Late hour recovery helps benchmarks to pare substantial losses

Indian equity indices ended the session slightly in the negative as investors preferred to book profits after two consecutive sessions of gains amid subdued global set up. Moreover, the frontline indices traded choppy throughout the day as investors adopted cautious approach for most part of the day’s trade ahead of Gujarat assembly election outcomes. Sentiments also remained dampened after stock market regulator Securities & Exchange Board of India (SEBI) on December 19, 2012, raised the base minimum capital (BMC) for stock brokers holding registration as stock-broker in the cash segment. SEBI also introduced BMC for members holding registration as trading member in any derivative segment

Selling got intensified in the first half with both the gauges tumbled below their crucial 5,900 (Nifty) and 19,400 (Sensex) levels toughing intraday lows as global risk appetite remained weak with deteriorating federal budget negotiations in US fueled concern that automatic tax increases and spending cuts will be triggered. But, some amount of recovery in the domestic benchmarks was witnessed in the late trade following revival in European counters which turned positive, after a subdued start on Thursday, with UK engineering group Weir among the main gainers as it benefited from a broker upgrade. Moreover, recovery in Asian markets too supported the sentiments.

Back home, the markets pared most of their losses with Sensex and Nifty re-conquering psychological 19,450 and 5,150 levels on value-buying in metal and other defensive sectors such as pharmaceuticals and FMCG. Moreover, traders also got some support with government’s stand of stable tax regime and stating that it was banking on better compliance to boost revenues. However, the recovery was not enough to bring the indices back into green as risk appetite remained frail after assembly election where Gujarat Chief Minister Narendra Modi looked set for a third consecutive victory, even as two top Congress leaders in the state bit the dust. Further, BJP's decisive win in Gujarat was on expected lines, and to a large extent, the Congress was expected to gain from the anti-incumbency wave in Himachal.

In currency market, rupee dropped by 20 paise to 54.75 against the American currency in late morning trade on Thursday on fresh dollar demand from banks and importers despite persistent capital inflows in the equity market. Some amount of selling was witnessed in Capital Goods space which declined by over half a percent on account of fall in shares of Larsen & Toubro which fell on worries of a slowdown in order bookings. However, losses remain capped as Metal space gained for the fifth time in a row, gaining over a percent point after up-beat Chinese data.

The NSE’s 50-share broadly followed index Nifty declined by about fifteen points but managed to end above its psychological 5,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by over twenty points to finish tad above the psychological 19,450 mark. Moreover, broader markets too traded in-line with benchmarks snapping the session slightly in the red.

The overall volumes stood above Rs 1.95 lakh crore, which remained on the higher side as compared to that on Wednesday. The market breadth remained in favor of declines as there were 1,310 shares on the gaining side against 1,583 shares on the losing side while 134 shares remain unchanged.

Finally, the BSE Sensex lost 22.08 points or 0.11% to settle at 19,453.92, while the S&P CNX Nifty declined by 13.20 points or 0.22% to end at 5,916.40.

The BSE Sensex touched a high and a low of 19,520.51 and 19,335.72, respectively. The BSE Mid-cap index was down by 0.21% and Small-cap index was down by 0.38%.

The top gainers on the Sensex were, Hindalco Industries up 2.59%, Jindal Steel up by 2.27%, Tata Steel up 1.90%, Hindustan Unilever up 1.55% and TCS up 1.27%, while, Sun Pharma down by 1.99%, Mahindra & Mahindra down by 1.68%, Bajaj Auto down by 1.37%, Wipro down by 1.32% and L&T down by 1.02% were the top losers on the index.

The top gainers on the BSE Sectoral space were, Metal up 1.19%, TECk up 0.34%, IT up 0.26%, FMCG up 0.13% and Health Care (HC) up 0.11 points, while Consumer Durables (CD) down 0.97%, Auto down 0.76%, Capital Goods (CG) down 0.72%, Power down 0.56% and Realty down 0.47% were top losers on the space.

Meanwhile, in an effort to mitigate risks arising out of algorithmic trading and safe-guarding the markets from erroneous or manipulative trading activities, market regulator Securities and Exchange Board of India (SEBI) has hiked the Base Minimum Capital (BMC) for stockbrokers to Rs 50 lakh from Rs 10 lakh earlier. The BMC is the deposit given by the member of the exchange against which no exposure for trades is allowed.

The changes will be in place by March 31 next year. The last time the BMC requirement was hiked was in 1996. The order follows a 900-point flash crash of NSE’s 50-stock share index, Nifty, on October 5, due to erroneous orders worth Rs 650 crore being executed by a broker on behalf of one of its clients. However, the BMC deposit requirement prescribed for the different profiles ranges from Rs 10 lakh to Rs 50 lakh for members of stock exchanges with nation-wide trading terminals. For members of other stock exchanges the requirement would be 40% of the same.

The new rules will require brokers and trading members to deposit Rs 10 lakh if they opt for only proprietary trading without the algorithmic option, Rs 15 lakh for trading only on behalf of clients (without proprietary and algorithmic options). However, a deposit of Rs 25 lakh would be required for proprietary trading and trading on behalf of clients (without algorithmic trading) and Rs 50 lakh for trading with the algorithmic option.

Further, the exchanges can seek for higher deposits if they perceive greater risks for any broker. A minimum 50% of the deposit would be required to be in the form of cash and cash equivalents.

The S&P CNX Nifty touched a high and a low of 5,937.60 and 5,881.45 respectively.

The top gainers on the Nifty were Jindal Steel was up 2.46%, Hindalco up 2.39%, Tata Steel up 1.74%, Hindustan Unilever up 1.72% and TCS up 1.53%.

The top losers on the index were Ambuja Cement down by 3.10%, Sun Pharma down by 2.68%, BPCL down by 2.14%, JP Associates down by 2.08% and Cairn down by 1.89%.

The European markets were trading mixed, France’s CAC 40 up by 0.42%, Germany’s DAX down 0.07% and the United Kingdom’s FTSE 100 up by 0.11%.

Asian markets ended mixed on Thursday amid worries over U.S. budget negotiations. Japan’s Nikkei ended with huge losses as a surging yen weighed on even after the Bank of Japan boosted its asset purchases for the third time. South Korea’s Kospi went home with green mark after Park Geun Hye was elected president of South Korea, the first woman to lead the nation. Shanghai Composite managed a green close after spending most part of the session in red amid negative leads from Wall Street, while Hang Seng Index closed marginally higher.