Benchmarks remain in narrow range after initial uptick

Benchmarks remained in a narrow range in late morning after the initial uptick. Sentiments remained up-beat after India Inc has raised hopes that spurt in inflation to a 14-month high of 7.52 percent in November should not come in the way of the Reserve Bank's formulating an accommodative monetary policy and has said that high interest rates at this stage may only worsen the industrial slowdown and not help ease inflation. However, gains remained capped as the rupee edged lower against the dollar as investors bet improving US economic data may usher in a reduction in monetary stimulus for the US economy from the US Federal Reserve. The investors remained little cautious ahead of Reserve Bank of India’s (RBI) mid-quarter review of monetary policy for 2013-14, slated to be released on December 18, 2013.

On the global front, Moreover, most of the Asian equity markets were trading in the green at this point of time tailing US cues and the Japanese market has taken the lead as yen weakened against dollar. Back home, traders were buying, Healthcare, Auto and Teck while selling was seen in Bankex on the BSE. The market breadth on BSE remains positive with advances to declines in the ratio of 1028: 538. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,600 and 6,150 levels respectively.

The BSE Sensex is currently trading at 20659.52 up by 87.58 points or 0.42% after trading in a range of 20784.03 and 20731.54. There were 22 stocks advancing against 7 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.67% and Small cap index gained 0.62%.

The top gaining sectoral indices on the BSE were, Healthcare up by 1.40%, Auto up by 0.94%, Teck up by 0.72%, Realty up by 0.60%, IT up by 0.60%, while, Bankex down by 0.09% was only the loser on the sectoral index.

The top gainers on the Sensex were Cipla up by 2.88%, Bharti Airtel up by 2.79%, SSLT up by 1.95%, Sun Pharma up by 1.70% and Jindal Steel up by 1.55%. On the flip side, HDFC Bank was down by 2.15%, Coal India was down by 1.36%, NTPC was down by 1.05%, SBI was down by 0.63% and HDFC was down by 0.49% were the top losers on the Sensex.

Meanwhile, Rating agency, Fitch, in its report underscored that Indian banking sector, reeling under asset quality pressures, will continue to see difficult times in 2014 due to the weak macro environment. However, the rating agency has assigned ‘stable’ outlook for Indian banking sector, driven by revision in the sovereign outlook.

Further, the rating agency expects asset quality indicators for the domestic banks to deteriorate, and stressed assets to peak around 15% due to further weakening of the economic environment. Stressed assets of domestic banks were at 9.1% of total loans (which includes non-performing loans of 3.4% and restructured loan ratio of 5.7%) in FY'13 from 6.1% in FY'12.

The rating agency also noted that the stress tolerance of the banks had weakened, resulting in downgrade of viability rating (VR) at several state-owned banks recently. In its report, Fitch highlighted that while the state-owned banks, whose earnings and capital buffers did not kept pace with the significant asset quality deterioration, were likely to face more pressure on their VRs; private sector banks were better positioned to face the economic slowdown.

Nevertheless, it also pointed that full impact of protracted slowdown remained to be seen, adding that it had scaled down India’s economic growth forecast for 2013-14 to 4.8% (from 5.7%) and that a 5.8% growth forecast for 2014-15 could mean a revival, albeit at a slow pace.

The CNX Nifty is currently trading at 6,178.65 up by 23.95 points or 0.39% after trading in a range of 6,190.55 and 6,174.75. There were 36 stocks advancing against 14 stock declines on the index.

The top gainers of the Nifty were Cipla up by 3.23%, Bharti Aritel up by 3.08%, Ranbaxy up by 2.62%, SSLT up by 1.92%, JP Associate up by 1.86%. On the flip side, HDFC Bank down by 2.38%, Coal India down by 1.29%, NTPC down by 0.91%, Power Grid down by 0.81%, and SBI down by 0.70% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng rose 73.31 points or 0.32% to 23,187.97, Jakarta Composite jumped 52.85 points or 1.28% to 4,178.81, KLSE Composite strengthened 9.04 points or 0.49% to 1,846.92, Nikkei 225 surged 122.59 points or 0.81% to 15,274.96, Straits Times increased 17.21 points or 0.56% to 3,070.98, Seoul Composite added 5.04 points or 0.26% to 1,966.19 and Taiwan Weighted was up by 55.03 points or 0.66% to 8,368.90.

On the flip side, Shanghai Composite was down by 12.80 points or 0.59% to 2,148.06.