Post Session: Quick Review

Indian equity markets ended in green ahead of CPI data and on a day when Railway Minister Mallikarjun Kharge presented UPA II’s last Rail Budget, which lacked any major announcement and turned out to be a non-event. Diverting from the interim railway budget presented by Lalu Prasad in 2009, Railway Minister presented what could be termed as the shortest vote-on-account, while keeping both freight rates and passengers fares unchanged. The Minister, which refrained from making any announcements, just about spelled out the achievements of the Railways during the five year stint.  Nevertheless, undertone of local equity markets remained fairly positively thanks to positive global cues after optimistic economic outlook from Federal Reserve Chair Janet Yellen whetted risk appetite. By close of trade, Sensex and Nifty, settled above the crucial 20,400 and 6,050 levels respectively, with gains of over quarter of a percent. Meanwhile, broader indices underperforming larger peers with fat margins managed to settle just little above the neutral line.

On the global front, Asian markets moved higher on Wednesday after the release of stronger-than-expected trade data from China, and as US Federal Reserve Chairwoman Janet Yellen said she planned no major changes in the central bank’s monetary policies.  China reported that exports climbed 10.6% in January from a year earlier, way above than the 0.1% rise that had been expected. Meanwhile, Yellen in her first testimony suggested that the Fed would keep in place most of its easy-money policies as it gradually reduces the extraordinary bond-buying program that it has used to stimulate the US economy. Additionally, receiving positive hand-over from Asian counterparts, European shares too were trading upbeat in early deals.

Closer home, most of the sectoral indices ended in red, nevertheless the underperformers were stocks from Metal, Fast Moving Consumer Goods and Consumer Durables counters. On the flip side, Capital Goods, Banking and PSU counters were the top gainers of the session. Additionally, Oil & Gas sector also witnessed gains mainly on the back of index-heavyweight, Reliance Industries (RIL) which rallied on value-buying after falling 2 percent on Tuesday after Delhi chief minister ordered an investigation into company Chairman Mukesh Ambani and policymakers over gas pricing. In stock-specific activities, railway stocks, Kernex Microsystems (India),Kalindee Rail Nirman Engineers and Taxmaco got de-railed as the interim railway budget lacked any major capital spending announcement. Although expectations of any major announcement had been low, some traders had positioned themselves for a potential positive surprise. Additionally, sugar stocks, viz Shree Renuka Sugar, Bajaj Hindusthan and Balrampur Chini stocks  soured in trade after Cabinet Committee on Economic Affairs (CCEA), for the third time in row, yet again deferred a decision on subsidy for export of raw sugar on account of unresolved difference between the Agriculture and Food Ministry on quantum of subsidy. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1288: 1337, while 137 scrips remained unchanged. (Provisional)

The BSE Sensex gained 73.96 points or 0.36% to settle at 20437.33. The index touched a high and a low of 20516.60 and 20427.23 respectively. Among the 30-share Sensex, 16 stocks gained, while 13 stocks declined and one stock remains unchanged. (Provisional)

The BSE Mid cap index ended higher by 0.01% and Small cap index ended higher by 0.02%. (Provisional)

On the BSE Sectoral front, Capital Goods up by 1.68%, Oil & Gas up by 1.16%, Bankex up by 0.74%, PSU up by 0.49% and Auto up by 0.23% were the top gainers, while Metal down by 1.46%, FMCG down by 0.92%, Consumer Durables down by 0.62%, Realty down by 0.46% and Healthcare down by 0.27% were the only losers in the space. (Provisional)

The top gainers on the Sensex were ICICI Bank up by 2.95%, Gail India up by 2.92%, ONGC up by 2.50%, L&T up by 2.05% and BHEL up by 1.68%, while, Tata Steel down by 4.19%, Maruti Suzuki down by 1.72%, ITC down by 1.58%, Dr Reddys Lab down by 1.53% and Hindalco down by 1.48% were the top losers in the index. (Provisional)

Meanwhile, in a bid to create a level playing field for existing banks and new players that may soon get the banking license, the Reserve Bank of India (RBI) has imposed curbs on banks investing in their group companies. As per the norms, banks cannot lend more than 5% of their paid-up capital and reserves to a single non-financial company or unregulated financial company belonging to the same group, while their aggregate group exposure should not exceed 20%.

However, in a case where bank’s current intra-group exposure is more than the limits stipulated, it would be required to bring it down before March 31, 2016. Nevertheless, exposure through equity and other capital instruments would be exempted from this norm. 

The measures, which would ensure banks maintaining arm's length relationship in dealings with their own group entities, meeting minimum requirements with respect to group risk management and group-wide oversight, and adhering to prudential limits on intra-group exposures, would come into effect in October, 2014. Almost all existing commercial banks, including foreign banks operating in India, will have to adhere to these norms.

Further, the central bank also has mandated banks not to enter into cross-default clauses i.e. clauses that trigger automatically when a lender declares that a loan is in default. It has barred banks from selling their bad loans to group entities other than asset reconstruction companies.

India VIX, a gauge for markets short term expectation of volatility, lost 6.44% at 17.43 from its previous close of 18.63 on Tuesday. (Provisional)

The CNX Nifty gained 17.10 points or 0.28% to settle at 6,079.80. The index touched high and low of 6,106.60 and 6,077.40 respectively. Out of the 50 stocks on the Nifty, 24 ended in the green, while 25 ended in the red and one stock remains unchanged.

The major gainers of the Nifty were ICICI Bank up 2.98%, Gail up by 2.79%, ONGC up by 2.41%, L&T up by 2.15% and BHEL up by 1.61%. The key losers were Tata Steel down by 4.09%, Cairn down by 2.90%, Maruti Suzuki down by 1.98%, ITC down by 1.63% and Dr. Reddy's Laboratories down by 1.53%. (Provisional)

Most of the European markets were trading in green; Germany’s DAX up by 0.97%, UK’s FTSE 100 up by 0.37% and France’s CAC 40 was up 0.72%.

The Asian markets concluded Wednesday’s trade in green with Japan’s Nikkei share average climbing to a 1-1/2 week high after strong Chinese trade data lifted investors’ risk appetites and the Federal Reserve’s new chief signaled no change in its policies. Chinese trade data printed much stronger than expected, with a sharp gain for exports, but markets largely ignored the result. Chinese Trade Balance rose to 31.86B, from 25.60B in the preceding month. China’s exports rose 10.6% in January compared to a year earlier, accelerating from a 4.3% advance the previous month.

Japan’s Core Machinery Orders fell to -15.7% from 9.3% in the preceding month while Japan’s M2 Money Stock rose to a seasonally adjusted 4.4%, from 4.3% in the preceding month whose figure was revised up from 4.2%. South Korean Unemployment Rate rose to a seasonally adjusted annual rate of 3.2%, from 3.1% in the preceding month whose figure was revised up from 3.0%.