Post Session: Quick Review

Last trading session of the week and month turned out to be largely dreary, with benchmarks consolidating in thin range in absence of positive triggers which could lift the markets substantially higher on the first session of new F&O series. However, snapping five consecutive sessions of losing streak, Indian equity markets managed to end higher, albeit with slender gains, above the crucial 20,500 (Sensex) and 6,050 (Nifty) levels respectively. Nevertheless, the session clearly belonged to broader indices, which went home with broader gains of over a percent. For the week, while Sensex and Nifty plunged in the range of 2.5-3% CNX Midcap ended with a cut of over a 1.5% and BSE Smallcap, in-line with broader indices, concluded with loss of over 2.5%.

Prevailing caution ahead of fiscal deficit data for the April-December period and first revised GDP data for the fiscal year that ended in March 2013, scheduled to be announced later in the day, mainly kept investors on the sidelines. However, some relief crept in at Dalal Street after Finance Ministry, in an attempt to calm down frayed nerves, underscored that the economy was well prepared to deal with the US Fed tapering programme.

On the global front, most of Asian markets were shut for the lunar New Year holiday, barring Japanese index, Nikkei 225, which ended lower with a cut of over half a percent. On the flip side, European shares were on course for their first monthly loss since August on Friday, partly on the back of evidence that company earnings are being hit by the turbulence in emerging markets.

Closer home, in the subdued session of trade, most of the sectoral indices ended in green, while those from Realty, Metal and Oil & Gas counters were the outperformers. On the flip side, stocks from Auto counter only emerged as the pocket of the weakness.  Auto stocks came under pressure after Hero MotoCorp, missed Q3 profit estimates on account of higher input costs and currency fluctuations. However, much of support was rendered by banking stocks today after Punjab National Bank surprised investors by positing good set of Q3 numbers, which took the stock zooming above 5%. The Punjab National Bank reported a 42.14 per cent decline in net profit at Rs 755.41 crore for the quarter ended December 31, 2013, however, the bank’s total income rose to Rs 11,922.30 crore for the quarter ended December 31, 2013 from Rs 11,499.27 crore during the same period of previous fiscal. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1517: 1070, while 144 scrips remained unchanged. (Provisional)

The BSE Sensex gained 15.60 points or 0.08% to settle at 20513.85. The index touched a high and a low of 20572.32 and 20448.43 respectively. Among the 30-share Sensex, 18 stocks gained, while 11 stocks declined and one stock remain unchanged. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 1.56% and 1.32% respectively. (Provisional)

On the BSE Sectoral front, Realty up by 1.63%, Metal up by 1.27%, PSU up by 1.26%, Oil & Gas up by 1.18% and Teck up by 1.04% were the top gainers, while Auto down by 0.43% was the only loser in the space. (Provisional)

The top gainers on the Sensex were Tata Power up by 3.33%, Gail India up by 3.07%, Tata Steel up by 2.55%, Bharti Airtel up by 2.32% and Mahindra & Mahindra up by 2.15%, while, Tata Motors down by 2.96%, HDFC down by 2.66%, NTPC down by 1.37%, Hero MotoCorp down by 1.29% and Sun Pharma down by 0.94% were the top losers in the index. (Provisional)

Meanwhile, with an aim to adopt effective judiciary and bankruptcy systems to deal with the NPA menace, the Reserve Bank of India (RBI) has stressed that the framework to revitalise distressed loans in the economy will be fully effective from April 1. The RBI’s new framework will help the domestic banking system to recognise financial distress early, take prompt steps to resolve it, and ensure fair recovery for lenders and investors. The asset quality of Indian banks has been showing downward trend since global financial crisis, 2008.

In order to improve the current restructuring process, the RBI framework will mandate the independent evaluation of large-value restructurings with a focus on viable plans and a fair sharing of losses between the promoters and the creditors. The framework proposal also noted that if a loss is fully disclosed, lenders can spread the loss on sale over two years. The central bank emphasized that lenders are encouraged to start early implementation of framework that do not require issuance of any notifications, regulatory guidelines and development of systems at their end. RBI also highlighted that banks and specified non-bank lenders should put in place necessary systems and infrastructure to implement the framework effectively.

The RBI further noted that in case borrowers do not co-operate with lenders in resolution, borrowing could become more expensive for them. Further, refinancing or take-out financing will be possible over a longer period and will not be interpreted as restructuring. Lenders will be given more liberal regulatory treatment for asset sales. The proposal also include allowing leveraged buyouts for specialised entities for acquisition of ‘stressed companies’ and to encourage sector-specific companies / private equity firms to play an active role in the stressed assets market.

India VIX, a gauge for markets short term expectation, lost 2.49% at 16.82 from its previous close of 17.25 on Thursday. (Provisional)

The CNX Nifty gained 13.20 points or 0.22% to settle at 6,086.90. The index touched high and low of 6,097.85 and 6,067.35 respectively. Out of the 50 stocks on the Nifty, 35 ended in the green, while 15 ended in the red.

The major gainers of the Nifty were PNB up 6.93%, Bank of Baroda up by 3.64%, ACC up by 3.38%, Tata Power up by 3.20% and BPCL up by 2.98%. The key losers were Tata Motors down by 3.26%, HDFC down by 2.78%, NTPC down by 1.56%, Grasim down by 0.99% and Asian Paint down by 0.94%. (Provisional)

Most of the European markets were trading in red; Germany’s DAX down by 1.07%, UK’s FTSE 100 down by 0.46% and France’s CAC 40 was down 0.88%.

Major Asian markets barring Japanese Nikkei were closed for trade on Friday on account of Lunar New Year holiday. The Japanese market concluded the trade in red on cautious note despite positive lead from Wall Street. Markets in Hong Kong, Shanghai, Taiwan, Singapore, Malaysia, South Korea and Indonesia are all closed for Lunar New Year holiday. Indonesia’s economy likely grew less than 6% in 2013, marking its slowest pace of growth in four years, as the end of a commodity boom hit exports and a widening current-account deficit undermined investor confidence. Inflation in Japan picked up speed in December, placing pressure on Prime Minister Shinzo Abe’s government to encourage wage gains as he attempts to free the nation from the deflationary debility that has lasted 15 years.

Japan’s core consumer price index, which excludes volatile fresh-food costs, climbed 1.3% from a year earlier in December, faster than a 1.2% gain in the previous month. According to other data, 103 jobs were available for every 100 person hunting for employment, thus revealing a tightening in the labor market that might put pressure on companies to raise salaries. As for Japanese manufacturing activity, the Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 56.6 in January, from 55.2 in the previous month.