Post Session: Quick Review

Indian markets showed a range bound trade to snap the week on a flat note. While the global cues remained good, domestic markets underperformed lacking any major supportive trigger. Initial gains faded up amid reports that the foreign direct investment (FDI) into India grew by a meager 1.5 percent to $ 2.18 billion in January and for the April-January period, foreign investment inflows dipped 2 percent to $18.74 billion from $19.1 billion during the corresponding period of the previous fiscal. The rupee’s upmove and a report that Moody's Analytics has projected the ouster of the UPA government after a disappointing second term and said that the BJP is likely to form the next government after the general elections were unable to rev the market momentum.

The global cues were good with US markets rebounding overnight on getting good economic data and shrugging off the interest rate increase concerns. Most of the Asian markets too showed good move and bounced back from their last session’s sharp fall with Chinese shares surging most in five months on signs of US economic strength. The European markets made a cautious start though recovered soon, but were unable to help much the domestic markets.

Back home, markets continued their consolidation mood and for most part of the day traded in a tight range, although the broader markets showed smart come back, the action was missing from the frontliners and lots of blue chips kept sulking since beginning, putting pressure on the markets. Traders also remained concerned with Reserve Bank Governor Raghuram Rajan statement that central bank is yet to move to inflation targeting and is still in discussions with the government on the same; he also reiterated his preference for targeting retail price inflation. All the sectoral indices barring oil & gas and healthcare, managed to protect their turf. There was somberness in the upstream oil companies especially Reliance Industries and ONGC, as the government is yet to notify the new price for domestically produced gas and there might be a delay in the announcement. Meanwhile, Aam Aadmi Party (AAP) has requested the Election Commission of India not to approve the near doubling of natural gas prices to about $8 from next month. IT sector stocks continued their good run for yet another day despite the strength in rupee and weakness in sector heavyweight Infosys after another senior-level exit from the company. Chandrashekar Kakal, senior vice-president and head of business operations at Infosys exited, becoming the 10th executive from the top management to bid goodbye. There will be a special short trading session on Saturday, March 22, as BSE will rebalance its four indices viz; S&P BSE IPO, 500 Shariah, Mid Cap and Small Cap with effect from March 24.

The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1,585:1,241, while 152 scrips remained unchanged. (Provisional)

The BSE Sensex gained 16.78 points or 0.08% to settle at 21,756.87. The index touched a high and a low of 21,870.11 and 21,729.90 respectively. Among the 30-share Sensex, 17 stocks gained, while 13 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 0.87% and 0.94% respectively. (Provisional)

On the BSE Sectoral front, Metal up by 1.98%, Realty up by 1.73%, Power up by 0.85%, Auto up by 0.77% and IT up by 0.74% were the top gainers, while Oil & Gas down by 1.88%, Healthcare down by 0.22% and PSU down by 0.19% were the top losers in the space. (Provisional)

The top gainers on the Sensex were Tata Steel up by 3.43%, Hindalco up by 3.31%, Wipro up by 2.91%, Axis Bank up by 2.59% and Tata Power up by 2.43%, while, RIL down by 2.34%, ONGC down by 2.30%, Hero MotoCorp down by 1.99%, Sun Pharma down by 1.74% and NTPC down by 1.42% were the top losers in the index. (Provisional)

Meanwhile, amid reports that the Election Commission may impede the Reserve Bank’s plan to issue new bank licences before general elections, the apex bank will go ahead with issuing new bank licences only after the conclusion of general elections in May. The RBI had written to the EC seeking their views on issuing new bank licences. It is reported that RBI’s move would amount to a violation of the model code of conduct as election dates have already been announced. RBI governor Raghuram Rajan has asserted that as soon as the central bank gets the permission from EC, the bank licences would be announced within a short period thereafter.

On the other hand, EC has put its approval on hold and would like to hear from the central bank why was it crucial to grant the licences during the poll period. Further, the EC may give also ask RBI to hold decision for another two months till elections are over.

At present, there are 24 public and private sector applicants for new banking licence including NBFCs and various large corporates such as India Post, IFCI and large business houses such as the Anil Ambani group and the Aditya Birla group. The RBI had issued final guidelines that would govern the new set of proposed banks. As per the guidelines, banks should have a minimum equity capital of around Rs 5 billion and not have foreign ownership of more than 49% for the first five years of operation. The rules also require that one out of every four branches opened by the new banks should be located in rural areas. Earlier, the central bank has received 26 applications for new banking licences, however, Tatas and the Mahindras withdrew their applications saying with the given stringent criteria it would be better for them to continue with their NBFC services.

India VIX, a gauge for markets short term expectation of volatility lost 4.28% at 16.18 from its previous close of 16.90 on Thursday. (Provisional)

The CNX Nifty gained 10.90 points or 0.17% to settle at 6,494.00. The index touched high and low of 6,522.90 and 6,485.70 respectively. Out of the 50 stocks on the Nifty, 31 ended in the green, while 19 ended in the red.

The major gainers of the Nifty were Tata Steel up 3.64%, Hindalco up by 3.38%, JP Associate up by 3.29%, Bank of Baroda up by 2.86% and Wipro up by 2.83%. The key losers were NMDC down by 2.69%, ONGC down by 2.45%, Reliance Industries down by 2.43%, Hero MotoCorp down by 1.98% and IDFC down by 1.79%. (Provisional)

The European markets were trading in green; France’s CAC 40 was up by 0.58%, Germany’s DAX was up by 0.49% and UK’s FTSE 100 up by 0.34%.

The Asian markets barring Taiwan Weighted concluded Friday’s in green as bargain-hunters moved in after the previous session’s heavy losses, with investors taking a lead from Wall Street and a positive batch of US data. Japan’s Nikkei 225 was closed for trading on account of ‘Vernal Equinox Day’ holiday. Hong Kong’s Hang Seng Index concluded the week as one of the world’s worst performing major stock indexes, down 9% so far in 2014. China’s economy slowed this quarter, with industries including retail and mining showing weaker revenue growth while loans through non-traditional channels became more expensive. The report adds to signs that Premier Li Keqiang may face difficulties reaching an expansion target of 7.5% this year without stimulus. The State Council, or cabinet, stated this week that it will speed up construction projects and other measures to support the economy after data showed moderating growth in industrial production and investment.

Goldman Sachs has slashed its 2014 growth outlook for China to 7.3% from 7.6%, citing recent trade and consumption-data disappointments. For 2015, Goldman expects growth of 7.6% versus a prior forecast of 7.8%. Inflation, meanwhile, is seen at 2.6% for 2014, versus a prior view of 3%, while its 2015 outlook on inflation is unchanged at 3%. The Chinese government’s official growth target for 2014 is 7.5%.