Post Session: Quick Review

Markets tumbled after RBI’s new governor, Raghuram Rajan, wrong-footed the markets, by hiking the benchmark lending rate (repo rate) by 25 basis points to 7.50%, sending the rate sensitive stocks into tailspin, which in turn led to complete obliteration at Dalal Street. Although, RBI’s new governor in an expected move, reduced the marginal standing facility (MSF) rate by 75 basis points from 10.25% to 9.5% and slashed the minimum daily maintenance of the cash reserve ratio (CRR) from 99% of the requirement to 95% effective from the fortnight beginning September 21, 2013, it fell short of what was expected by market-participants. As the trade progressed losses were cut with the new governor stressing that the growth will not be impacted with the 25 basis point hike in the repo rate due to the number of reforms taken up in the recent past.

By the close of trade, Sensex and Nifty, erasing half of previous trading session gains, settled with a cut of  over one and half a percent, past the 20,300 and 6,000 bastions respectively. Meanwhile, broader indices too witnessing the sharp brunt of profit-booking, ended with cut of close to a percent. Nevertheless, for the week, Sensex and Nifty both rallied close to 3%. In the broader space, while CNX Midcap index joined the party by scaling gains of over a percent, BSE Smallcap index ended lower with loss of over quarter of a percent.

On the global front, both Asian and European shares, paused for breath after previous sessions’ breath-taking rally, as investors pondered what policy the US Federal Reserve will pursue after it triggered a global market rally by leaving its stimulus level unchanged.

Closer home, investors mood were further dampened on RBI’s forecast of WPI inflation turning higher than initially projected over the rest of the year. Across the board profit booking was witnessed with rate sensitive Realty and Banking index getting whipped off over six and four percent respectively, being the top laggard followed by the Capital Good pivotal which settled with loss of close to three percent. On the flip side, only stocks from Power and Consumer Durable counters stood the test of time by eking out slender gains of over quarter of a percent. Banking shares collapsed after RBI upped repo rate by 25 bps, since an increase in the Repo rate increases the cost of borrowing and lending of the banks which in turn discourages the public to borrow money and encourages them to deposit. The market breadth on the BSE remained negative; advances and declining stocks were in a ratio of 941: 1392, while 119 scrips remained unchanged. (Provisional)

The BSE Sensex lost 360.42 points or 1.75 % to settle at 20286.22.The index touched a high and a low of 20677.99 and 20051.43 respectively. Among the 30-share Sensex pack, 9 stocks gained, while 21 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 0.70% and 0.92% respectively. (Provisional). On the BSE Sectoral front, Power up by 0.73% and Health Care up by 0.06% were the only gainers, while Realty down by 6.43%, Bankex down by 4.16%, Capital Goods down by 2.82%, Auto down by 1.32% and PSU down by 1.10% were the top losers. (Provisional)

The top gainers on the Sensex were Gail India up by 3.63%, BHEL up by 1.68%, Sun Pharma up by 1.52%, Wipro up by 0.87% and Coal India up by 0.86%, while, ICICI Bank down by 4.53%, L&T down by 4.41%, HDFC Bank down by 3.94%, Sesa Goa down by 3.91% and HDFC down by 3.79% were the top losers in the index. (Provisional)

Meanwhile, Indian banking industry's deposits increased by 14.2 percent to Rs 98.63 lakh crore in the January-March quarter, 2013. The nationalised banks accounted for the highest share of 52.4 per cent of the aggregate deposits in the total deposits during the period followed by the State Bank of India and its associates having 22 per cent share and new private sector banks represent 13.6 per cent share in deposits. Meanwhile, the share of old private sector banks, foreign banks, and regional rural banks in aggregate deposits was 5.1 percent, 4 percent and 2.9 percent, respectively. The Banking Industry had reported 13.8 percent deposits growth in the same period of previous year.

Meanwhile, the growth in credit slowed down to 15.1 per cent at Rs 55.42 lakh crore in the reported quarter from 17.3 per cent a year ago. In gross bank credit, nationalised banks accounted for the highest share at 51 percent followed by SBI and its associates having 22.7 percent share and new private sector banks consist 14 percent share. Meanwhile, old private sector banks, foreign banks and regional rural banks had relatively lower shares in the gross bank credit at 5 percent, 4.9 percent and 2.5 percent in January-March quarter respectively. Indian banking industry credit-to-deposit ratio stood at 78.1 percent in March 2013. The contraction in industry credit growth was mainly due to the prevailing economic slowdown, hurting domestic demand. Indian economic growth slowed down to decade low of 5 percent in the previous fiscal. Meanwhile, banks have also stayed away from aggressive lending due to concerns over asset quality and a rise in non-performing assets.

India VIX, a gauge for markets short term expectation of volatility gained 0.93 % at 24.73 from its previous close of 24.50 on Thursday. (Provisional)

The CNX Nifty lost 91.00 points or 1.49% to settle at 6,024.55. The index touched high and low of 6,130.95 and 5,932.85 respectively. 20 stocks advanced against 30 declining on the index. (Provisional)

The top gainers on the Nifty were Reliance Infrastructure up by 5.16%, UltraTech Cement up by 5.00%, Gail up by 4.19%, HCL Tech up by 3.65% and Ambuja Cements up by 3.31%.

On the other hand, DLF down by 11.99%, PNB down by 7.51%, Bank of Baroda down by 5.43%, IndusInd Bank down by 5.16% and Jaiprakash Associates down by 5.07%.

Most of the European markets were trading in green; France’s CAC 40 up by 0.09% and Germany’s DAX up by 0.11%, while the United Kingdom’s FTSE 100 down by 0.01%.

Most of the Asian markets concluded Friday’s trade in red but notched up healthy returns for a week that was dominated by developments suggesting that US monetary policy could remain easier than previously expected. South Korean markets are closed from September 18 for the rest of the week for the Chuseok holidays. Trade will resume on September 23. Shanghai Composite and Taiwan Weighted remained closed on account of Mid-autumn Festival. Hang Seng is closed today on account of public holiday. When these markets reopen Monday, there will also be a data point on the Chinese economy in the form of preliminary manufacturing data for September - a number that has impacted markets in recent months.

Prices of both new and existing homes continued to rise in most Chinese cities in August. Of a statistical pool of 70 major Chinese cities, 66 saw a month-on-month rise in new home prices, up from 62 in July, the National Bureau of Statistics (NBS) reported. According to the bureau, 58 cities reported month-on-month price gains in existing and second-hand homes in August, compared to 57 in July. On a year-on-year basis, new home prices rose in 69 cities last month, the same as the July figure, while 68 reported higher year-on-year prices for existing homes in August, up from 67.