Markets get a soft start; benchmarks trade lower by about half a percent

Indian markets have made a weak start on Thursday morning, mainly on the back of soft global cues, as the US markets ended lower over night after minutes of the latest meeting of Fed showed that all members agreed that on likelihood of continuing improvement it would be appropriate to make a further measured reduction in the pace of its asset purchases at this meeting. The Asian markets too made a soft start with Japanese market extending their slump on strength in yen; however the Chinese market was holding up its early gains despite a manufacturing index falling to the lowest level in seven months. The preliminary February reading of HSBC Purchasing Managers’ Index stood at 48.3 compared with January’s final figure of 49.5. Back home, there was profit booking in the sectors that have gained most in last few trading sessions, while the weakness in rupee too was weighing down the sentiments. The broader indices are though outperforming the benchmarks but their gains too remain marginal, unable to do much for the market.Telecom stocks are particularly under pressure, as the guidelines for mergers and acquisitions of telecom companies are expected to be in place within 10 days which may disappoint phone companies because the government has refused to concede the demand that they shouldn't be required to pay market-linked prices for spectrum that comes with any acquisition.

The market breadth on BSE was negative, out of 1602 stocks traded, 703 stocks advanced, while 812 stocks declined on the BSE.

The BSE Sensex opened at 20661.07; about 61 points lower compared to its previous closing of 20722.97, and touched a high and a low of 20661.07 and 20589.03 respectively. The index is currently trading at 20641.87, down by 81.10 points or 0.39%. There were 7 stocks advancing against 23 declines on the index.

The overall market breadth has made a weak start with 43.88% stocks advancing against 50.69% declines. The broader indices were trading flat; the BSE Mid cap index was down by 0.03%, while the Small cap index was trading up by 0.01%.

The top gaining sectoral indices on the BSE were, Consumer Durables up by 1.05%, Auto up by 0.21% and Healthcare up by 0.15%, while Bankex down by 1.18%, PSU down by 0.68%, Metal down by 0.67%, Power down by 0.48% and Oil & Gas down by 0.43% were the top losers on the sectoral index. 

The top gainers on the Sensex were Bajaj Auto up by 1.42%, TCS up by 0.93%, Tata Motors up by 0.55%, Cipla up by 0.46% and Sun Pharma up by 0.43%. On the flip side, Tata Steel was down by 1.94%, Tata Power was down by 1.67%, ICICI Bank was down by 1.28%, SBI was down by 1.11% and  Axis Bank was down by 1.00% were the top losers on the Sensex.

Meanwhile, non-performing assets (NPAs), one of the major problematic areas of the Indian banking sector are continuously rising and it is estimated that currently upto a quarter of bank loans are under stress. Finance Minister P Chidmabram in his interim budget just acknowledged that banks are under strain owing to rising non-performing assets and that bankers have assured that as the economy turns they will be able to contain the NPAs, recover more loans, and build healthier balance sheets, However, he failed to offer any relief and merely announced that he will recapitalise banks to the extent of Rs 11,200 crore, which was again lower than last fiscal.

A study done by NPAsource.com, a first-of-its-kind portal which focuses on resolution of stressed assets and an online portal for e-auction of NPAs of financial institutions, has said that gross non-performing assets (NPAs) of 40 listed banks shot up 35.2 per cent or Rs 63,386 crore in the nine months ended December 31, 2013. The study further elaborated that 10 out of the 40 listed banks accounted for nearly 70 per cent of the total gross NPAs. State Bank of India at 28 per cent at Rs 67,799 crore has the largest share in total gross NPAs of the 40 listed banks, followed by Punjab National Bank with 7 per cent share at Rs 16,596 crore and Bank of Baroda and Central Bank of India with 5 per cent share each at Rs 11926 crore and Rs 11599 crore respectively. On the other hand Yes Bank, DCB and City Union Bank were having the lowest gross NPAs at Rs 196 crore, Rs 208 crore and Rs 269 crore respectively.

Recently, Reserve Bank of India Governor Raghuram Rajan too in the foreword of the Financial Stability Report has said that non-performing assets of the banking sector need to be tackled on a priority basis to ensure that they do not grow to alarming proportions. Further, despite assuring that the current levels of NPAs do not pose a systemic concern, has said that we cannot be complacent.

The CNX Nifty opened at 6,127.15; about 25 points lower as compared to its previous closing of 6,152.75, and has touched a high and a low of 6,129.10 and 6,105.50 respectively. The index is currently trading at 6,122.15, down by 30.60 points or 0.50%. There were 8 stocks advancing against 42 declines on the index.

The top gainers of the Nifty were Bajaj-Auto up by 1.60%, TCS up by 0.96%, Tata Motors up by 2.56%, Cipla up by 0.46% and Ranbaxy up by 0.43%. On the flip side, Bank of Baroda down by 2.14%, Tata Steel down by 1.99%, IDFC down by 1.80%, Kotak Bank down by 1.68% and PNB down by 1.58% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng tumbled 241.92 points or 1.07% to 22,422.60, Jakarta Composite decreased 11.31 points or 0.25% to 4,581.34, KLSE Composite declined by 3.18 points or 0.17% to 1,826.27, Nikkei 225 crumbled 283.35 points or 1.92% to 14,483.18, Straits Times slipped by 2.50 points or 0.08% to 3,086.2, Seoul Composite dropped 10.72 points or 0.55% to 1,932.21 and Taiwan Weighted was down by 37.29 points or 0.43% to 8,539.72.

On the flip side, Shanghai Composite was up by 14.28 points or 0.67% to 2,156.83.