Markets make a flat but positive start for the New Year

Key Indian benchmarks have made a flat but positive start on the first trading day of 2014 with frontline gauges trading tad above their neutral lines on increased buying by funds as well as retail investors on the back of firm global cues. The US markets snapped the strong year 2013 on an upbeat note, traders remained in jubilation mood despite thin volumes, while release of a report from the Conference Board showing a bigger than expected rebound of consumer confidence too aided to the sentiments. However, all the major Asian markets are closed today on account of New Year.

Back home, some support also came in on report that foreign institutional investors (FIIs) bought shares worth a net Rs 309.70 crore on December 31, 2013. Meanwhile, the output of eight core sector industries grew 2.5% during April-November, showing signs of recovery. Core sector grew 1.7 per cent in November after shrinking 0.6 per cent in October, though it was much lower than 5.8 per cent growth last November. However, gains remained capped after India’s fiscal deficit in the April-November period reached 94% of the targeted budgetary estimate of Rs 5.42 lakh crore, raising concerns that India may well overshoot its ambitious target of containing the deficit at 4.8% of GDP. Some cautiousness also crept in as the retail inflation for industrial workers inched up marginally to 11.47 per cent in November compared to 11.06 per cent in October and 9.55 per cent in the same month last year due to higher prices of food items.

On the sectoral front, realty witnessed the maximum gains in trade followed by healthcare and consumer durables, while software, power and oil and gas remained the top losers on the BSE sectoral space. The broader indices, however, outperforming benchmarks, while the market breadth on the BSE was positive; there were 869 shares on the gaining side against 303 shares on the losing side while 61 shares remain unchanged.

The BSE Sensex opened at 21222.19; about 51 points higher compared to its previous closing of 21170.68, and touched a high and a low of 21244.35 and 21166.55 respectively.

The index is currently trading at 21194.33, up by 23.65 points or 0.11%. There were 22 stocks advancing against 8 declines on the index.

The overall market breadth has made a strong start with 70.48% stocks advancing against 24.57% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.51% and Small cap gained 0.77%. 

The top gaining sectoral indices on the BSE were, Realty up by 1.56%, Healthcare up by 0.79%, Consumer Durables up by 0.78%, Metal up by 0.59% and PSU up by 0.44%, while IT down by 0.12%, Power down by 0.06%, Oil & Gas down by 0.02% and Teck down by 0.01% were the top losers on the sectoral index.

The top gainers on the Sensex were Coal India up by 1.17%, SSLT up by 0.97%, Cipla up by 0.86%, Hero MotoCorp up by 0.83% and Maruti Suzuki up by 0.67%. On the flip side, Tata Power was down by 1.42%, Wipro was down by 0.50%, RIL was down by 0.38%, Axis Bank was down by 0.34% and TCS was down by 0.18% 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 6,323.80; about 19 points higher as compared to its previous closing of 6,304.00, and has touched a high and a low of 6,327.20 and 6,301.65 respectively. The index is currently trading at 6,309.00, up by 5.00 points or 0.08%. There were 30 stocks advancing against 19 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were Ranbaxy up by 2.04%, Asian Paints up by 2.00%, DLF up by 1.65%, Lupin up by 1.64% and Coal India up by 1.12%. On the flip side, Tata Power down by 1.37%, UltraTech Cement down by 0.69%, Grasim down by 0.54%, ACC down by 0.51% and Kotak Bank down by 0.43% were the top losers on the index.

All the major Asian equity indices remained closed for trade today on account of the New Year.