Benchmarks trade lackluster in absence of buying activity; Nifty holds the crucial 6000 mark

On account of prevailing caution ahead of key earning season, Indian equity markets continue to trade lackluster in absence of any buying activity in afternoon deals. Although, the benchmarks have recovered from early weakness, the trade continues to remain largely range-bound in absence of positive catalyst which can drive the markets higher, ahead of the crucial Infosys’ Q2 earnings and IIP data tomorrow. However, a positive start of European markets could lead to some trend reversal at Dalal Street. Currently, oscillating in a range-bound manner, Sensex is trading above the crucial 20,200 with slender loss, while Nifty is just about managing to hold its head above the crucial 6,000 level. However, broader indices outperforming larger peers are up and about with gains of over half a percent.

On the global front, regardless of mixed trend of Asian peers, European markets, snapping a three-day losing streak, have rebounded from one-month lows on Thursday, on improved appetite for equities on growing signs of progress to end the U.S. fiscal stalemate and avert a possible debt default.

Closer home, stocks from Metal, Auto and Capital Goods counters are limiting the further slide of the bourses, while those from oil & Gas, Banking and Fast Moving Consumer Goods counters are adding to the underlying weakness of Indian equity markets. Meanwhile, depreciation of Indian currency on account on broad gains of dollar against basket of other major currencies, also is weighing on the sentiment. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1218:863; while 144 shares remained unchanged.

The BSE Sensex is currently trading at 20223.07, down by 26.19 points or 0.13% after trading in a range of 20,323.77 and 20,135.91. There were only 16 stocks advancing against 14 declines on the index.

The broader indices continued to outperform their larger peers the BSE Mid cap and Small cap indices were trading up by 0.76% and 0.62% respectively.

The gaining sectoral indices on the BSE were Metal up by 1.09%, Auto up by 0.95%, Capital Goods and Realty were up by 0.52% and Health Care up by 0.48%. While, Oil and Gas down by 0.69% , Bankex down by 0.28% and Fast Moving Consumer Goods down by 0.10%, were remained the only losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.90%, Jindal Steel up by 1.79%, Tata Motors up by 1.68%, SSLT up by 1.63% and M&M up by 1.40%. On the flip side, HDFC Bank down by 1.36%, Tata Power down by 1.34%, RIL down by 1.29%, Gail India down by 1.03% and Sun Pharma down by 0.87% were the top losers on the Sensex.

Meanwhile, giving respite to Non-banking finance companies (NBFCs) waiting for banking licences, the Resserve Bank of India (RBI) Deputy Governor K C Chakrabarty said that NBFCs have advantage over other applicants for banking licences as they already have good customer base. Meanwhile, Chakrabarty added that a separate committee has been appointed to award licences and is considering various factors to choose appropriate applications for new banking licences.

The central bank has received 26 applications for new banking licence including NBFCs and various large corporates such as Tata Group, Reliance Capital and L&T Finance among others. Earlier, in February, the RBI issued final guidelines that would govern the new set of proposed banks. As per the guidelines, banks should have a minimum equity capital of around Rs 5 billion and not have foreign ownership of more than 49% for the first five years of operation. The rules also require that one out of every four branches opened by the new banks should be located in rural areas.

The government has planned to enhance the penetration level of Indian banking industry as it plays an important role in the economic development of the country and is the most dominant segment of the financial sector. Banks help channel savings to investments and encourage economic growth by allocating savings to investments that have potential to yield higher returns. The Indian banking industry’s contribution to GDP moves along with growth in the Indian economy.

The CNX Nifty is currently trading at 6,008.40, up by 0.95 points or 0.02% after trading in a range of 6,031.80 and 5,979.80. There were 30 stocks advancing against 20 declines on the index.

The top gainers of the Nifty were Ranbaxy up by 3.84%, Lupin up by 2.57%, NMDC  and Asian Paints were up by 2.48%, and Tata Steel up by 1.81%. On the flip side, HDFC Bank down by 1.46%, Reliance down by 1.32%, Tata Power and Kotak Mahindra Bank down by 1.28% and Sun Pharma down by 0.91% were the major losers on the index.

The Asian equity indices were trading in mixed; Jakarta Composite up by 0.72%, Straits Times up by 0.42%, Nikki 225 up by 1.12% and KLSE Composite up by 0.32%. While, Hang Seng down by 0.82%, Taiwan Weighted down by 0.37%, Seoul Composite down by 0.07%, and Shanghai Composite down by 1.03%.

European shares have got off to a positive start; with CAC 40 gaining 0.89%, DAX rising by 0.55% and FTSE 100 advancing 0.37%.