Barometer indices sustain early morning stupendous gains; broader too capture additional ground

Diwali at domestic front coupled with the announcement of long-awaited plan to resolve the European debt crisis on international front have lighted up the spirit at Dalal Spirit as the bourses after showcasing lukewarm response at Mahurat trading have sustained early morning stupendous gains. Investor’s positioned back money to the riskier assets early this morning on the back of announcement of three pronged plan which included a 50 percent write-down on Greek government debt, increased leveraging of the European Financial Stability Facility bailout mechanism and agreements on plan to recapitalize the region's banks. Risk appetite further revisited Dalal Street supported by data showing the U.S. economy grew at its fastest pace in a year in the third quarter, a welcome respite for a financial system that seemed on the brink of a recession some weeks ago. Overnight, US markets surged 3 percent on European debt accord. Meanwhile, Asian shares too trading in jaunty mood are spilling over the optimism at D-Street. However, the US future indices were showing an uptick in the screen trade. Back home, on the BSE Sectoral front, stocks from rate sensitive’s were showing the major dynamism as the index pivotal were up with gains of over 3-5%. 30 share barometer index -Sensex- escalating over 400 points was trading above 17700 level. 50 shares broadly followed index-Nifty-gaining over a century of points as trading above 5300 mark. The overall market breadth on BSE was in the favour of advances which thrashed advances in the ratio of 1557: 780, while 85 shares have remained unchanged.

The index is currently trading at 17,756.72, up by 467.89 points or 2.71%. The index has touched a high and low of 17,908.13 and 17,671.86 respectively. All the 30 stocks were on advancing side.

The broader indices too were trying to match up the pace of frontline indices; the BSE Mid cap and Small cap indices were up by 1.33% and 1.02% respectively.

Buying was witnessed across the counter. However, Metal up by 5.33%, Bankex up by 3.38%, Realty up by 3.27%, Capital Goods up by 3.17% and Auto up by 3.00%, were the top gaining counters on Sensex.

Since all 30 stocks were on advancing side there were no losers. However, the top gainers on the Sensex were Hindalco Industries up by 8.42%, Sterlite Industries up by 7.78%, Tata Steel was up by 6.2%, Jindal Steel up by 6.02% and Jaiprakash Associates up by 6.91%.

Meanwhile, the ministry of finance indicated that it is likely to approve capital infusion into public sector banks, including State Bank of India by mid-November. In the current financial year, the capital requirement of PSU banks has been estimated between Rs 10,000-20,000 crore.

After the second meeting of the Committee on Capital Requirements of Financial Institutions, the financial services secretary D K Mittal said 'we will hopefully decide on the capital infusion for banks by Tuesday.' Once the committee on capital requirements of financial institutions approves the capital infusion, the proposal will be tabled to Finance Minister Pranab Mukherjee for his approval. This process is expected to finish by November 15. After receiving finance ministry’s approval, the proposal will go to the Union Cabinet.

The first meeting of the committee chaired by the finance secretary R S Gujral was held last week. About 5-6 PSU banks including SBI, Bank of Baroda, Syndicate Bank and Union Bank of India would require capital in the current fiscal year. The capital is either needed to increase the government holding to 58% of tier I capital to 8%.

The committee is examining proposals for capital requirement during the current fiscal as well as for long-term (2021). By that time banks will have to meet Basel II norms as well. As India is set to implement Basel III norms on capital adequacy, in coming ten years, PSU banks would need around Rs 3.5 lakh crore. 

In 2011-12, the government has already earmarked Rs 6,000 crore for capital infusion in the PSU banks and additional amount would be asked via second batch of the supplementary demand for grants to be tabled in the coming winter session of Parliament. In last financial year, the government had provided capital support of around Rs 20,157 crore to the PSU banks. The banks which got capital from the government last fiscal includes Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce and UCO Bank

The S&P CNX Nifty is currently trading at 5,344.20, surged by 142.40 points or 2.74%.  The index has touched a high and low of 5,399.70 and 5,329.05 respectively. There were 48 stocks advancing against 1 declining stock on the index, while 1 stock remained unchanged.

The gainers of the Nifty were Hindalco Industries up by 8.46%, Sterlite Industries up by 8.55%, Tata Steel was up by 5.97%, Jindal Steel up by 6.30% and Tata Motors up by 6.10%. On the flip side, BPCL down by 2.31% remained the sole loser.

All the Asian equity indices too got a strong start; Shanghai Composite gained 1.00, Hang Seng added 1.89% at 20,061.44, Jakarta Composite surged 0.57%, KLSE Composite gained 0.78% at 1,482.40, Nikkei 225 gained 0.96%, Straits Times gained 1.27%, Seoul Composite edged higher 0.39% and Taiwan Weighted gained 0.65%.