Post session - Quick review

Indian markets went through a huge round of volatility on the very first day of the February F&O expiry week, while on the one hand there was cautiousness in the markets ahead of the rail and union budget, some panic emerged among traders after margin call was triggered in few mid cap stocks by some big investors. Though, the global cues were sanguine but traders looked concerned about the local developments, overlooking all the enthusiasm of the guidelines for the New banking licences.

On the global front, the majority of the Asian markets ended in the green, though the flash report of China’s manufacturing expanding at the slowest pace in four months casted shadow of economic weakness in the region. However, the European markets made an all green start on speculation that Bank of Japan’s new Governor will go for aggressive stimulus policy. Though, the support of this was limited for the domestic markets.

The local markets could not capitalize the trigger of RBI releasing final guidelines for issuing new bank licences to make way for corporate houses to enter the banking sector. RBI has not excluded companies or entities from any specific industry from applying for a new bank licence. Companies with a 10-year track record and “sound credentials” can apply by July 1. Foreign ownership will be capped at 49 percent for the first five years, and the lenders are required to set up one-in-four of their branches in villages with less than 10,000 people. All the probable aspirants for banking licences looked in an upbeat mood from the very beginning, Aditya Birla Nuvo gained 1%, L&T Finance was up by 5% and PSU PFC too gained about half a percent. But the dampener for the markets came in the form of sharp selling in the broader indices on panic selling, to name a few Core Education lost about 60%, Eros International was down by over 6%, Welspun Corp lost about 20%. Railways related stocks showed a mixed trend a day ahead of the rail budget, while Kalindee Rail Nirman lost over 3%, Texmaco Rail was up by over 3%. On the sectoral front IT stocks surged, supported by the initial weakness in rupee, while realty remained the top laggard of the day.

The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 886:1061 while 997 scrips remained unchanged. (Provisional)

The BSE Sensex gained 14.68 points or 0.08% and settled at 19331.69. The index touched a high and a low of 19411.18 and 19237.98 respectively. 15 stocks were up, while 14 stocks declined and one stock remained unchanged on the index (Provisional)

The BSE Mid cap and Small cap indices declined by 1.20% and 1.36% respectively. (Provisional)

On the BSE Sectoral front, IT was up by 1.86%, TECk up by 1.28%, Auto up by 0.78% and Health Care up by 0.02% were the top gainers, while Realty down by 2.39%, Capital Goods down by 1.68%, Metal down by 1.08% , Oil & Gas down by 1.05%  and PSU down by 1.04%, were the losers in the space.

The top gainers on the Sensex were Infosys up by 2.84%, Tata Motors up by 2.06%, Hero MotoCorp up by 1.42%, BHEL up by 1.29% and TCS up by 1.16%. On the flip side, Cipla down by 2.60%, L&T down by 2.30%, ONGC down by 2.04%, Coal India down by 1.99% and RIL down by 1.01% were the top losers on the Sensex. (Provisional)

Meanwhile, setting the stage for corporate giants to enter the highly regulated banking space as the Reserve Bank of India (RBI) on February 22 floated the much awaited guidelines for issuing new bank licences. Accommodating the Government’s viewpoint, the central bank reversed the stand it had taken in the draft guidelines of not allowing broking and real-estate companies in the banking space.

The RBI unveiled that Entities / groups in the private sector, public sector and Non-Banking Financial Companies (NBFCs) shall be eligible to set up a bank through a wholly-owned Non-Operative Financial Holding Company (NOFHC).

As per the final guidelines, the minimum capital requirement for opening a bank was set at Rs 500 crore, while the foreign shareholding was capped at 49%.It also specified that entities applying for the new bank licences should have past records of 'sound credentials and integrity, be financially sound with a successful track record of 10 years. For this purpose, the banking regulator may seek feedback from other regulators and enforcement and investigative agencies.  Further, the new lenders would be required to open at least 25 percent of their branches in unbanked rural centres, whose population is less than 10,000.

Thus, interested firms are expected to apply for the new bank licences to the central bank till July 1, 2013. At the first stage, the applications will be screened by the Reserve Bank India. Thereafter, the applications will be referred to a High Level Advisory Committee, the constitution of which will be announced shortly.

India VIX, a gauge for markets short term expectation of marginally lost 0.35% at 16.73 from its previous close of 16.67 on Friday. (Provisional)

The S&P CNX Nifty gained 0.45 points or 0.01% to settle at 5,850.75. The index touched high and low of 5,878.40 and 5,825.00 respectively. 24 stocks advanced against 26 declining on the index. (Provisional)

The top gainers on the Nifty were Ranbaxy was up by 4.94%, Power Grid was up by 3.10%, Infosys was up by 2.79%, Tata Motors was up by 2.19% and BHEL was up by 1.84%. On the other hand, DLF down by 3.39%, JP Associate down by 3.20%, CIPLA down by 2.97%, L&T down by 2.46% and ONGC down by 2.15% were the top losers. (Provisional)

The European markets were trading in green, France’s CAC 40 up by 0.77%, Germany’s DAX up by 1.39% and the United Kingdom’s FTSE 100 down by 1.28%.

Asian markets ended mostly higher on Monday, as investors were busy picking up shares, beaten-up in the last week’s steep plunge. Japan’s Nikkei went home with green mark after a descent rally, on expectations for aggressive easy monetary policy. Yen, which traded near three-year low against the dollar, also supported Japanese stocks to hold gains. Chinese stock too closed marginally higher despite HSBC flash purchasing managers' index (PMI) for February slipped to a four-month low of 50.4 from January's final reading of 52.3, which had been the best performance since January 2011. South Korean stocks bucked the trend and ended lower, on news that an advocate of aggressive monetary easing was poised to head the Bank of Japan pressured Korean carmakers.