Benchmarks facing resistance at higher level retreat; Nifty off 6100 level

After early fall and subsequent rise, benchmark equity indices paring substantial gains have managed to hold their fort in green. Though buying in Banking, Oil & Gas and Power stocks, are supporting the uptrend of barometer gauges, selling pressure from Information Technology, Consumer Durable and Realty stocks is capping the up move of the bourses. Appreciation of Indian currency on government’s stunt of increasing gold import tax by 2% points to 6%, is mainly weighing heavily on IT pivotal, given these firms derive lion chunk of their revenue from exports. Meanwhile, mixed trend of regional counterparts, is also adding to the caution at D-street ahead of FMCG major HUL’s earning.

Barometer 30 and 50 share index, Sensex and Nifty, facing stiffed resistance near 20100 and 6100 levels, are now holding their fort above 20,000 and 6000 respective levels. Additionally, broader indices too witnessing profit-booking, have started paring gains.

On the global front, Asian shares were trading mixed amid optimism over the global growth outlook, as bold easing measures from the Bank of Japan failed to lift Tokyo equities and the yen rebounded from a brief sell-off as investors digested the central bank's actions.  The spotlight in Asia fell on the BOJ, which on Tuesday doubled its inflation target to 2 percent and adopted an open-ended commitment to buy assets, surprising markets that had expected another incremental increase in its 101 trillion yen ($1.12 trillion) asset-buying and lending program.

Back home, the BSE Sensex is currently trading at 20114.10, up by 12.28 points or 0.06% after trading in a range of 20156.86 and 20090.22. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading in green; the BSE Mid cap and Small cap index were trading higher by 0.12% and 0.13% respectively.

 The top gaining sectoral indices on the BSE were Bankex up by 0.45%, Oil & Gas up by 0.21%, Power up by 0.08%, Health Care up by 0.04% and Metal up by 0.03%. While, IT down by 0.54%, Consumer Durables down by 0.51%, TECk down by 0.43%, Realty down by 0.18% and Auto down by 0.10% were the top losers on the index.

The top gainers on the Sensex were Sun Pharma up by 2.05%, NTPC up by 2.01%, ICICI Bank up by 1.23%, Hindustan Unilever up by 1.19% and Bajaj Auto up by 0.98%. On the flip side, Gail India down by 3.83%, Tata Motors down by 1.10%, Hindalco down by 1.02%, Tata Power down by 0.92% and Hero MotoCorp down by 0.74% were the top losers on the Sensex.

Meanwhile, citing concerns over asset quality and the high interest rates, Global ratings agency Moody's has maintained a 'negative' outlook on the country's banking system. 'In India, impaired loans are yet to peak among public sector banks,' Moody's said in its Asia-Pacific Banking Outlook. NPA rose to Rs 1.67 trillion in the quarter ended September 30, from Rs 1.13 trillion a year ago.

Further, the agency has underscored although the government is likely to remain supportive', room for the Reserve Bank  of India to act, by slashing lending rates, remains to be limited due to high inflation and the 'modest fiscal capacity.’

While a slowdown in the global economy has prompted many other central banks to support growth through monetary stimulus, the RBI has hitherto rebuffed calls for lower lending rates citing high inflation and the size of the fiscal deficit.

Meanwhile, the Moody's expect interest rates to fall during 2013, although remain higher than the rest of Asia. Highlighting that 94% of the banks it rates in Asia carry stable outlooks on their deposit ratings, Moody's said the negative outlook on specific banks mostly relate to India.

However, Moody’s in a report also stated that Indian banks are better off than those in Vietnam. The Vietnamese system is in much worse shape than India’s and there is a reasonably high probability that the government will need to step in and take measures to address the issue of high NPLs (non-performing loans), or face the negative economic consequences of a banking system that cannot support credit growth, Moody’s stated.

The S&P CNX Nifty is currently trading at 6,087.35, up by 5.05 points or 0.08% after trading in a range of 6,101.30 and 6,078.80. There were 26 stocks advancing against 24 declines on the index.

The top gainers of the Nifty were Asian Paint up by 3.08%, ACC up by 2.30%, NTPC up by 2.17%, Sun Pharma up by 1.99% and Axis Bank up by 0.98%.

On the flip side, Gail India down by 3.87%, HCL Tech down by 1.66%, BPCL down by 1.34%, Tata Motors down by 1.19% and Hindalco Industries down by 1.14% were the major losers on the index.

Asian equity indices were trading mixed; Hang Seng jumped 0.16%, KOSPI Composite added 0.49%, Straits Times was up by 0.04% and Taiwan Weighted was up by 0.44%.

On the flip side, Shanghai Composite down by 0.76%, Jakarta Composite declined 0.57%, KLSE Composite dropped 0.77% and Nikkei 225 declined 0.35%.