Indian equity markets recoil from intra-day’s low; Sensex reclaims 16,600 bastion

After showcasing signs of consolidation in opening trade, Indian equity markets have retreated from intra-day’s low level, as benchmark indices found support near the bottoms. Profit-booking by opportunist after four consecutive sessions of gains, have led to the soft opening of the bourses. However, buying interest witnessed across Information Technology, Oil & Gas and Consumer Durable counters lightened the sentiment at Dalal Street to some extent. Strong support emerged to the 30 scrip sensitive index, Sensex, near the 16600 level, which after breaching the bastion, recovered quickly, to trade past that level, albeit with loss of close to 50 points. Similarly, the widely followed 50 share index, Nifty, despite oscillating in the negative terrain, is holding the crucial 5000 bastion. Reversal of trade, emerged for broader indices, which slashing losses, were trading in green territory.

Gloomy global design could be blamed for subdued performance for benchmarks on the last trading session of the week. Lack of clear signal of further U.S. monetary stimulus from Federal Reserve Chairman Ben Bernanke was weighed against surprise rate cut in China by Asian pacific shares. Cold water was poured on hopes for an early policy response in the U.S. after US Federal Reserve Chairman Ben Bernanke gave no hint of immediate action to jump-start growth in the world's No. 1 economy.

Closer home, depreciation of Indian currency, was benefiting stocks from Information Technology counters, where software providers gains lion chunk of the revenues from exports. Declining over 32 paise in early trade, Indian rupee was trading at 55.25 against the dollar. The overall market breadth on BSE was in the favour of advances which thrashed declines in the ratio of 1046:915, while 94 shares remained unchanged.

The BSE Sensex is currently trading lower by 42.66 points or 0.26% at 16,606.39. The index has touched a high and low of 16,613.04 and 16,533.47 respectively.   There were only 13 stocks advancing against 17 declines on the index.

The broader indices bounced back in green; the BSE Mid cap and Small cap indices were trading higher by 0.01% and 0.35 respectively.

The major losing sectoral indices on the BSE were, IT down by 0.88%, Oil and Gas down by 0.80%, CD down by 0.68%, Health Care down by 0.56% and TECk down by 0.50%. While, Realty up by 1.22%, Capital Goods up by 0.78% and Fast Moving Consumer Goods up by 0.20%.

The few gainers on the Sensex were HUL up by 1.50%, DLF up by 1.31%, L&T up by 1.20%, Bharti Airtel up by 1.06% and GAIL India up by 1.06%.

On the flip side, ONGC down by 1.83%, Bajaj Auto and Infosys were down by 1.24%, TCS down by 1.12% and Maruti Suzuki down by 1.01% were the top losers on the Sensex.

Meanwhile, in its bid to improve capital to risk weighted assets ratio (CRAR) of Regional Rural Banks (RRB), the government has approved the release of Rs 632 crore for recapitalization of cash-starved RRBs. The Union Cabinet’s move to release 50 percent share of the central government for recapitalization of the remaining RRBs is likely to help the banks in enhancing their capital adequacy and lending capacity to the agriculture sector.

The central government shares 50% of the issued capital of RRBs while the concerned state government and the sponsor bank share 15% and 35%, respectively. As all state governments have not contributed their share, the government decided to extend the scheme of capitalization of weak RRBs by another 2 years in order to complete the process of recapitalization.

As per the recommendations of Dr Chakrabarty, Deputy Governor, RBI, the government had initiated the process of recapitalization of 40 financially weak RRBs in 2009-10 and capitalization in 16 RRBs was completed till the end of March, 2012. The Regional Rural Banks were established in 1975 with the objective to create an alternative channel to 'cooperative credit structure' with a view to ensure sufficient institutional credit for rural and agriculture sector.

The S&P CNX Nifty is currently trading lower by 16.10 points or 0.32% at 5,033.55. The index has touched a high and low of 5,044.25 and 5,012.65 respectively. There were 17 stocks advancing against 33 declines on the index.

The top gainers of the Nifty were Reliance Infra up by 2.12%, L&T up by 1.41%, HUL up by 1.39%, GAIL up by 1.36% and DLF up by 1.34%.

On the flip side, ONGC down by 2.01%, Cairn India down by 1.66%, Infosys down by 1.36%, Asian Paints down by 1.32% and ACC down by 1.23%, were the major losers on the index.

Asian markets were brutally obliterated; Hang Seng Index declined 0.59%, Jakarta Composite shrank 0.25%, KLSE Composite slipped 0.25%, Nikkei 225 got pounded by 2.24%, Straits Times Index dropped 0.54%, KOSPI Composite Index shed 0.57% and Taiwan Weighted sank 1.22%

On the other hand only Shanghai Composite up by 0.11% was the lone gainer on the index.