Benchmarks pare losses; slew of upbeat earnings aid

Benchmark equity indices, gaining some traction, have pared some of their losses on account of sustained buying activities in rate sensitive’s Realty, Bankex and counter’s, which gaining stream, are restricting the downside chances of bourses. However, the underlying tone at D-street remains downbeat after country’s FY12 GDP growth was revised to 6.2 percent from 6.5 percent. Meanwhile, the government has also pegged FY12 gross domestic savings at 30.8 percent, down from 34 percent earlier.  Much of the drubbing belongs to stocks from Metal, Oil & Gas and Information Technology (IT) counters, which languishing at the bottom, are adding to the negative milieu amidst already pessimistic global set-up.

Thus, on the final F&O expiry session, 30 share barometer index, Sensex, on BSE declining close to 50 points was trading below its psychological 20,000 bastion. However, 50 share index, oscillating close to its neutral line, was trading above its 6050 bastion. Broader indices managed to hold their fort in green terrain.

On the global front, Asian markets trading lower are in the way of marking a downbeat end to what has otherwise been a very strong January for regional stocks. Investor’s started booking profit after much weaker than expected GDP figures from the United States, re-stoke recessionary fears. Gross domestic product fell at a 0.1 per cent annual rate, its weakest performance since the economy emerged from recession in 2009.

Back home, slew of upbeat earnings have also aided the sentiment to some extent. Markets were thrilled after India's second largest public sector lender Punjab National Bank (PNB) reported a forecast beating nearly 14% year-on-year rise in its third quarter net profit at Rs 1,306 crore, aided by lower provisions against bad loans, which in turn sent the stocks higher over 5%. Additionally, State-controlled lender Union Bank of India surprised the street by reporting net profit growth of 37.7 percent year-on-year to Rs 302.4 crore in the third quarter of financial year 2012-13, led by lower non-performing assets. The overall market breadth on BSE is in the favour of declines which have outnumbered advances in the ratio of 1242:1180, while 161 shares remained unchanged.

The BSE Sensex is currently trading at 19960.16, down by 44.84 points or 0.22% after trading in a range of 20008.83 and 19938.94. There were 13 stocks advancing against 17 declines on the index.

The broader indices managed to hold their fort in green; the BSE Mid cap and Small cap index were trading up by 0.25% and 0.02% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 1.02%, PSU up by 0.76%, Bankex up by 0.48%, Consumer Durables up by 0.30% and Auto up by 0.13%, while, Metal down by 0.45%, Oil & Gas down by 0.31%, IT down by 0.28%, Capital Goods down by 0.16% and TECK down by 0.07% were the top losers on the index.

The top gainers on the Sensex were BHEL up by 2.16%, Bajaj Auto up by 1.25%, ONGC up by 0.72%, Coal India up by 0.50% and ITC up by 0.49%.

On the flip side, Tata Power down by 2.42%, Sterlite Industries down by 1.96%, Reliance down by 1.30%, Wipro down by 1.11% and L&T down by 0.99% were the top losers on the Sensex.

Meanwhile, the government, in order to implement the joint lending mechanism at the earliest, reportedly has decided to drop controversial clause of treating a borrower's accounts with all banks as non-performing if the accountholder defaults on payment to one bank. According to the proposal, in case a loan becomes non-performing for one bank, all the member banks of the consortium would classify the loan as a non-performing asset (NPA).

The banks will now follow the existing regulatory prescription of RBI in the case. As per the Reserve Bank's guidelines, if a borrower's account turns non-performing with one bank, it does not affect the status of the borrower's accounts with other lenders.

Under joint lending agreement (JLA), state-run banks will lend in a consortium to borrowers seeking credit over Rs 150 crore by way of a term loan, working capital and non-fund-based facilities. However, it will be mandatory for banks to bring all exposures of a borrower under the JLA within six months of its implementation.

The government hopes that this arrangement, designed to insulate state-run banks from sticky loans, will stop borrowers from seeking multiple loans from different banks against inadequate collaterals. 

The S&P CNX Nifty is currently trading at 6,051.85, down by 3.90 points or 0.06% after trading in a range of 6,058.05 and 6,042.30. There were 25 stocks advancing against 24 declines on the index and one remained unchanged.

The top gainers of the Nifty were PNB up by 7.12%, BHEL up by 2.62%, Bank of Baroda up by 2.37%, DLF up by 1.93% and Asian Paints up by 1.88%.

On the flip side, Tata Power down by 2.37%, Sesa Goa down by 2.01%, Ranbaxy down by 1.41%, Reliance Industries down by 1.27% and Wipro down by 1.18% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng lost 0.37%, Jakarta Composite declined 0.34%, KLSE Composite slipped 0.09%, Straits Times dipped 0.01%, KOSPI Composite decreased 0.13% while Shanghai Composite was trading flat with negative bias

On the other hand Taiwan Weighted was up by 0.22%, Nikkei 225 up by 0.22%.