Benchmarks off day’s low; Nifty conquers 5900 psychological level

Benchmark equity indices although not at day’s low, continue to trade downbeat on fading hopes of a last-minute compromise deal between US politicians to avert the fiscal cliff, which is also weighing on the sentiment of Asian counterparts. Much of the market-participants expect the session to be dull as most markets across Asia and Western Europe are closed or will be closing early on the last day of Calendar Year 2012. Thus, after rebounding from intra-day low level, 50 share index, Nifty, is trading above 5900 bastion and 30 share index, Sensex, is trading comfortably hovering above the psychological 19400 mark. Meanwhile, broader indices continue to keep their head above the water. Not much of the momentum is witnessed in the range-bound session of trade, with all eyes being glued to US as “Fiscal Cliff” Deadline Approaches.

Buying in Realty, Metal and Consumer Durable counters, is capping the losses of the bourses, while stocks from FMCG, Information Technology and Capital Goods counters are endorsing them. Meanwhile, Auto stocks are trading in green ahead monthly sales data for December 2012. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1430:1143, while 145 shares remained unchanged.

The BSE Sensex is currently trading at 19423.60, down by 21.24 points or 0.11% after trading in a range of 19491.58 and 19409.05. There were 14 stocks advancing against 16 declines on the index.

The broader indices continued to hold their neck in green; the BSE Mid cap and Small cap indices were trading higher by 0.19% and 0.44% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 1.35%, Metal up by 0.67%, Consumer Durables up by 0.66%, PSU up by .0.56% and Auto up by 0.41%. On the flip side, FMCG down by 0.30%, IT down by 0.16%, Capital Goods down by 0.14%, TECk down by 0.13% and Health Care down by 0.10% were the loser on the sectoral space.

The top gainers on the Sensex were Wipro up by 1.42%, Jindal Steel up by 1.38%, Hindalco Industries up by 1.04%, Tata Motors up by 0.86% and Hero MotoCorp up by 0.50%.

On the flip side, ITC down by 0.74%, L&T down by 0.63%, Cipla and TCS were down by 0.60%, HDFC was down by 0.45% and HDFC was down by 0.55% were the top losers on the Sensex.

Meanwhile, providing additional time to some banks that need to enhance their capital base, the Reserve Bank of India (RBI) has rescheduled the start date for implementation of Basel III, the global capital norms for banks, by three months to April 1, 2013 from January 1, 2013. The norms are to be implemented in a phased manner by March 31, 2018.

Further, RBI giving out no other reason for the delay would align the introduction of the rules with the start of the country's tax year, which runs from April to March. It would also closely monitor the progress on Basel III implementation in other countries, particularly the major ones, who are the members of the Basel Committee.

These guidelines, which were floated back in May, envisages scheduled commercial banks (excluding LABs and RRBs) operating in India to maintain a minimum total capital (MTC) of 9 per cent of total risk weighted assets (RWAs) as against a MTC of 8 per cent of RWAs as prescribed in Basel III rules text of the BCBS (Basel Committee on Banking Supervision), which is also higher than the international norm of 8%.

However, the RBI Governor D Subbarao, back in September reported that the government will have to infuse Rs 90,000 crore in state-run banks in the next five years, if the Centre fails to scale down their holding in these entities to 51%. Underscoring that both public and private banks together need an additional capital of Rs 5 trillion (Rs 5 lakh crore) by March 31, 2018 to comply with the Basel III regulations, the governor stated, 'the government, in order to maintain majority shareholding under the Basel III, will have to infuse Rs 90,000 crore into the state-run banks, which in light of precarious fiscal position would be a tall task. Out of Rs 5 trillion additional capital requirements, banks would require Rs 1.75 trillion as total equity capital, and the remaining Rs 3.25 trillion as non-equity capital of Rs 3.25 trillion.

Further towards this development, the Basel Committee, on December 14, reported that it would be incorporating all the transitional deadlines in line with the original global agreement, even where they have not been able to meet the January 1, 2013 start date. Eleven member jurisdictions, including India, had finalised Basel-III regulations effective from January 1, 2013, while seven others, including the European Union and the United States, published the final set of Basel III regulations effective from the start date of January 1, 2013. While, seven other jurisdictions including the European Union and the US have issued draft regulations, and have indicated that they are working towards issuing final versions as quickly as possible.  

The S&P CNX Nifty is currently trading at 5,900.50, down by 7.85 points or 0.13% after trading in a range of 5,919.00 and 5,897.15. There were 27 stocks advancing against 23 declines on the index.

The top gainers of the Nifty were Punjab National Bank up by 29.60%, Jindal Steel up by 1.42%, Bank of Baroda up by 1.31% and Wipro up by 1.26%.

On the flip side, TCS down by 0.87%, ITC down by 0.79%, HDFC down by 0.77%, Ultra Tech Cement down by 0.75% and Sun Pharma down by 0.64% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng down by 0.04%, Straits Times was down by 0.77% and KLSE Composite down by 0.26%. On the flip side, Shanghai Composite up by 1.61% sole gainer amongst Asian pack.

Indonesia, Japan, South Korea and Taiwan markets remained closed for trade today on the account of public holiday.