Post session - Quick review

Local political drama amidst Cyprus jitters, yet again sapped investors’ appetite for risk assets that led to another downbeat session of trade at D-Street. There was no respite to the markets throughout the session. Investors across the globe were jolted by the Cypriot parliament's decision to reject European bailout proposal, which stoked fresh concerns on the euro-zone debt crisis. Markets were jeopardize after Cyprus's parliament overwhelmingly rejected a proposed tax on bank deposits as a condition for bailout aid, pushing the Mediterranean island a step closer to the brink of financial meltdown. Nevertheless, sentiments at D-street took a hit for the worst after DMK Ministers M.K. Alagiri, S.S. Palanimanickam, S. Gandhiselvan, S. Jagatrakshakan and D Napolean, submitted their resignation letters to Prime Minister Manmohan Singh, a move that makes the government vulnerable despite its assertions of being in majority. Finance Minister P. Chidambaram though tried to soothe market sentiment, saying the government's reforms agenda was not under threat following the DMK's decision, which could be apparently sensed with the passage of Food Security Bill. However, the anxiety of investors prompted them to book losses. Additionally, lingering concerns over RBI’s hawkish guidance in Mid-quarterly policy review too had its own share of impact on Indian equity markets. Thus, clocking fourth consecutive session of loss, benchmark 30 share index, Sensex, dropped over century of points, to conclude below the crucial 19k level. Likewise, 50 share index, Nifty, too declining over 50 points, finished below the 5700 mark. Heavy selling in broader indices too depressed investors sentiment further, both Midcap and Smallcap indices witnessed a nasty laceration of over 1.75%.

On the global front, European shares showcasing an exceptional trend, snapped a three-day losing streak on Wednesday, as investors bought back battered stocks, betting that the Cypriot debt crisis would eventually be resolved. According to the traders, limited size of Cyprus's cash requirements meant it was likely a compromise with international lenders would be found, although they cautioned that equity markets would probably remain volatile.

Closer home, with the political turmoil giving rise to apprehensions about the future course of economic measures in the country, investors mostly sold stocks they held. However, in the downbeat session of trade, Fast Moving Consumer Goods, Information Technology, Auto counters turned out to be the top performers, while, Realty, Power and Public Sector Undertaking counters emerged the laggards. Meanwhile, sugar stocks ended lower for second consecutive session of trade after CCEA deferred decision on decontrol in absence of Finance Minister P Chidambaram, Defence Minister AK Antony and Health Minister Ghulam Nabi Azad. Besides, Telecom stocks too ended lower for second trading session, even as Delhi Court, in an interim relief allowed Bharti to continue with 3G intra-circle roaming facilities till the High Court’s next hearing, which is scheduled to be held on May 8, 2013.  The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 774: 2117 while 114 scrips remained unchanged. (Provisional)

The BSE Sensex lost 123.91 points or 0.65% to settle at 18884.19.The index touched a high and a low of 19028.09 and 18836.77 respectively. 11 stocks were up, while 19 stocks declined on the index. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 1.90% and 2.32% respectively. (Provisional)

On the BSE Sectoral front, FMCG up by 0.67%, IT up by 0.12%, Auto up by 0.07% and Consumer Durables up by 0.01% were the only gainers, while Realty down by 4.67%, Power down by 2.65%, PSU down by 2.37%, Bankex down by 2.10% and Capital Goods down by 2.04% were the top losers in the space. (Provisional)

The top gainers on the Sensex were Hindustan Unilever up by 3.53%, Tata Motors up by 1.51%, Cipla up by 1.47%, ITC up by 0.82% and TCS up by 0.78%, while, Bharti Airtel down by 4.18%, SBI down by 3.87%, NTPC down by 3.43%, Hindalco Industries down by 2.80% and ONGC down by 2.76% were the top losers in the index. (Provisional)

Meanwhile, giving relief to the infrastructure sector, the Reserve Bank of India (RBI) has decided to treat loans for infrastructure companies implementing public private partnership (PPP) projects as secured subjected to certain conditions. Pursuant to which, the borrowing cost for infrastructure companies implementing these projects could come down as the lenders may be considered as secured to the extent assured by the project authority.

The central bank, in its notification issued to banks, has said that most of the projects in India are user-charge based for which the Planning Commission has published Model Concession Agreements (MCAs). The PPP projects have been adopted by various Ministries and State Governments and thus provide adequate comfort to the lenders regarding security of their debt. In view of the above features, it has been decided that in case of PPP projects, the debts due to the lenders may be considered as secured to the extent assured by the project authority in terms of the Concession Agreement. 

However, as per the existing guidelines, annuities received under Build-Operate-Transfer (BOT) model for road/highway projects, there are provisions to compensate the project sponsor if a certain level of traffic is not achieved, to be treated as tangible securities.

The government has identified the development of infrastructure a most critical prerequisite for sustaining the current growth momentum of the economy. The pace of development in the infrastructure sector lingers to a great extent on the investments made and timely execution of the projects.

Further, investment in existing and new infrastructure projects involves high risks, low returns, huge capital, high incremental capital/ output ratio, long payback periods as well as superior technology. Hence, in order to bring in adequate resources for setting up of a sound and efficient infrastructural base, the government has entered into the 'Public Private Partnership (PPP)' programme.

India VIX, a gauge for markets short term expectation of marginally lost 0.29% at 16.66 from its previous close of 16.61 on Tuesday. (Provisional)

The CNX Nifty lost 39.30 points or 0.68% to settle at 5,706.65. The index touched high and low of 5,745.30 and 5,682.30 respectively. 15 stocks advanced against 35 declining ones on the index. (Provisional)

The top gainers on the Nifty were Hindustan Unilever up by 3.58%, Asian Paints up by 2.19%, Cipla up by 1.86%, Tata Motors up by 1.65% and Grasim was up by 1.26%. On the other hand, Reliance Infrastructure down by 8.91%, DLF down by 3.88%, SBI down by 3.85%, JP Associate down by 3.85% and IDFC down by 3.73% were the top losers. (Provisional)

All European markets were trading in green with, Germany’s DAX up by 0.53%, the United Kingdom’s FTSE 100 up by 0.14% and France’s CAC 40 up by 0.71%.

Asian markets ended mixed on Wednesday following Cypriot lawmakers comprehensively rejecting the plan of tax savings as part of a crucial bailout deal. However, investors were cautious amid worries over the euro-zone financial system. Mainland China’s Shanghai Composite went home with green mark on strong performance of banks and developers.

Japanese markets were shut for a public holiday on Wednesday.