Post Session: Quick Review

Indian benchmark equity indices, concluded the last trading session of tumultuous year 2013 on a positive note, but garnered massive gains of over 9% (Sensex) and 6.5% (Nifty), in rupee terms, on annual basis to end past the crucial 21,150 (Sensex) and 6300 (Nifty) levels respectively.  Nevertheless, Indian equity markets underperformed the globe in 2013, despite FII’s investing $20 billion in the year, marking third highest flows. In dollar terms, Sensex and Nifty gave negative returns of 3% for the year. On the flip side, broader indices, which outperformed larger peers on the final trading session of the year, were underperformers with fat margins for the year 2013, with BSE Midcap index slipping over 5.5% and CNX smallcap index plunging by 9%. Meanwhile, in dollar terms, BSE Midcap index surrendered 15% and Smallcap collapsed by 20%. On the currency front, Rupee plunged almost 13% against dollar in 2013 and hit its all time low level of 68.85/$ on August 28.

Some mild recovery which was witnessed in dying hours of trade, mainly aided benchmark equity indices in clocking a positive close, which for once gave a glimpse of a negative close for the year, lacking any positive domestic as well global trigger. On the global front, Asian markets mostly rose on Tuesday on the last day of the year following another record close on Wall Street, but Shanghai was region's worst performer over the past 12 months. On the flip side, European shares inched higher early in a shortened session on Tuesday before the New Year break, with pan-European indexes set to post their biggest annual gains since 2009.

Closer home, with the broadly positive session of trade, only stocks from Metal, Auto and Fast Moving Consumer Goods underperformed. Meanwhile, the top gainers of the session were stocks from Power, Oil & Gas and PSU counters.  The banking sector, which came under pressure after the Reserve Bank of India (RBI) in its eight Financial Stability report, underscored that risks to the banking sector have increased during the past six months due to rising bad loans, recovered in today’s trading session. Additionally, retail shares surged led by Trent, which rose over half a percent after the Foreign Investment Promotion Board (FIPB) approved UK-based Tesco Plc's proposal to enter the Indian multi-brand retail segment in joint venture with Trent. For the year, defensive IT Pharma sector were biggest gainers, while Realty, PSU banks and metals were the underperformers. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1486: 1076, while 157 scrips remained unchanged. (Provisional)

The BSE Sensex gained 26.92 points or 0.13% to settle at 21169.93. The index touched a high and a low of 21230.88 and 21122.68 respectively. Among the 30-share Sensex, 18 stocks gained, while 12 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 0.66% and 0.31% respectively. (Provisional)

On the BSE Sectoral front, Power up by 0.50%, Oil & Gas up by 0.47%, PSU up by 0.38%, Healthcare up by 0.32% and Capital Goods up by 0.28% were the top gainers, while Metal down by 0.26%, FMCG down by 0.15% and Auto down by 0.02% were the only losers in the space. (Provisional)

The top gainers on the Sensex were Tata Power up by 2.53%, Wipro up by 1.25%, Axis Bank up by 1.12%, RIL up by 0.98% and L&T up by 0.72%, while, BHEL down by 1.87%, Maruti Suzuki down by 0.78%, Mahindra & Mahindra down by 0.74%, SSLT down by 0.72% and Infosys down by 0.62% were the top losers in the index. (Provisional)

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 gained 12.05 points or 0.19% to settle at 6,303.15. The index touched high and low of 6,317.30 and 6,287.30 respectively. Out of the 50 stocks on the Nifty, 33 ended in the green, while 16 ended in the red and two stocks remains unchanged.

The major gainers of the Nifty were IDFC up 4.72%, JP Associate up by 3.13%, Tata Power up by 2.53%, UltraTech Cement up by 1.54% and HCL Technologies up by 1.52%. The key losers were BHEL down by 1.78%, Maruti Suzuki down by 0.86%, Jindal Steel down by 0.82%, M&M down by 0.67% and Tata Steel down by 0.59%. (Provisional)

The European markets were trading in green; France’s CAC 40 was up 0.25%, and UK’s FTSE 100 gained 0.33%. Germany’s DAX was closed on account of New Year's Eve.

The Asian markets concluded Tuesday’s trade mostly in green, the last day of the year with markets in South Korea, Japan and Indonesia closed on New Year’s Eve. Markets were also cautious ahead of China’s official manufacturing data due on Wednesday, with investors widely expecting a slowdown in factory activity. Investors have long been concerned about high levels of debt in China, and uncertainty over the local banking system’s exposure to bad debt. This year in particular, rising money-market rates shook confidence in the Chinese stock market and contributed to its fourth consecutive year of poor performance. China’s central bank stated that it would continue with a prudent monetary policy, maintain an appropriate level of liquidity and bring about the reasonable growth of credit.

Calls for China to accelerate financial reforms grew louder after figures showed its indebted local governments owe nearly $3 trillion in a debt build-up. The National Audit Office, China’s state auditor, reported that local governments had total outstanding debt of 17.9 trillion yuan at the end of June, a sum that includes contingent liabilities and debt guarantees. Hong Kong’s total exports’ value rose 5.8% to $325.5 billion over a year earlier, compared to a year-on-year increase of 8.8% in October. Within this total, re-exports’ value rose 6% to $320.9 billion, while that of domestic exports fell 10.4% to $4.6 billion. Concurrently, imports’ value increased 5.2% to $370.1 billion, compared to a year-on-year increase of 6.3% in October. South Korean CPI rose to a seasonally adjusted annual rate of 1.1%, from 0.9% in the preceding month.