Sensex displays sideways movement in Thursday's noon trades

Stock markets in India are showing lackadaisical movements in the Thursday afternoon session as the benchmark indices have extended their streak of consolidation for the fourth straight session this week. The frontline equity indices traded in an extremely tight range hardly budging from their previous closing levels. The benchmarks are exhibiting a sideways kind of movement since the start of trade and are currently trading with a positive bias amid uncertain market conditions, lacking any significant triggers to take the markets either ways. The psychological 17,500 (Sensex) and 5,300 (Nifty) levels were proving as support levels as the key indices despite repeated attempts refused to go substantially below those levels. However, cues from the Asian markets remained subdued with the benchmark in China plunging over a percent and leading the losers in the region. The European markets too traded on a tepid note as investors globally awaited European Central Bank's policy decision later in the day. Moreover, market participants also awaited a 3 billion euro Spanish bond auction, including new 10-year bonds, which will gauge the market's response to recent measures agreed by European leaders to ease the country's funding problems. On the domestic front, cues from the money market remained pessimistic as Indian rupee extended its depreciating run for the second straight session and inched above the 55 per dollar levels against the US dollar. On the BSE sectoral space, the Capital Goods sector climbed by around three fourth of a percent and remained the top gainer in the space followed by the Power and defensive FMCG pockets which traded with around half a percent gains and supported the markets. On the other hand, profit booking was evident in the high beta Realty and IT counters which dropped by about a quarter percent and capped the upside chances for the markets.

Moreover, the broader markets continued to trade on a positive note with notable gains of around a percent and outperformed their larger peers by a fat margin. The bourses consolidated on weak volumes of over Rs 0.5 lakh crore while the market breadth on BSE was in favor of advances in the ratio of 1763:842 while 95 scrips remained unchanged.

The BSE Sensex is currently trading at 17,478.54 up by 15.73 points or 0.09% after trading as high as 17,505.18 and as low as 17,423.45. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index advanced 0.85% and Small cap index surged 1.28%.

On the BSE sectoral space, Capital Goods up 0.73%, Power up 0.57%, Healthcare up 0.49%, FMCG up 0.49% and Consumer Durables up 0.31% were the major gainers, while Realty down 0.25%, IT down 0.23%, TECk down 0.22%, PSU down 0.13% and Auto down 0.04% were the  only laggards in the space.

Cipla up 2.26%, Jindal Steel up 1.87%, BHEL up 1.31%, TATA Power up 0.67% and RIL up 0.66% were the major gainers on the Sensex, while Bajaj Auto down 1.86%, ONGC down 1.18%, Dr Reddy’s down 0.93%, NTPC down 0.68% and Coal India down 0.65% were the major losers in the index.

Meanwhile, India’s central bank - the Reserve Bank of India (RBI) is contemplating the proposal of easing some of the rules relating to the country’s microfinance institutions’ (MFIs) net worth, capital adequacy and provisioning needs. At a time when the MFIs are facing difficult times, the relaxation of norms by RBI would provide a huge sigh of relief to the institutions dealing in micro-finance and also help them emerge out of the crisis.

Acknowledging that the setting up of new regulatory regime has run into some bottlenecks, RBI governor D Subbarao opined that the central bank is taking efforts to resolve various challenges faced by the MFIs and would soon bring MFI operations back on track. He cited that small MFIs were unable to meet the Rs 5 crore entry point capital to be eligible to register as non banking finance company (NBFC)-MFI, underlining the difficulties faced by them in complying with the qualifying asset criterion for registering as NBFC-MFI.

Subbarao highlighted that the loss making MFIs based in Andhra Pradesh, who are suffering from large non-performing assets (NPAs) and eroded capital, are reeling under acute problems in complying with the capital and provisioning norms. Therefore banks were reluctant to make fresh loans to them as such loans do not qualify for priority sector lending.

Though micro finance institutions have RBI as their regulator but there are apprehensions over whether the central bank has the means and ability to do so. RBI Governor revealed that the central government is bringing out a law to govern the MFI and has proposed RBI as the regulator however, concerns remain whether it have the set up to oversee small MFIs without affecting the quality of supervision.

The S&P CNX Nifty is currently trading at 5,305.80, higher by 3.25 points or 0.06% after trading as high as 5,312.30 and as low as 5,288.85. There were 28 stocks advancing against 22 declines on the index.

The top gainers on the Nifty were Cipla up 2.20%, Jindal Steel up 1.97%, IDFC up 1.70%, HCL Tech up 1.27% and BHEL up 1.24%.

Asian Paints down 1.61%, ONGC down 1.41%, Dr Reddy’s down 1.26%, DLF down 1.22% and TCS down 0.80% were the major losers on the index.

In the Asian space, Shanghai Composite plunged 1.05%, eased 0.19%, KLSE Composite shed 0.20%, Nikkei 225 dropped 0.27% and Taiwan Weighted declined 0.47%.

On the other hand Hang Seng rose 0.60%, Straits Times Index ascended 0.57% and KOSPI Composite Index inched up 0.06%.

The European markets got off to a tepid start as France’s CAC 40 shed 0.29%, Germany’s DAX dropped 0.02% and the United Kingdom’s FTSE 100 inched up 0.03%.