Key indices oscillate in a narrow range; small-cap pocket outperform

The key equity indices oscillated in a narrow range with a positive bias in the mid-morning session. Up-tick on all the regional peers, barring Taiwan Weighted, was keeping the undertone positive back home. The US index futures were flat-to-positive in screen trade. On the Dalal Street, the BSE Sensex and the NSE Nifty were holding on to the crucial levels of 20,100 and 6,000 respectively. Metal, consumer durables and banking stocks were attracting maximum number of investors in trade. On the flip side, auto, software and capital goods counters were witnessing selective selling at this point of time. Index heavyweight, RIL, gained around half a percent in trade. The gainers list was topped by Hindalco Industries, HDFC bank and Sterlite Industries while Wipro, RCom and Tata Motors languished at the bottom. The small-cap pocket outperformed all its larger peers in trade. The market breadth on the BSE was extremely robust; the gainers thrashed the losers in a ratio of 1786:765 while 111 shares were unchanged.

The BSE Sensex increased 79.92 points or 0.40% to 20,105.34. The index touched a high and a low of 20,122.49 and 20,054.64, respectively.

The BSE Mid-cap and Small-cap indices gained 0.64% and 1.03%, respectively.

The main gainers in the BSE sectoral space were Metal up 1.16%, Consumer Durables (CD) up 1.01%, Bankex up 0.59%, Fast Moving Consumer Goods (FMCG) up 0.52% and Realty up 0.47%.

On the other hand, Auto down 0.18%, Information Technology (IT) down 0.08% and Capital Goods (CG) down 0.02% were the only losers in the BSE sectoral space.

Meanwhile, India's telecom regulator TRAI is looking to encourage the domestic production of telecom equipments as security concerns regarding the mostly Chinese supplied equipments grows among various government departments.

The Indian government has been apprehensive with regard the telecom equipment supplied by Chinese majors. Various security establishments have raised concerns to government on apprehension that Chinese equipment may have some sort of spying technology weaved into it. Even though the Chinese companies are looking to allay government's concerns, given the political realities, the matter is unlikely to be ever resolved completely. There were hopes that the issue will be thoroughly resolved during the state visit of Chinese President to India earlier in the month, however not much seems to have materialised.

Companies have been saying that the government is probably using the security clearance norm to restrict Chinese companies from supplying the equipments. However, given the scorching growth in the telecom industry and huge requirement of equipments, experts have been pointing out that restrictions in using the Chinese companies will retard the pace of network rollout by operators and hence subscriber growth, particularly in the 3G space.

The major gainers on the Sensex were Hindalco Inds up 1.96%, HDFC Bank up 1.77%, Sterlite Inds up 1.65%, Bharti Airtel up 1.33% and Jindal Steel up 1.29%.

The major losers on the index were Wipro down 1%, RCom down 0.97%, Tata Motors down 0.91%, M&M down 0.66% and BHEL down 0.40%.

The microfinance institutions (MFIs) have come into eye of the storm following the ordinance issued by the Karnataka government. Even as the industry hope for some relief to come its way from the forthcoming report of the Y H Malegam Committee constituted by the Reserve Bank of India (RBI), analysts feel that the road ahead for MFIs will remain bumpy in next year.

One of the most critical aspects of the ongoing crisis is liquidity crunch for the industry. A number of banks have in recent weeks suspended the lines of credit to MFIs as it became clearer that problems being faced by microfinance players are not going to end very soon. There have also been accusations that some of the MFIs were following policies of giving loans to defaulters to pay earlier loans, just to hike overall lending numbers. While not all the MFIs would be doing this, banks are also gearing up to increase their vigil on the industry.

Since commercial banks are the biggest source of funds to MFIs contributing nearly three-fourths of the total capital of the industry, if the credit lines remain closed for longer period, the microfinance industry is definitely going to chock. While banks have officially being denying any denial of funds to MFIs, the fact is that most of them are now looking into widening the option of direct lending to the marginal section of society to meet their priority sector lending targets rather than going through MFIs.

The S&P CNX Nifty rose 20.95 points or 0.35% to 6,016.95. The index touched a high and a low of 6,025.10 and 6,002.85, respectively. 

The top gainers on the Nifty were Hindalco Inds up 1.96%, HDFC Bank up 1.85%, Sterlite Inds up 1.59%, Jindal Steel up 1.44% and Bharti Airtel up 1.42%.

The top losers on the index were RCom down 1%, Siemens down 0.95%, Tata Motors down 0.95%, Wipro down 0.93% and Sun Pharma down 0.78%.

Among other Asian peers, Shanghai Composite added 0.29%, Hang Seng gained 1.17%, Jakarta Composite rose 0.67%, KLSE Composite advanced 0.41%, Nikkei 225 jumped 0.35%, Straits Times increased 0.71% and Seoul Composite climbed 0.30% while Taiwan Weighted shed 0.07%. 

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