Indian equities regain strength; Nifty above 5,350 mark

Indian equities regained strength and continued its firm trade as buying emerged among the frontline counters, which pulled the market up with investors hunting for fundamentally beaten down stocks paying no heeds towards the weekly inflation numbers which hit 6-month high of 11.43% for week ended October 15. Traders were seen piling up the position in Metal, Realty and Bankex sector while selling was witnessed in Consumer Durables sector. Metal sectors were seen rallying in the market on back of good support from Sterlite Industries, Hindalco and Jindal Steel which were seen trading with 8 to 11% gain. Apart from this, other metal shares rose on the local bourses as LMEX, a gauge of six metals traded on the London Metal Exchange, jumped on Thursday, October 27, 2011. Capital Goods sector were up due to heavy buying in front line counters like L&T which surged by 4% along with support from stocks like ABB, Siemens, BHEL, Praj Industries, BEML and Punj Lloyd. Shares of three state-run oil marketing firms HPCL, BPCL and IOC are trading in red after crude oil prices crossed $90 mark amid economic data indicating the strongest US economic growth in 12-months and progress with the sovereign debt crisis in the euro zone. In scrip specific development, Gokaldas Exports jumped on reports that the company may win orders from Wal-Mart and niche European fashion houses that are shifting a part of their sourcing requirements from China to other Asian markets.

On the global front, Asian markets were trading in green while the European markets were too trading in green. The sentiments were optimistic on account of Europe's hard-won debt deal to save the Euro-zone and the global economy from recession. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,350 and 17,700 levels, respectively. The market breadth on the BSE was positive in the ratio of 1653:1100 while, 92 scrips remained unchanged.

The BSE Sensex is currently trading at 17,770.25 up by 481.42 points or 2.78% after trading as high as 17,908.13 and as low as 17,671.86. There were 28 stocks advancing against 2 declines on the index.

The broader indices were trading in the green terrain; the BSE Mid cap index climbed 1.45% while Small cap added 0.89%.

On the BSE Sectoral space, Metal up 6.87%, Realty up 4.25%, Bankex up 3.58%, Capital Goods up 3.05% and Auto up 2.78% were the major gainers while Consumer Durables down 0.07% was the only loser in the space.

Sterlite up 11.05%, Hindalco up 10.10%, Jindal Steel up 8.78%, JP Associates up 7.83% and Tata Steel up 6.84% were the major gainers on the Sensex, while Maruti Suzuki down 2.17% and Bharti Airtel down 0.60% was the only losers on the index.

Meanwhile, the Reserve Bank of India has warned banks for taking customers for granted by manipulating interest rates on the floating rates loans. The Apex bank also wants banks to voluntarily waive the prepayment penalty on home loans.

However, Banks and RBI both mutually agreed to outlaw prepayment fees on floating rate home loans as one the 10-point action to improve customer services. KC Chakrabarty, deputy governor of RBI said 'Banks had agreed...now they have a problem. We are giving them some time but we are very clear that this 10-point action plan has to be implemented,'

Many banks are charging around 2% of the outstanding loans if the borrower wants to repay before the due date. However, leading commercial banks from public and private sector such as State Bank of India and Axis Bank have stopped charging prepayment fees.

The RBI governor D Subbarao also had indicated that the RBI will pursue banks to waive off the prepayment penalties as soon as possible. However, he also hinted that the banking system should get time to adjust with this, and RBI will give banks some time for adjusting.

At the same time, the RBI in its mid-year monetary policy review has expressed its discomfort about old floating rate customers getting a raw deal whereas new customers are offered a better rate; however, both have got the same rating. In a statement, the RBI said that there are instances where the spread charged to a customer has been revised upward frequently during the tenure of the floating rate loan.

The RBI find this practice as discriminating in nature as the existing customer are at disadvantage compare to the new customer with the same credit rating. Especially in case of home loans where banks kept offering attractive rates to new customers whereas old customers pay a higher rate.

To bring uniformity in differential rates RBI said that it is setting up a working group which will look into the 'principles governing proper, transparent and non-discriminatory pricing of credit.'

The S&P CNX Nifty is currently trading at 5,351.70, higher by 149.90 points or 2.88% after trading as high as 5,399.70 and as low as 5,322.80. There were 46 stocks advancing against 4 declines on the index.

The top gainers on the Nifty were Sterlite up 11.33%, Hindalco up 10.37%, Jindal Steel up 8.99%, JP Associates up 7.90% and Tata Steel up 7.22%. BPCL down 2.87%, Maruti down 2.10%, Bharti Airtel down 0.66% and GAIL down 0.20% were the only losers on the index.

Asian markets traded on an encouraging note, Shanghai Composite surged 1.55%, Hang Seng soared 1.68%, Jakarta Composite climbed 0.30%, KLSE Composite advanced 0.52%, Nikkei 225 jumped 1.39%, Straits Times garnered 1.68%, Seoul Composite gained 0.39% and Taiwan Weighted rose 0.67%.

The European markets were too trading in green with, France’s CAC 40 added 0.88%, Germany's DAX gained 1.39% and Britain’s FTSE 100 rose 0.47%.