Post session - Quick review

Recovery, which emerged in the last hour of the trade, mainly negotiated positive close for Indian equity markets, which after taking a breather in last trading session, resumed their northbound journey. Otherwise, investor’s cautiousness ahead of earning season, which is expected to kick start later this week and negative global cues dominated the sentiment for almost entire trading session at D-Street. Nevertheless, statement from country’s Prime Minister, Manmohan Singh, of government being determined to turn setbacks to opportunity, soothing some worrisome nerves, bargained some gains for benchmark equity indices in otherwise drudgery session of trade in Indian equity markets.

Further, Finance Minister’s statement of economy moving in the right track to restrict fiscal deficit of 5.3% of the GDP in 2012-13, also buttressed the sentiment at D-street. The government has taken a number of steps to restrict the fiscal deficit to 5.3 per cent of the GDP during the financial year, he said, the process would continue in the subsequent years as well.

Thus, after clocking first negative session of trade in New Calendar Year (2013) in the previous trading session, 30 share barometer index, Sensex, clinching over quarter points, concluded above the 19700 level. Similarly, 50 share index, Nifty, too accumulating decent gains, finished above mental 6000 bastion. However, broader indices staged mixed trend.

On the global front, Asian pacific shares ended down in dumps on Tuesday as investors locked in profits after strong recent gains and on caution ahead of the U.S. earnings season, with markets also watching political developments to resolve the debt ceiling issue. Meanwhile, European shares too were trading mixed after an unexpected slump in German exports set a negative tone ahead of other data that will fill out the picture of the region's economic health. The latest German trade report was disappointing, as much steeper-than-expected 3.4 percent month on month decline in exports in November, following a 0.3 percent rise previously, was reported.

Closer home, recuperation in rate sensitive Realty and Bankex counters, along with spurt of defensive’s FMCG and Health Care space, mainly pumped some strength into Indian equity markets. Banking shares also managed to stage some recovery on hopes of eased liquidity rules under BASEL III norms after Reserve Bank of India (RBI) on December 7 hinted at allowing part of the statutory liquidity ratio (SLR) holdings of banks to be treated as liquid assets under the Basel-III guidelines, which will come into effect next fiscal. Additionally, Realty counters also staged good move, with Indiabulls Real Estate, Unitech stocks notching over 3-6% gains.

On the flip side, stocks from Consumer Durables, Metal and Capital Goods, topping the loser’s list, restricted the upside chances of barometer gauges. Metal stocks declined as LMEX, a gauge of six metals traded on the London Metal Exchange, dropped 0.35% on Monday, 7 January 2013. SAIL, JSW Steel, Jindal Steel & Power, Tata Steel, Hindalco Industries, Hindustan Zinc and Sterlite Industries shed by 0.50-2.50%. Meanwhile, Sugar stocks almost ended in green after reports suggested of government likely raising the levy price of sugar - the rate at which it buys the sweetener from mills to sell through ration shops - by over Rs 2 to about Rs 22 per kg for the current year. Moreover, shares of telecom services provider like Idea Cellular, Reliance Communication and Bharti Airtel gained traction ever after the Empowered Group of Ministers (EGoM) on telecom decided to slash the reserve price for CDMA spectrum by 30-50 percent. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1456:1464 while 150 scrips remained unchanged. (Provisional)

The BSE Sensex gained 55.06 points or 0.28% and settled at 19746.48. The index touched a high and a low of 19761.78 and 19632.59 respectively. 16 stocks were seen advancing while 14 stocks were declining on the index (Provisional)

The BSE Mid-cap index was up by 0.07% while Small-cap index was down by 0.34%. (Provisional)

 On the BSE Sectoral front, Realty was up by 1.28%, FMCG up by 0.95%, Power up by 0.75%, Health Care up by 0.73% and PSU up by 0.25% were the top gainers, while Consumer Durables down by 2.00%, Metal down by 0.96%, Capital Goods down by 0.75%, IT down by 0.51% and Oil & Gas down by 0.31% were the top losers in the space.

The top gainers on the Sensex were HDFC up by 2.20%, ITC up by 2.18%, Cipla up by 1.58%, Bharti Airtel up by 1.44% and BHEL up 1.42%, while, Tata Steel down by 1.55%, Wipro down by 1.46%, L&T down by 1.45%,  Infosys down by 1.41% and Hero Moto Corp down by 1.15% were the top losers in the index. (Provisional)

Meanwhile, following the Basel committee of banking supervision easing implementation of liquidity coverage ratio, the Reserve Bank of India (RBI) on Dec 7 hinted at allowing part of the statutory liquidity ratio (SLR) holdings of banks to be treated as liquid assets under the Basel-III guidelines, which will come into effect next fiscal.

If one looks at SLR, it is supposed to be maintained continuously. Therefore, question arises whether the banks add some more liquidity on top of SLR, which will be definitely not good for them. Hence, RBI is looking at carving out SLR so that a part of it can become usable, RBI Deputy Governor Anand Sinha reported on the sidelines of an event. However, Sinha did not reveal any details on how much of the SLR holdings could be converted.

In India, banks are mandated to keep 23 per cent of their net time and demand liabilities in government securities. However, statutory liquidity ratio (SLR) does not meet the Basel requirement for liquidity coverage ratio as the assets held by banks are not unencumbered and not liquid.

The Basel-III guideline, which aims to make banks more resilient against any unexpected economic crisis, seeks a higher liquidity coverage ratio that requires banks to hold marketable high quality liquid assets. As a matter of concern, ICRA in its report has stated that banks will need Rs 3.9-5 trillion capital over the next six years, out of which common equity requirements will be Rs 1.3-2 trillion; Rs 1.9 trillion for additional tier I; and Rs 1 trillion for tier II.

Of lately, providing additional time to some banks that need to enhance their capital base, 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.  India VIX, a gauge for markets short term expectation of volatility lost 4.66% at 13.27 from its previous close of 13.92 on Tuesday. (Provisional)

The S&P CNX Nifty gained 14.45 points or 0.24% to settle at 6,002.85. The index touched high and low of 6,007.05 and 5,964.40 respectively. 24 stocks advanced against 26 declining on the index. (Provisional)

The top gainers on the Nifty were Reliance Infrastructure was up by 2.71%, HDFC was up by 2.45%, ITC was up by 2.13%, BHEL was up by 2.09% and Power Grid was up by 1.66%. On the other hand, IDFC down by 1.90%, Wipro down by 1.84%, Tata Steel down by 1.75%, Sesa Goa down by 1.51% and L&T down by 1.46% were the top losers. (Provisional)

Most of European markets were trading in green, France’s CAC 40 up by 0.31% and the United Kingdom’s FTSE 100 up by 0.46%. On the other hand, Germany’s DAX down by 0.12% was the sole loser in space.

Asian markets mostly ended lower on Tuesday as investors traded cautiously ahead of the U.S. earnings season and the European Central Bank's policy meeting due later in the week. Japan’s Nikkei went home with red mark as a stronger yen pressurized Japanese exporters. Hong Kong’s market closed with losses weighted down by profit-taking in energy, insurance and property sectors after recent rallies. Chinese market ended lower before several batches of data due over the coming week, while Seoul's Kospi was dragged by heavyweight Samsung Electronics.