Benchmarks end slightly higher on Tuesday

After showcasing a strong performance in last session, Indian equity benchmarks witnessed a bit of consolidation on Tuesday with frontline gauges cornering modest gains by the end of trade. The optimism that was evident in morning trade fizzled out completely during the mid and the session turned choppy, as after Monday’s rally, markets remained cautious and the key indices gyrated in a very tight range throughout the day’s trade. Nevertheless, markets which dipped into red terrain in afternoon deals managed to end positive, comfortably above their crucial 6,300 (Nifty) and 21,200 (Sensex) bastions, supported by rally in rate sensitive counters viz. Banking, Realty and Auto amid renewed expectations that the Reserve Bank of India (RBI) will maintain status quo on interest rates when it meets to review its monetary policy on January 28.

Global cues too remained supportive with most of the Asian equity indices ending in the green after Chinese central bank injected emergency funding support to commercial banks in order to cater to rising demand for cash ahead of the Chinese New Year. The Japanese Nikkei also ended higher for the first time in four sessions, as a weaker yen boosted stocks of exporters as well as automakers. Firm opening in European markets too supported the sentiments with CAC, DAX and FTSE all trading in the green terrain in early deals.

Back home, sentiments remained upbeat on report that foreign institutional investors (FIIs) bought shares worth a net Rs 384.89 crore on January 20, 2014. Some support also came in after Indian rupee firmed up against the US dollar in early trades and was up at Rs 61.58 per dollar at the time of equity markets closing as compared with the previous close of Rs 61.62 per dollar.

Additionally, stocks related to textile sector like, Arvind, Alok Industries, Vardhman Textile, Trident etc. edged higher, as the government is setting up a $60 billion target for the next financial year, up by over 30% from the current financial year. Select retail stocks such as Shoppers Stop, Future Retail and Provogue (India) gained traction after commerce minister highlighted that he would seek legal opinion on whether a state can opt out of FDI multi-brand retail policy. Additionally, metal and mining stocks edged higher after China’s central bank injected emergency funds into banks to tackle concerns about liquidity.

However, some disappointment came in from corporate earning front with private sector lender -- Kotak Mahindra Bank -- upsetting street with its third quarter earnings. The bank’s standalone net profit fell 6% year-on-year to Rs 340 crore and net interest income grew nearly 11 percent to Rs 912.7 crore, the stocks of the bank plunged by 3%.

The NSE’s 50-share broadly followed index Nifty rose by around ten points to end above its psychological 6,300 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex gained over forty points to end above its psychological 21,250 mark. Moreover, broader markets traded with traction and ended the session in the green with gain of around half a percent. The market breadth remained in favour of advances, as there were 1,376 shares on the gaining side against 1,247 shares on the losing side, while 160 shares remained unchanged.

Finally, the BSE Sensex gained 46.07 points or 0.22%, to settle at 21251.12, while the CNX Nifty added 9.85 points or 0.16% to settle at 6,313.80.

The BSE Sensex touched a high and a low of 21302.52 and 21189.20, respectively. The BSE Mid cap index was up by 0.45%, while the Small cap index gained 0.39%.

The top gainers on the Sensex were ICICI Bank up 3.32%, Tata Motors up 2.68%, Tata Steel up 2.39%, Axis Bank up 2.37%, and SSLT up by 1.56%, on the flip side TCS down 2.46%, Coal India down 2.45%, BHEL down 1.90%, Gail India down 1.59%, and Sun Pharma down by 1.43%,were the top losers on the index.

On the BSE Sectoral front Bankex up by 1.55%, Auto up by 1.03%, Metal up by 0.77%, Capital Goods up by 0.64% and Realty up by 0.59%, were the top gainers, while IT down by 0.68%, Teck down by 0.63%, Power down by 0.59%, Oil & Gas down by 0.53% and PSU down by 0.19%, were the top losers on the sectoral front.

Meanwhile, in order to put banks under the scanner on a range of governance parameters, the Reserve Bank of India (RBI) has set up an eight-member expert panel for reviewing the function of board of banks and examines 'fit and proper' criteria for directors, including their tenure. The panel to be headed by former Axis Bank Chairman P J Nayak and is expected to submit its report within three months from the date of its first meeting.

As per the RBI, the panel will review the regulatory compliance requirements of bank boards and examine their working including whether adequate time is devoted to issues of growth, strategy governance and risk management. The panel will also investigate possible conflicts of interest in board representation, like among owner representatives and regulators. The panel will also examine guidelines on board compensation, which vary vastly between public sector banks, private banks and foreign banks.

Furthermore, the committee will also review central bank regulatory guidelines on bank ownership, ownership concentration and representation in the board and also judge what can be rationalised and where requirements need to be enhanced.

The central bank’s recent move will help to strengthen the domestic banking industry, which is the most dominant segment of the country’s financial sector. Banks help channel savings to investments and encourage economic growth by allocating savings to investments that have potential to yield higher returns. The Indian banking industry’s contribution to GDP moves along with growth in the Indian economy.

The CNX Nifty touched a high and low of 6,330.30 and 6,297.90 respectively.

The top gainers on the Nifty were ICICI Bank up by 3.41%, Tata Steel up by 3.06%, Tata Motors up by 2.49%, Jaiprakash Associates up by 2.32%, and Axis Bank up by 2.20%. On the other hand, Kotak Mahindra Bank down by 3.14%, BHEL down by 2.44%, Coal India down by 2.41%, TCS down by 2.26%, and Asian Paints down by 2.14%, were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.27%, Germany's DAX was up by 0.46%, and United Kingdom's FTSE 100 was up by 0.08%.

The Asian markets, barring Taiwan Weighted concluded Tuesday’s trade in green after Chinese central bank injected emergency funding support to commercial banks, in order to cater to rising demand for cash ahead of the Chinese New Year. China’s business climate index, a major gauge of the country’s macro-economic outlook, fell in the fourth quarter. The index was 119.5 points for the fourth quarter, down two points from the previous quarter. The Bank of Japan has started two days monetary policy meeting. Japan’s industrial production fell to a seasonally adjusted -0.1%, from 0.1% in the preceding month. Thailand’s escalating political crisis may lead the country’s central bank to further cut its benchmark interest rate.

Indonesia companies avoided borrowing funds from overseas lenders last year due to a slower economic growth; a condition that can prop up confidence in the country’s weakened currency. The total overseas debt compiled by the country’s private businesses barely changed to stand at $137 billion in November 2013, up 10 percent from the previous year. Hong Kong Unemployment Rate fell to a seasonally adjusted 3.2%, from 3.3% in the preceding month. The overall consumer prices in Hong Kong rose 4.3% year-on-year in December, same as in November. Netting out the effects of the Government’s one-off relief measures, the underlying inflation rate increased 3.9% year-on-year, slightly less than in November (4%), mainly due to the smaller increases in the prices of fresh vegetables.