Benchmarks pare gains; CRR unchanged at 4.25%

Indian benchmarks- Sensex, Nifty were trading in the positive terrain in the late morning session. On the global most of the Asian equity indices were trading in the green with Japanese Nikkei remained the top gainer amongst the regional peers, gaining over a percentage point following the weekend election victory of the Liberal Democratic Party, whose leader, Shinzo Abe, in line to become prime minister, is looking forward to shore up growth with higher public works spending. Back home, prolonging its anti-inflationary stance, Reserve Bank of India (RBI) in ‘Mid-Quarter Monetary Policy Review: December 2012’, left its key policy rates, viz. repo and reverse repo, unchanged at 8 per cent and 7 per cent respectively. However, what came as a bigger disappointment to the street was a status quo stance even on cash reserve ratio (CRR).  The CRR of scheduled banks remain unchanged at 4.25 per cent of their net demand and time liabilities. Meanwhile, the marginal standing facility (MSF) rate and the Bank Rate also stand unchanged at 9.0 per cent. The traders were seen piling up position in Auto, Capital Goods and CD, while selling was seen in Bankex, Oil & Gas and Metal sector. Sun Pharmaceutical Industries zoomed after a wholly-owned subsidiary of the company entered into a definitive agreement with Takeda Pharmaceuticals USA to acquire Takeda's URL Pharma, Inc. generic business. Jindal Stainless surged after the company stated that its board will consider a reworking proposal for restructuring of the company's debts and to issue equity shares of the company on preferential basis. Kingfisher Airlines shares rebounded on reports that the promoters are likely to infuse Rs. 425 crore to resume operations in the grounded carrier. Jet Airways shares gained on hopes of Etihad investment. HPCL, BPCL and Indian Oil Corporation edged higher after the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas stated that the under-recovery (UR) on High Speed Diesel (HSD) applicable for 2nd fortnight of December, effective 16 December 2012, declined to Rs 9.28 per litre from Rs 10.03 per litre for the first fortnight of the month. PSU OMCs are currently (effective 16 December 2012) incurring daily under-recovery of about Rs 411 crore on the sale of Diesel, PDS Kerosene and Domestic LPG.

 The NSE Nifty and BSE Sensex were managing to hold their psychological 5,850 and 19200 levels respectively. The market breadth on BSE was positive, in the ratio of 1189:915.

The BSE Sensex is currently trading at 19289.23 up by 44.81 points or 0.23% after trading in a range of 19330.60 and 19287.09. There were 19 stocks advancing against 11 declines on the index.

The broader indices were trading on mixed note; the BSE Mid cap index was down by 0.01% and Small cap index was up by 0.29%. The top gaining sectoral indices on the BSE were, Auto up by 1.01%, Capital Goods up by 0.76%, CD up by 0.69%, Power up by 0.47% and Health Care up by 0.37%. While Bankex down by 0.45%, Oil & Gas down by 0.14%, Metal down by 0.11%, FMCG down by 0.03%, PSU down by 0.02% were the top losers on the index.

The top gainers on the Sensex were Bharti Airtel up by 2.38%, BHEL up by 2.15%, Sun Pharma up by 2.02%, Tata Motors up by 1.96% and Mahindra & Mahindra up by 1.53%.

On the flip side, Hindalco Industries  was down by 0.85%, ONGC was down by 0.54%, ICICI Bank was down by 0.40%, Wipro was down by 0.30%, and  Maruti Suzuki was down by 0.28% were the top losers on the Sensex.

Meanwhile, in a move to curb demand for the precious metal, the government is mulling schemes like gold deposits, accumulation plans, gold-linked accounts and pension products. These gold-backed products will allow the investors enjoy benefits of investment in the metal without investing in the physical commodity.

In its Mid-Year Economic Analysis tabled in Parliament, the government said ‘gold backed financial instruments in the form of modified gold deposits and gold accumulation plans, besides gold-linked accounts and pension products linked with the precious metal are some measures being considered to reduce the attraction of a direct investment in bullion and jewellery in the domestic market and check a substantial rise in imports.’ By adding further it said gold-linked investments would have to be monitored to see whether the overall demand for the metal actually falls.

This move by the government is aimed to curb the gold imports, which is pushing up the current account deficit (CAD). India’s gold imports in 2011-12 financial year stood at $60 billion and the quantum of import was 1,067 tonnes. With imports touching a record high last year, the Reserve Bank too announced a slew of curbs on gold purchase and financing.

With gold imports contracting by 18.4% y-o-y to Rs 71,912 crore in the April-June quarter of the current financial year, the government is hopeful of recording a lower CAD this fiscal. India’s CAD has been rising on the back of record trade deficits, which in October jumped to a 12-year high of $21 billion on the back of rising oil and gold imports.

 The S&P CNX Nifty is currently trading at 5,867.05 up by 9.15 points or 0.16% after trading in a range of 5,882.70 and 5,866.50. There were 25 stocks advancing against 24 declines while 1 stock remains   unchanged on the index.

The top gainers of the Nifty were Bharti Airtel up by 2.38%, BHEL up by 2.22%, Tata Motors up by 1.87%, Sun Pharma up by 1.87% and Bank of Baroda up by 1.58%.

On the flip side, Axis Bank down by 1.02%, ACC down by 0.95%, Hindalco down by 0.81%, Kotak Bank down by 0.70%, and BPCL down by 0.55% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite surged 14.78 points or 0.68% to 2,175.12, Hang Seng rose 37.91 points or 0.17% to 22,551.52, KLSE Composite added 6.87 points or 0.42% to 1,655.45, Nikkei 225 soared 112.88 points or 1.15% to 9,942.49, Straits Times gained 8.61 points or 0.27% to 3,167.31 and KOSPI Composite was up by 5.37 points or 0.27% to 1,988.40.

On the flip side, Jakarta Composite declined 17.79 points or 0.41% to 4,298.07, Taiwan Weighted was down by 5.78 points or 0.08% to 7,624.98.