Domestic bourses trade slightly higher on last day of the year

Indian equity benchmarks are trading slightly higher in early deals on last day of the year as sentiments remained firm on hopes that inflows from foreign institutional investors (FIIs) will continue despite the US Federal Reserve starting to withdraw its stimulus programme from January 1. The gains remained capped as investors remained on the sidelines ahead of April-November fiscal deficit reading later in the day. Sentiments also remained cautious on Reserve Bank of India (RBI) Governor Raghuram Rajan’s statement that the challenge of containing inflation is limiting the central bank’s ability to boost economic growth.

On the global front, the US markets made a mixed closing after trading choppy throughout the day, as many traders remained away from their desks ahead of the upcoming New Year’s Day holiday. However, Asian markets were trading mostly higher at this point of time. However, the mood was cautious due to some of the markets in the region being closed for New Year’s Eve.

Back home, the banking sector remained under pressure after the Reserve Bank of India (RBI) has stated that risks to the banking sector have increased during the past six months due to rising bad loans and has proposed tightening banks' exposure limit for single borrower and single groups. On the sectoral front, oil and gas witnessed the maximum gain in trade followed by auto and healthcare, while banking and software remained the top losers on the BSE sectoral space. The broader indices too were going neck-to-neck with benchmarks, while the market breadth on the BSE was positive; there were 776 shares on the gaining side against 446 shares on the losing side while 58 shares remain unchanged.

The BSE Sensex opened at 21177.77; about 34 points higher compared to its previous closing of 21143.01, and touched a high and a low of 21230.88 and 21122.68 respectively.

The index is currently trading at 21177.73, up by 34.72 points or 0.16%. There were 21 stocks advancing against 9 declines on the index.

The overall market breadth has made a strong start with 61.69% stocks advancing against 34.06% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.40% and Small cap gained 0.33%. 

The top gaining sectoral indices on the BSE were, Oil & Gas up by 0.78%, Auto up by 0.41%, Healthcare up by 0.39%, Metal up by 0.30% and PSU up by 0.29%, while Bankex down by 0.27% and IT down by 0.01% were the top losers on the sectoral index.

The top gainers on the Sensex were Tata Power up by 1.74%, RIL up by 1.14%, Coal India up by 1.05%, Bajaj Auto up by 1.01% and Tata Motors up by 0.87%. On the flip side, HDFC Bank was down by 1.22%, BHEL was down by 1.14%, SSLT was down by 0.35%, Infosys was down by 0.28% and Mahindra & Mahindra was down by 0.26% were the top losers on the Sensex.

Meanwhile, Reserve Bank of India (RBI), in its ‘Financial Stability Report - December 2013’, has underscored that risks to the banking sector have increased during the past half-year and that all the risks dimensions captured in the banking stability indicator show increase in vulnerabilities in the banking sector. As per the report banking stability measures, based on co-movements in banks' equity prices, also indicate that the distress dependencies within the banking system have risen during this period. Further, the analysis shows that failure of a major corporate or a major corporate group could trigger a contagion in the banking system due to exposures of a large number of banks to such corporates. Additionally, RBI in its report expressed concerns over asset quality of banks. It highlighted that macro stress tests on credit risk suggest that if the adverse macroeconomic conditions persist, the credit quality of commercial banks could deteriorate further. However, it also underscored that under improved conditions, the present trend in credit quality may reverse during the second half of 2014-15.

Moreover, RBI remained more distressed over asset quality of Scheduled Commercial Banks (SCBs). It noted that Gross Non-performing Assets (GNPA) ratio of SCBs as well as their restructured standard advances ratio increased and therefore the total stressed advances ratio rose significantly to 10.2 per cent of total advances as at end September 2013 from 9.2 per cent of March 2013.

The CNX Nifty opened at 6,307.35; about 16 points higher as compared to its previous closing of 6,291.10, and has touched a high and a low of 6,317.30 and 6,287.30 respectively. The index is currently trading at 6,304.40, up by 13.30 points or 0.21%. There were 38 stocks advancing against 11 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were IDFC up by 1.76%, NMDC up by 1.61%, Tata Power up by 1.52%, ACC up by 1.12% and Ranbaxy up by 1.11%. On the flip side, BHEL down by 1.25%, HDFC Bank down by 1.24%, Kotak Bank down by 0.57%, Infosys down by 0.35% and M&M down by 0.30% were the top losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite surged 18.26 points or 0.87% to 2,115.79, Hang Seng added 61.52 points or 0.26% to 23,306.39 and Straits Times was up by 10.50 points or 0.33% to 3,163.79.

On the flip side, KLSE Composite declined 7.19 points or 0.37% to 1,865.33 and Taiwan Weighted was down by 6.37 points or 0.07% to 8,617.06.

However, markets in South Korea, Japan and Indonesia are closed for New Year’s Eve.