Benchmarks off lows; mood remains downbeat

Recovering from day’s low, benchmarks have pared some losses, however, the overall mood continues to remain downbeat at D-street after three DMK Ministers, S. S. Palanimackam, S. Gandhiselvan and S. Jagatrakshakan, submitted their resignation to Prime Minister Manmohan Singh, a move that makes the government vulnerable despite its assertions of having a majority. Finance Minister released a statement claiming that the government's reforms agenda was not under threat following the DMK's decision to pull out of the UPA coalition, which could be apparently sensed with the passage of Food Security Bill.

Trimming some losses, Sensex is nearing the 18950 level with Nifty too re-gaining the 5700 bastion. Meanwhile, broader indices were facing heavy sell-off, with cut of over a percent and half. On the global front, Asian markets were trading mixed in a cautious trade on Wednesday as concerns over developments in Europe continued to weigh on sentiment.

Closer home, defensive Fast Moving Consumer Goods (FMCG) and Health Care (HC) counters, were the only exceptions, while stocks from Realty, Power and Capital Goods counters witnessed maximum pounding. Meanwhile, stocks of sugar companies were sulking in red for the second consecutive session after the Cabinet Committee on Economic Affairs (CCEA) deferred the sugar decontrol proposal yesterday in absence of Finance Minister P Chidambaram, Defence Minister AK Antony and Health Minister Ghulam Nabi Azad. The overall market breadth on BSE is in the favour of declines which outpacing declines in the ratio of 1974:584; while 102 shares remained unchanged.

The BSE Sensex is currently trading at 18942.26, down by 65.84 points or 0.35% after trading in a range of 19,028.09 and 18871.76. There were 8 stocks advancing against 22 declines on the index.

The broader indices were trading in red; the BSE Mid cap and Small cap indices were trading lower by 1.63% and 1.73% respectively.

The top gaining sectoral indices on the BSE were FMCG up by 0.54%, Health Care up by 0.34%, while Realty down by 3.65%, Power down by 1.68%, Capital Goods down by 1.66%, PSU down by 1.55% and Metal down by 1.11% were the top losers on the BSE.

The top gainers on the Sensex were Cipla up by 2.44%, Hindustan Unilever up by 2.19%, TCS up by 0.90%, Hero MotoCorp up by 0.86% and Tata Motors up by 0.80%.

On the flip side, SBI down by 2.12%, NTPC down by 2.04%, L&T down by 1.87%, BHEL down by 1.64% and ONGC down by 1.61% were the top losers on the Sensex.

Meanwhile, to recover the major portion of the non performing assets (NPAs), the finance ministry has suggested the state-runs banks to review their top 300 non-performing accounts by their board's management committee and also implement a strict recovery policy, especially in cases where defaulting companies have affluent promoters. Pursuant to which, the bank’s board will suggest measures accordingly and if there is a case for recovery, steps will be taken. Almost all state-run banks have senior finance ministry officials on their boards.

The finance ministry has also asked the banks to take the support from Lok Adalats and recovery camps to check fresh slippages and devise a strategy for their minimization. It has already directed banks to disclose their top 50 NPAs along with the details of loan sanctioning officer, the collateral furnished by the borrower, terms of the loan and how the bank covers the risk.

As of December 2012, gross nonperforming assets of public sector banks have risen from Rs 71,080 crore in March 2011 to Rs 1.55 lakh crore. Further, as many as 215 projects with investments of Rs 7 lakh crore are currently stalled, and banks have disbursed about Rs 54,000-crore loans towards these projects. Moreover, stalled projects, mainly due to coal linkage, environment clearances and land acquisition problems in sectors like power, coal, iron, steel and road transport have further added to the problem of bad loans.

The CNX Nifty is currently trading at 5,715.25, down by 30.70 points or 0.53% after trading in a range of 5,745.30 and 5,692.75. There were 14 stocks advancing against 36 declines on the index.

The top gainers of the Nifty were Cipla up by 2.46%, Hindustan Unilever up by 2.26%, Lupin up by 1.65%, Asian Paints up by 1.16% and Tata Motors up by 0.92%.

On the flip side, Reliance Infra down by 5.81%, JP Associates down by 4.83%, ACC down by 2.96%, DLF down by 2.61% and PNB down by 2.60% were the major losers on the index.

Most of the Asian equity indices were trading in red; Jakarta Composite declined 0.20%, Straits Times slipped 0.27%, KOSPI Composite declined 0.97% and Taiwan Weighted was down by 0.52%.

On the flip side, Shanghai Composite soared 2.56%, Hang Seng rose 0.83% and KLSE Composite was up by 0.18%.  Japanese Nikkei remained shut for the trade today.