for the wealthiest Americans, removing a key obstacle to solving the conundrum. However negotiations over any income threshold are expected to be protracted.

Closer home, much of the support is being rendered from Auto, Realty and  Metal counters, while stocks from Information Technology, Consumer Durable and Fast Moving Consumer Goods counters emerging to be dark spots of the trade. The overall market breadth on BSE continued to be in the favour of advances which thumped declines in the ratio of 1407:1128; while 137 shares remained unchanged.

The BSE Sensex is currently trading at 19248.13, down by 69.12 points or 0.36% after trading in a range of 19346.78 and 19246.92. There were 17 stocks advancing against 13 declines on the index and one remained unchanged.

The broader indices were trading in green; the BSE Mid cap and Small cap indices were trading higher by 0.44% and 0.49% respectively.

The top gaining sectoral indices on the BSE were, Auto up by 0.79%, Realty up by 0.59%, Metal up by 0.49%, Healthcare up by 0.36% and PSU up by 0.31%. While, TECk down by 1.17%, IT down by 1.02% , CD down by 0.90%, FMCG down by 0.68%, and Capital Goods down by 0.48% were the few losers on the index.

The top gainers on the Sensex were Hindalco Inds up by 2.63%, Maruti Suzuki up by 1.61%, Bajaj Auto up by 1.34%, Tata Power up by 1.19% and Mahindra & Mahindra up by 1.06%. On the flip side, Bharti Airtel down by 3.08%, Wipro down by 2.35%, TCS down by 1.85%, HDFC Bank down by 1.56% and BHEL down by 1.51% were the top losers on the Sensex.

Meanwhile, underscoring that risk assessment capability of state-run banks is lower than private sector counterparts, RBI Deputy Governor K C Chakrabarty has urged Public Sector Bank’s (PSB) to develop the habit of saying 'no' to unviable proposals. Knowingly giving money to some unviable projects, is a governance issue, he said.

The RBI deputy governor attributed the problem of rising bad assets mostly to poor administration and low risk management practices at state lenders. He averred, unfortunately, a combination of factors is responsible for this. Fundamentally, it is a structural issue, a skills issue and a governance issue. Further, highlighting that the poor borrowers are subsidizing the rich, Chakrabarty reported that it was not the small borrower who is a threat to banking as his repayment track record is far better than larger ones. ‘Loans to big corporate are a problem’ Chakrabarty added.

According to the RBI data, gross NPAs of public sector banks (PSBs) rose to 3.3% as on end March 2012, from 2.4% a year ago, while for private lenders, the ratio declined to 2.1% from 2.5% during the same period. Further, a recent ICRA report also warned of bad assets book of banks crossing the Rs 2-trillion-mark or about 3.8 per cent of the total asset book this fiscal, driven mostly by public sector banks. 

The S&P CNX Nifty is currently trading at 5,862.60, down by 17.00 points or 0.29% after trading in a range of 5,886.05 and 5,860.20. There were 26 stocks advancing against 23 declines while 1 stock remained unchanged on the index.

The top gainers of the Nifty were Hindalco up by 2.83%, Maruti Suzuki up by 1.54%, -Auto up by 1.32%, Tata Power up by 1.24% and Punjab National Bank (PNB) up by 1.09%.

On the flip side, Bharti Airtel down by 3.18%, Wipro down by 2.22%, TCS down by 1.98%, HDFC Bank down by 1.71% and Ambuja Cement down by 1.57% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng declined by 0.64%, KLSE Composite was down by 0.34%, Straits Times was lower by 0.45%, Seoul Composite was down by 0.60% and Taiwan Weighted was trading lower by 0.88%.

On the other hand, Shanghai Composite was up by 0.26%, Jakarta Composite was higher by 0.01% and Nikkei 225 has surged by 0.94%.