Markets continue positive trade amid volatility

Following a slightly shaky start and subsequent up move, Indian equity markets trimmed down some gains, however continued to trade positive in the late morning session on Monday. The Sensex was up by 84 points, while the Nifty added 25.75 points. Meanwhile, the monsoon session of Parliament has started today, but the proceedings are expected to be dominated by economic downslide. Many ordinances including the food security bill will come up for conversion into laws. Markets sentiments were also dampened with the report that India has moved dangerously close to slipping out of the elite 14-member global league of stock markets having a trillion-dollar valuation. In currency markets, rupee pulled back against the greenback on Monday amid dollar’s weakness against other Asian currencies and as U.S. jobs data on Friday was seen making the Federal Reserve more cautious about rolling back its economic stimulus. On sectoral front, metal, FMCG, information technology and oil sectors were trading up. Shares from capital goods and power sectors were continuing to trade weak.

On the global front, Asian markets were trading soft after data showed US employers slowing their pace of hiring in July, while the NZ dollar dropped after a food-safety scare affected exports of the country's largest company. Back home, the market breadth was favoring the negative trend; there were 940 shares on the losing side against 861 shares on the gaining side, while 101 shares remained unchanged.

The BSE Sensex is currently trading at 19,248.58 up by 84.56 points or 0.44% after trading in a range of 19,306.51 and 19,141.68. There were 19 stocks advancing against 11 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.28%, while Small cap index gained 0.20%.

The top gaining sectoral indices on the BSE were, Metal up by 2.56%, FMCG up by 1.23% and IT up by 0.93%, while, Capital Goods down by 3.09%, Power down by 1.61%, Auto down by 0.68% and Consumer Durable down by 0.66%were the top losers indices on the BSE.

The top gainers on the Sensex were Coal India up by 5.54%, Jindal Steel up by 3.26%, Sterlite Inds up by 2.77% and NTPC up by 2.12%. On the flip side, BHEL down by 15.86%, Tata Motors down by 2.91%, L&T down by 1.85% and Cipla down by 1.76% were the top losers on the Sensex.

Meanwhile, in a bid to meet public sector banks’ (PSBs) global capital requirement norms, Basel III, the Finance Ministry is likely to finalise Rs 14,000-crore capital allocation to the banks by the end of this month. In this regard, the government has received capital requirement proposals from all public sector banks and is evaluating their proposals at the moment. The fund allocation will be done to individual banks by issue of preferential shares, which will increase the Government’s holding in the banks.

All public sector banks, at present, are meeting Basel III requirements for capitalization, though four of them -- Indian Overseas Bank, IDBI Bank, Bank of Maharashtra and Dena Bank -- have Tier-1 capital below 8% and government will take required measures to ensure that these banks retain the same by the end of the current fiscal year. Meanwhile, other lenders like Punjab National Bank and Canara Bank have made a request of Rs 1,500 crore and Rs 1,000 crore of capital infusion by the government during the current fiscal, respectively.

Finance Minister P Chidambaram, in its Budget speech, had said that the government will provide Rs 12,517 crore as additional capital into 13 public sector banks before March 2013 and also proposed to provide a further amount of Rs 14,000 crore for capital infusion in 2013-14. The government had infused about Rs 20,117 crore in public sector banks during 2010-11, and Rs 12,000 crore in 2011-12.

Execution of Basel III capital regulations foresee improving requirement of core equity capital by banks due to higher capital ratios. The Basel III capital ratios are expected to be fully phased in as on March 31, 2018.

The CNX Nifty is currently trading at 5,703.65 up by 27.75 points or 0.45% after trading in a range of 5,721.00 and 5,661.50. There were 34 stocks advancing against 16 declines on the index.

The top gainers of the Nifty were Coal India up by 5.99%, Ranbaxy up by 4.08%, Jindal Steel up by 3.72%, Sesa Goa up by 3.67% and JP Associate up by 2.69%. On the flip side, BHEL down by 15.78%, Asian paints down by 3.08%, BPCl down by 2.67%, Tata Motors down by 2.62% and Grasim down by 2.09% were the major losers on the index.

The Asian equity indices were trading mixed; Shanghai Composite up by 0.50%, Hang Seng up by 0.16%, Jakarta Composite up by 0.36%, Taiwan Weighted was up by 0.48%, KLSE Composite up by 0.18%. While, Straits Times down by 0.68% to 3232.01 and Nikkei 225 was down by 1.44%.