Weakness persists on street in late Morning trade

Volatility roost on street as benchmarks continue to remain weak in late morning trades weighed down by profit taking in IT majors after recent gains in the run up to the second quarter earnings. Investor’s sentiments dampened after Finance Minister P. Chidambaram termed the rising number of bad loans in the banking sector as 'unacceptable,' even as he expressed satisfaction at the growth in bank lending in the first quarter. However, the loss on the down -side remained capped as the rupee appreciating against the US dollar. On the global front, most of the Asian counters turned red after a positive opening, as investors booked their profits at higher levels. Japanese Nikkei share average, having touched a three and a half week high earlier, declined by over a percent as a stronger yen took a heavy toll.

Back home, traders were buying, Consumer Durables, Metal and PSU while selling were seen in IT, Teck and Auto on the BSE. The market breadth on BSE remains positive with advances to declines in the ratio of 1006: 718. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,700 and 6,150 levels respectively. 

The BSE Sensex is currently trading at 20758.34, down by 106.63 points or 0.51% after trading in a range of 20922.32 and 20716.50. There were 10 stocks advancing against 20 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.35% and Small cap index gained 0.16%.

The top gaining sectoral indices on the BSE were, Consumer Durables up by 0.82%, Metal up by 0.80%, PSU up by 0.64%, Bankex up by 0.52%, and Oil & Gas up by 0.10%, while IT down by 1.52%, Teck down by 1.22%, Auto down by 0.87%, Realty down by 0.86% and FMCG down by 0.39% were the top losers on the sectoral index.

The top gainers on the Sensex were Gail India up by 4.10%, SBI up by 2.52%, SSLT up by 2.49%, Tata Power up by 1.34% and Cipla up by 1.02%. On the flip side, Wipro was down by 5.03%, Tata Motors was down by 1.70%, Dr Reddys Lab was down by 1.32% HDFC Bank was down by 1.32% and Bajaj Auto was down by 1.29% were the top losers on the Sensex.

Meanwhile, Finance minister P Chidambaram, after reviewing the performance of public sector banks, has allowed the government to infuse the budgeted Rs 14,000 crore of bank capitalization through preferential allotment. However, the minister ruled out the possibility of the government diluting its shareholding in the state-run banks.

This development is complete contradiction to Reserve Bank of India’s suggestion of government diluting ownership in Public State Banks even below 51% as an option for raising funds and easing fiscal burden, with government maintaining of keeping its stake in state-run banks at 58%.

Further, the minister has left it on the bank’s board to decide upon the issue of raising capital from the markets through qualified institutional placement (QIP) or other routes, which would be in addition to the capital infusion by the government. This development comes on the heels of the country's biggest lender, State Bank of India mulling raising 8,000 crore through the QIP route. The bank, in which government holds 62.31% stake, is expected to take a call on this within a month.

The government infused Rs 12,517 crore into 13 PSBs in 2012-13. It had infused about Rs 20,117 crore in PSBs during 2010-11, and Rs 12,000 crore in 2011-12.

The CNX Nifty is currently trading at 6,171.15 down by 31.65 points or 0.51% after trading in a range of 6,217.95 and 6,154.40. There were 16 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were Gail up by 3.83%, Bank of Baroda up by 3.74%, SBI up by 2.75%, SSLT up by 2.36%, and PNB up by 2.31%. On the flip side, Wipro down by 5.01%, DLF down by 2.10%, HCL Tech down by 2.09%, Tata Motors down by 1.78% and JP Associates down by 1.68% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 25.79 points or 1.17% to 2,184.87, Hang Seng slipped 67.17 points or 0.29% to 23,248.82, Nikkei 225 dropped 223.58  points or 1.47% to 14,497.26, Seoul Composite shed 17.37 points or 0.87% to 2,038.30 and Taiwan Weighted was down by 33.18 points or 0.40% to 8,384.29.

On the flip side, Jakarta Composite surged 52.06 points or 1.15% to 4,564.81, KLSE Composite rose 11.09 points or 0.61% to 1,814.67 and Straits Times was up by 1.74 points or 0.06% to 3,212.91.