Benchmarks pare gains; Banking pivotal drags

Benchmarks are trading choppy as gains in Information Technology, Metals and Consumer Durables were offset by losses in banking counter which was under pressure following online portal Cobrapost's sting operation which alleged 23 public and private sector banks involved in money laundering. According to the expose, banks like State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, Federal Bank, Development Credit Bank, Indian Overseas Bank, Yes Bank and Corporation Bank are involved in money laundering. Paring part of their gains, benchmark 30-share index, Sensex, is currently trading above 19,600 level, while Nifty, too is holding above 5,950 level, with gains of over 0.15%. Meanwhile, broader indices, outperforming the frontline equity indices, were trading up with gains of over half a percent.

Sentiment took a small hit after somewhat negative opening of European counterparts. European stock markets opened mostly lower on Monday, with a holiday in London and a lack of data or major earnings news keeping momentum subdued. Meanwhile, Asian pacific shares rose as investors cheered upbeat US jobs data, which added optimism about the US economic outlook.

Closer home, besides Bankex, stocks from Fast Moving Consumer Goods, Realty and Capital Goods were the weak spells of trade. Additionally, sentiments to some extent were deterred with murky macro-economic report. A business survey showed Indian services growth easing dramatically during April with new orders coming in at a much slower pace, thereby prompting firms to rein in hiring plans. The HSBC Services Purchasing Managers' Index, based on a survey of around 400 companies, fell to 50.7 last month, its lowest since October 2011 and the weakest reading in the current expansion cycle. The overall market breadth on BSE is in favour of advances, which have thumped declines in the ratio of 1129:899; while 113 shares remain unchanged.

The BSE Sensex is currently trading at 19,620.12, up by 44.48 points or 0.23% after trading in a range of 19,694.29 and 19,554.31. There were 20 stocks advancing against 10 declines on the index.

The broader indices were trading in green; the BSE Mid cap and Small cap index were up by 0.61% and 0.74% respectively.

The top gaining sectoral indices on the BSE were, IT up by 1.57%, Metal up by 1.55%, TECk up by 1.24%, Consumer Durables up by 1.21% and Auto up by 1.07% while, Bankex down by 0.78%,  FMCG down by 0.69%, PSU down by 0.34%, Realty down by 0.26% were the losers on the BSE.

The top gainers on the Sensex were Hindalco Industries up by 2.91%, Tata Steel up by 2.81%, TCS up by 2.63%, Reliance Industries up by 2.22% and Hero MotoCorp up by 1.78%.

On the flip side, HDFC Bank down by 1.52%, ONGC down by 1.37%, ITC down by 1.21%, NTPC down by 1.19% and HDFC down by 0.64% were the top losers on the Sensex.

Meanwhile, opposing the government’s decision for a sovereign bond issue in the international market to fund a widening current account deficit (CAD), the Chief Economic Advisor Raghuram Rajan said that there is no reason to consider issuing a sovereign bond in global markets to fund India's bulging CAD. Given that our focus is on easing access to Indian sovereign rupee markets and increasing liquidity and raising depth, domestic bond markets is the safer way to finance than to go outside and issue a bond.

However, as per Rajan, over the long term, these dynamics could change. Earlier, according to some finance ministry officials, sovereign bonds could address the financing problems of CAD and the infrastructure sector. CAD for the October-December 2012 period, swelled to 6.7% of gross domestic product. However, it is expected to be lower in the January-March quarter, aided by a surge in exports.

Meanwhile, the government had first issued quasi-sovereign debt bonds through State Bank of India in 1991, when the country was facing a balance of payments crisis. Further, bonds were again issued in 1998, when the country faced sanctions from the US and in 2000, to support the foreign exchange reserves.

The CNX Nifty is currently trading at 5,955.10, up by 11.10 points or 0.19% after trading in a range of 5,976.50 and 5,928.45. There were 29 stocks advancing against 20 declines on the index, while 1 stock remains unchanged.

The top gainers of the Nifty were Asian Paints up by 3.44%, Hindalco Industries up by 2.96%, Tata Steel up by 2.89%, TCS up by 2.70% and Reliance up by 2.39%.

On the flip side, Kotak Bank down by 1.82%, Ambuja Cement down by 1.64%, HDFC Bank down by 1.46%, NTPC down by 1.22% and ONGC down by 1.17% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 1.23%, Hang Seng surged 1.03%, Jakarta Composite soared 1.08%, KLSE Composite zoomed 3.34%, and Taiwan Weighted was up by 0.42%.  On the flip side, Straits Times and KOSPI Composite were down by 0.22%.

Japanese market is shut for the trade today on account of Children’s Day.

European shares got off to negative start with market in London being shut for trade on account of holiday. CAC 40 declined by 0.15% and DAX slid by 0.11%.