Benchmarks pare most of their gains; hold their head above water

Benchmark equity indices although not at day’s low, have substantially pared gains as investors continue to cash out their profit at the last day of Calendar Year 2013. However, despite this markets are holding in positive terrain, albeit with slender gains of over one tenth of a percent, with Sensex trading past the crucial 21,150 and Nifty just shy of the crucial 6300 levels respectively. Meanwhile, broader indices outperforming larger peers for yet another session, are trading up with gains of over quarter of a percent. On the global front, Asian pacific shares were trading mixed, early gains succumbed to selling pressure hours ahead of the year's final trading session.

Closer home, stocks from Power, Oil & Gas and Information Technology counters were the top gainers of the session, while Fast Moving Consumer Goods, Banking and Metal counters were the weak spell of the trade. In stock specific activity, while Apollo Tyres was up 4 percent after a deal to acquire U.S.-based Cooper Tire & Rubber Co fell through late last night, Trent rose over 3% after India's foreign investment regulator approved a $110 million investment plan by Britain's Tesco. The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1145:657;  while 32 shares remained unchanged. 

The BSE Sensex is currently trading at 21168.53, up by 25.52 points or 0.12% after trading in a range of 21,230.88 and 21,122.68. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.45%, while Small cap index up by 0.36%.

The gaining sectoral indices on the BSE were Power up by 0.53%, Oil and Gas up by 0.49%, IT up by 0.35%, Auto up by 0.32%, and TECK up by 0.27%. While, FMCG down by 0.14%, Bankex down by 0.13% and Metal down by 0.09% were the only losers on the index.

The top gainers on the Sensex were Tata Motors up by 2.70%, TCS up by 1.06%, Bajaj Auto up by 0.89%, RIL up by 0.68% and Tata Motors up by 0.57%. On the flip side, BHEL down by 0.86%, HDFC Bank down by 0.81%, SBI down by 0.49%, HUL down by 0.36% and Maruti Suzuki down by 0.35%.

Meanwhile, the Reserve Bank of India (RBI) has allowed banks to sanction loans of up to Rs 1 lakh against pledge of gold ornaments and jewellery. Earlier in May, the central bank had imposed restrictions on banks and NBFCs for providing loans against gold coins as well as units of gold ETFs and mutual funds. Meanwhile, the banks were asked to ensure that the amount of loan granted to any customer against gold ornaments, gold jewellery and gold coins weighing up to 50 grams should be within the board-approved limit.

Further, the RBI noted that the period of the loan should not exceed 12 months from the date of sanction and the interest will be charged to the account monthly but will become due for payment along with principal only at the maturity. Further, the RBI has decided to permit bullet repayment of loans extended against pledge of gold ornaments and jewellery for other than agricultural purposes. Bullet repayment refers to the lump sum payment for the entire loan amount paid at the time of maturity.

The central bank further notified that banks will recognize interest income on such loans in their profit and loss account only on collection and prescribed a minimum margin to be maintained for such loans. Banks should fix the loan limit taking into account the market value of the security such as gold ornaments, expected price fluctuations, interest that will accrue during the tenure of the loan etc. The RBI cautioned the banks that the account would be classified as non-performing asset (sub-standard category) even before the due date of repayment, if the prescribed margin is not maintained.

The CNX Nifty is currently trading at 6,298.75, up by 7.65 points or 0.12% after trading in a range of 6,317.30 and 6,287.30. There were 30 stocks advancing against 19 declining on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were IDFC up by 3.43%, Tata Power up by 2.81%, TCS up by 1.05%, JP Associates up by 0.95% and ACC up by 0.87%. On the flip side, BHEL down by 1.00%, HDFC Bank down by 0.72%, Maruti Suzuki down by 0.65%, Kotak Bank down by 0.59% and SBI down by 0.54% were the major losers on the index.

The Asian equity indices were trading mixed; Jakarta Composite up by 1.45%, Nikkei 225 up by 0.69%, and Shanghai Composite up by 0.88%. While, KLSE Composite down by 0.43% and Taiwan Weighted down by 0.14%.