Benchmarks pare losses in late morning

Benchmarks pared earlier losses and continued to trade marginally in the red in late morning. Investor’s Sentiments got some support from good economic data of trade deficit. India’s current-account deficit shrank to a four-year low to $5.2 billion or 1.2% of gross domestic product (GDP), in the September quarter, sharply lower from the $21 billion deficit recorded a year ago period. Meanwhile, Finance minister P Chidambaram has said that the economy is expected to grow by 5% in 2013-14 and the fiscal and current account deficits would be contained.

The gains on up- side remain capped after the output of eight core sector industries contracted by 0.6 percent in October due to poor showing by coal, oil and gas sectors. The output of eight infrastructure industries in April-October was a mere 2.6 percent against 6.8 percent in the same period of the last fiscal. Meanwhile, stocks related to Auto space witnessed selling as after showing some signs of revival in September and October during the festive season, auto sales dipped again in November.On the global front, Most of the Asian equity benchmarks were trading lower at this point of time as investors remained cautious, tracking negative cues from Wall Street overnight, as better than economic reports raised speculation the Federal Reserve will soon tighten its monetary policy. Meanwhile, Shanghai Composite edged lower on expectations that China will restart initial public offerings in the new year, raising fears of a share glut

Back home, traders were buying, Metal, Capital Goods and IT, while selling were seen in FMCG, Realty and Bankex on the BSE. The market breadth on BSE remains positive with advances to declines in the ratio of 945:727. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,800 and 6,200 levels respectively. The BSE Sensex is currently trading at 20876.27 down by 21.74 points or 0.10% after trading in a range of 20907.39 and 20826.73. There were 11 stocks advancing against 19 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.46% and Small cap index gained 0.35%.

The top gaining sectoral indices on the BSE were, Metal up by 0.74%, Capital Goods up by 0.58%, IT up by 0.41%, Teck up by 0.34% and Consumer Durables up by 0.18%, while FMCG down by 0.43%, Realty down by 0.34%, Bankex down by 0.31%, Auto down by 0.14%, and PSU down by 0.07% were the top losers on the sectoral index.

The top gainers on the Sensex were Jindal Steel up by 3.50%, Hindalco Industries up by 2.34%, Gail India up by 2.04%, BHEL up by 1.29% and Maruti Suzuki up by 0.91%. On the flip side, NTPC was down by 1.26%,  HDFC was down by 1.24%, Dr Reddys Lab was down by 0.98%, Hindustan Unilever was down by 0.60% and ITC was down by 0.51% were the top losers on the Sensex.

Meanwhile, In order to avoid 2008-crisis kind of situation, the Reserve Bank of India (RBI) will soon announce a separate category of domestic systemically important banks (D-SIBs), which will have to set aside more capital to cover risks and be subject to more intense regulations by the banking regulator. It will mainly cover banks having multiple financial services like insurance, broking and asset management and the list of banks falling under this category will be released by August 2015.

According to the draft guidelines floated for D-SIBs, these banks, which will be selected based on a pre-determined formula, will be required to maintain higher core tier-I capital ranging from 0.20 to 0.80% of their risk weighted assets.

Further, this classification system will be based upon the BCBS (Basel Committee for Banking Supervision) framework for global systematically important banks (G-SIBs) and will involve computation of composite systemic importance score for banks, which will be arrived at post-considering a bank’s size, interconnectedness, substitutability and complexity among other things. Based on their systemic importance scores, banks will be plotted into different buckets. Meanwhile, the higher capital requirements will be applicable in phased manner from Apr 1, 2016 and will become fully effective from Apr 1, 2019. D-SIBs will also be subjected to differentiated supervisory requirements and higher intensity of supervision based on the risks they pose to the financial system. Lastly, the RBI has invited comments on the draft guidelines till December 31.

The CNX Nifty is currently trading at 6,206.10 down by 11.75 points or 0.19% after trading in a range of 6,216.15 and 6,194.25. There were 17 stocks advancing against 33 stock declines on the index.

The top gainers of the Nifty were Jindal Steel up by 3.48%, Hindalco Industries up by 2.71%, Gail up by 1.98%, Asian Paint up by 1.58% and BHEL up by 1.00%. On the flip side, HDFC down by 1.29%, DR Reddy down by 1.21%, NTPC down by 1.19%, Kotak Bank down by 1.17% and HCL Tech down by 0.97% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite dipped 1.81 points or 0.08% to 2,205.56, Hang Seng declined 140.22 points or 0.58% to 23,898.33, Jakarta Composite dropped 21.56 points or 0.50% to 4,300.41, Straits Times decreased 0.20 points or 0.01% to 3,188.56, Seoul Composite shed 16.89 points or 0.83% to 2,013.89 and Taiwan Weighted was down by 2.83 points or 0.03% to 8,411.78.

On the flip side, KLSE Composite rose 9.56 points or 0.53% to 1,827.71 and Nikkei 225 was up by 102.84 points or 0.66% to 15,757.91.