Benchmarks trade in positive territory in early deals on Wednesday

Indian equity benchmarks, after witnessing a fall of over half a percent in previous session, have resumed their northward journey on Wednesday’s morning session. Both the frontline gauges re-conquered their crucial 6,050 (Nifty) and 20,000 (Sensex) levels on the back of buying in rate-sensitive sectors ahead of the Reserve Bank of India monetary policy next week amid uncertainty over the quantum of interest rate cut by the central bank. Stocks related to banking counters also remained on the buyers’ radar after a Reserve Bank of India panel suggested that banks could issue 30-year fixed rate home loans under the priority sector category (sub-Rs 25 lakh) to make loans more affordable. However, gains remain capped as stocks from PSU sector witnessed selling pressure despite report that Finance Minister P Chidambaram said that disinvestment target for FY’14 will not be less than Rs 30,000 crore.

Globally, the US markets continued their bull run after a long weekend with Standard & Poor’s 500 climbing to a fresh five-year closing high overnight. There was sign that Republican leaders in the US House of Representatives aim on Wednesday to pass a nearly four-month extension of the US debt limit. However, most of the Asian equity indices were trading in the red led by Japanese benchmark Nikkei average which tumbled by over a percent as the yen jumped following the Bank of Japan’s (BOJ) decision to further ease policy. The BOJ doubled its inflation target to 2 percent and adopted an open-ended commitment to buy assets starting 2014.

Back home, realty witnessed the maximum gain in trade followed by consumer durables and realty while, fast moving consumer goods, auto and public sector undertaking remained the top 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 1,038 shares on the gaining side against 664 shares on the losing side while 98 shares remain unchanged.

The BSE Sensex opened at 19,997.04; about 15 points higher as compared to its previous closing of 19981.57, and has touched a high and a low of 20,055.07 and 19,991.88 respectively.

The index is currently trading at 20,024.91, up by 43.34 points or 0.22%. There were 24 stocks advancing against 6 declines on the index.

The overall market breadth has made a positive start with 58.39% stocks advancing against 36.54% declines. The BSE Mid cap and Small cap indices rose 0.25% and 0.30% respectively.

The top gaining sectoral indices on the BSE were Realty up by 0.82%, Consumer Durables up by 0.70%, Capital Goods up by 0.67%, Metal up by 0.45% and Bankex up by 0.39%. While, FMCG down by 0.27%, Auto down by 0.11% and PSU down by 0.08% were the only losers on the index.

The top gainers on the Sensex were HDFC up by 1.13%, Mahindra & Mahindra up by 1.05%, L&T up by 1.01%, HDFC Bank up by 0.99% and Hindalco Industries up by 0.92%.

On the flip side, Hindustan Unilever was down by 4.32%, NTPC was down by 1.25%, Tata Motors was down by 1.05%, ONGC was down by 0.79% and Bajaj Auto was down by 0.68% 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 opened at 6,052.85; about 4 points higher as compared to its previous closing of 6,048.50 and has touched a high and a low of 6,069.80 and 6,050.95 respectively. The index is currently trading at 6,060.35, up by 11.85 points or 0.20%. There were 26 stocks advancing against 14 declines on the index.

The top gainers of the Nifty were HDFC up by 1.11%, UltraTech Cement up by 1.08%, Mahindra & Mahindra up by 1.05%, HDFC Bank up by 1.03% and Larsen & Toubro up by 1.02%.

On the flip side, Hindustan Unilever down by 4.60%, NTPC down by 1.28%, Tata Motors down by 1.21%, IDFC down by 0.91% and HCL Tech down by 0.90%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite declined 10.04 points or 0.43% to 2,305.10, Hang Seng slipped 52.54 points or 0.22% to 23,606.45, Jakarta Composite dipped marginally by 1.81 points or 0.04% to 4,414.73, Nikkei 225 tumbled 111.53 points or 1.04% to 10,598.40, KOSPI Composite dropped 2.64 points or 0.13% to 1,993.88 and Taiwan Weighted was down by 13.43 points or 0.17% to 7,745.67.

On the flip side, KLSE Composite rose 6.18 points or 0.38% to 1,634.84 and Straits Times was up by 9.90 points or 0.31% to 3,229.76.