Benchmarks make promising start for 2013

Key Indian benchmarks have made a promising start on the first trading day of 2013 with the BSE’s Sensex re-conquering 19,500 mark in early trade while, NSE’s Nifty hovering near its crucial 5,950 level on increased buying by funds as well as retail investors on the back of jubilant global cues. The US markets surged on the last trading day of the year, making it one of the strongest days in more than a month. A last minute deal was reached to avert the ‘fiscal cliff.’ President Barack Obama and Republican Senate leader Mitch McConnell issued statements indicating a deal. However, all the major Asian markets are closed today on account of New Year.

On the domestic front, sustained buying in key heavyweights along with broader indices kept the markets on the positive side. Moreover, sentiments got some support from report that Centre’s fiscal deficit exceeding 80 per cent of the Budget target in the first eight months (April-November), slightly better than the numbers recorded during same period in 2011-12. Shares of rate sensitive too traded jubilantly in morning session on expectations that RBI will cut key rates in its monetary policy meet later this month. However, gains remain capped as the eight core industries witnessed a slow growth of 1.8 per cent in November against the eight-month high of 6.5 per cent seen in the previous month, signaling a similar softness in the IIP data to be released later in the month.

All the sectoral indices opened higher with the Realty, Metal and Consumer Durables leading the opening gains with over 1%. Capital Goods, Bankex, Power and Auto indices were the other notable index movers in the opening trades while, there were no losers on the BSE sectoral space. The broader indices were going neck-to-neck with benchmarks while, the market breadth on the BSE was positive; there were 1,268 shares on the gaining side against 388 shares on the losing side while 68 shares remain unchanged.

The BSE Sensex opened at 19513.45; about 86 points higher compared to its previous closing of 19426.71, and has touched a high and a low of 19580.27 and 19508.93 respectively.

The index is currently trading at 19565.81, up by 139.10 points or 0.72%. There were 28 stocks advancing against 2 declines on the index.

The overall market breadth has made a positive start with 73.55% stocks advancing against 22.51% declines. The broader indices were trading in-line with benchmarks; the BSE Mid cap and Small cap indices rose 0.73% and 0.79% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 1.79%, Metal up by 1.23%, Consumer Durables up by 1.05%, Bankex up by 0.97% and Capital Goods up by 0.92%. While, there were no losers on the index.

The top gainers on the Sensex were Jindal Steel up by 1.79%, Hindalco Industries up by 1.68%, Bharti Airtel up by 1.54%, Tata Steel up by 1.42% and HDFC up by 1.04%.

On the flip side, Hero Moto Corp was down by 0.20% and Dr Reddy’s Lab was down by 0.05% 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 opened at 5,937.65; about 32 points higher compared to its previous closing of 5,905.10, and has touched a high and a low of 5,950.20 and 5,935.20 respectively.

The index is currently trading at 5,946.20, up by 41.10 points or 0.70%. There were 45 stocks advancing against 4 declines and 1 remains unchanged on the index.

The top gainers of the Nifty were Reliance Infrastructure up by 3.14%, Jindal Steel up by 1.76%, Hindalco Industries up by 1.72%, JP Associate up by 1.70% and Bharti Airtel up by 1.47%. On the flip side, BPCL down by 0.43%, Hero Moto Corp down by 0.25%, Asian Paint down by 0.08% and ACC down by 0.05%, were the only losers on the index.

All the major Asian markets remained closed for trade today on account of the New Year.