Benchmarks remain volatile as US shutdown fears loom

Benchmarks remained volatile since early trade after the US Govt directed government agencies to shut down late Monday after Congress failed to find a compromise on a government spending bill. However , Sentiments got some support from report that Core Sector, the eight key infrastructure industries, grew at their fastest pace in seven months at 3.7% in August compared with an expansion of 3.1% in the previous month, boosted by robust performance in electricity, cement, steel and petroleum refinery products. The market mood was upbeat as Reserve Bank decided to conduct open market operations (OMOs) by purchasing government securities for an aggregate amount of Rs 10,000 crore on October 7.

On the global front, most of the Asian equity benchmarks were trading in the green at this point of time with Japanese markets were trading up by around quarter a percent as a report showed that confidence among large Japanese manufacturers increased before Prime Minister Shinzo Abe unveils plans for an economic-support package. However, gains remained capped as global risk appetite was frail on concerns over political dysfunction in US as lawmakers struggled to keep the government offices running ahead of today’s budget default.

Back home, traders were buying, Realty, Auto and Capital Goods while selling were seen in Metal, PSU and Power on the BSE. Auto stocks firmed up on expectation of higher sales in September. BSE Sensex and NSE Nifty were comfortably trading near their psychological 5,700 and 19,400 levels respectively.

The market breadth on BSE remains positive with advances to declines in the ratio of 861: 601. The BSE Sensex is currently trading at 19413.75, up by 33.98 points or 0.18% after trading in a range of 19466.18 and 19264.72. There were 17 stocks advancing against 13 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.39% and Small cap index gained 0.10%.

The top gaining sectoral indices on the BSE were, Realty up by 1.23%, Auto up by 0.89%, Capital Goods up by 0.85%, Bankex up by 0.78%, and Teck up by 0.33%, while Metal down by 1.58%, PSU down by 0.75%, Power down by 0.64%, Oil & Gas down by 0.49% and FMCG down by 0.42%were the top losers on the sectoral index.

The top gainers on the Sensex were BHEL up by 3.97%, Maruti Suzuki up by 3.37%, Dr Reddys Lab up by 1.73%, Mahindra & Mahindra up by 1.21% and SBI up by 1.07%. On the flip side, Sesa Goa was down by 3.49%, NTPC was down by 2.63%, Tata Power was down by 2.59% ,ONGC was down by 2.17%, and Hindalco Industries was down by 1.92% were the top losers on the Sensex.

Meanwhile, the net non-performing assets (NPA) of Indian banking industry have increased to 1.68 percent of the total loan at the end of financial year13 as against to the 1.28 of total loans in the FY12. Meanwhile, public sector banks recorded steep rise in net NPAs as compared to the private sector banks. Net NPAs of the 26 public sector banks, including State Bank of India (SBI), grew by 2.02 percent during the year as compared to 1.53 in the previous fiscal. SBI and its five associates recorded a net NPA of 2.04 percent against 1.76 percent in the comparable period. Conversely, net NPAs of new private sector bank rose marginally to 0.45 percent as compared to 0.42 percent, showing superior risk management than public sector banks.

The stress on the asset quality is a reflection of the stress in the economy of the country and over the past two years, non-performing Assets (NPAs) of banks have been increasing on account of prevailing economic downturn. Indian economic growth slowed down to four year low at 4.4 percent in Q1 FY14. Meanwhile, in the April- June quarter, 2013, gross NPAs in the banking system grew by 12.02 percent to Rs.2.06 trillion and formed 3.85 percent of the industry’s advances.

At present, banking industry is also concerned over the ongoing tight liquidity situation as it has resulted in increase in cost of funds of all commercial banks to 6.12 percent in FY13 as against 5.90 percent in FY12. For, public sector banks, the cost of funds rose to 6.27 percent from 6.06 percent in 2011-12. Further, increase in cost of funds, has been adversely impacting industry's net interest margin (NIM), which came down to 2.79 percent in FY13 from 2.90 percent a year ago. For the public sector banks, NIM came down to 2.57 percent in the reported fiscal as compared to 2.76 percent in the FY12.

The CNX Nifty is currently trading at 5,747.85 up by 12.55 points or 0.22% after trading in a range of 5,762.40 and 5,700.95. There were 28 stocks advancing against 22 declines on the index. 

The top gainers of the Nifty were BHEL up by 4.15%, DLF up by 3.87%, Maruti Suzuki up by 3.46%, IDFC up by 1.99%, and DR Reddy up by 1.80%. On the flip side, Sesa Goa down by 3.65%, Tata Power down by 2.46%, NTPC down by 2.07%, ONGC down by 2.05%, NMDC down by 1.92% were the major losers on the index.

Most of the Asian equity indices were trading in green; Jakarta Composite rose 60.53 points or 1.40% to 4,376.70, Nikkei 225 increased 75.76 points or 0.52% to 14,531.67, Straits Times strengthened 15.70 points 0.50% to 3,183.57, Seoul Composite added 1.69 points or 0.12% to 1,999.78 and Taiwan Weighted was up by 15.53 points or 0.20% to 8,194.10.

On the flip side, KLSE Composite was down by 2.23 points or 0.13% to 1,766.39.

Chinese and Hong Kong equity markets remained shut for the trade today.