Benchmark indices continue to trade range bound

The benchmark equity indices continue to trade range bound in positive terrain in the late-morning session as no major negative trigger from the global front has emerged so far, while result season at the domestic front is going smoothly without any negative surprises.Meanwhile, majority of the regional peers were trading in positive terrain while Dow future was showing marginal downtick in the screen trade. Back home TCS surged 3.61% on posting good set of numbers. Its Q3 consolidated net sales were up 4% at Rs 9,663.35 crore and net profit was up 9% at Rs 2,369.83 crore as against estimates of Rs 9653.82 crore and Rs 2203.250 crore, respectively. The BSE Sensex and NSE Nifty were trading below their physiological levels of 19,000and 5,700 respectively. Meanwhile IT, TECk, Bankex, FMCG and Metal counters were getting favor from the investors at this point of time while Realty, Power and Capital Goods counters  were witnessing some selling pressure . The broader indices were also trading in positive terrain. The market breadth on the BSE was positive; there were 1443 shares on the gainer's side against 1047 shares on the losers' side, while 93 shares were unchanged.

The BSE Sensex increased 97.77 points or 0.52% at 18,980.02.The index touched a high and a low of 19,106.95 and 18,933.47 respectively.

The BSE Mid-cap index and Small-cap index were up by 0.24% and 0.44% respectively.

The main gainers in the BSE sectoral space were  IT up 1.70%, TECk up 1.27%, Bankex  up 0.90%, FMCG up 0.89% and Metal  up 0.86%.

On the other hand Realty down 0.33%, Power down 0.13% and Capital Goods down 0.09% were the only losers in the sectoral space.

The major gainers on the Sensex were TCS up 3.61%, Wipro up 2.60%, Cipla up 2.10%, Tata Motors up 1.93% and Tata Steel up 1.93%.

On the flip side, Reliance Infra down 3.06%, Tata Power down 2.08%, Jindal Steel down 1.59%,HDFC down 1.45% and DLF down 1.12%.

The Reserve Bank of India (RBI) has tightened the prudential norms for the non-banking financial companies (NBFCs) in a move aimed at protecting the domestic financial sector in event of a global shock like that of the global economic crisis of 2008. However, it will raise the cost of operations for NBFCs and hence can hike the interest charged by them.

As per the new norms, the NBFCs will have to make a general provision at 0.25% of the outstanding standard assets. Also, the provisions on standard assets should not be reckoned for arriving at net NPAs. Further, the provisions towards standard assets need not be netted from gross advances but shown separately as 'Contingent Provisions against Standard Assets' in the balance sheet, said the RBI. The NBFCs though are allowed to include the 'General Provisions on Standard Assets' in Tier II capital which together with other 'general provisions/ loss reserves' will be admitted as Tier II capital to a maximum of 1.25% of the total risk-weighted assets.

The central bank has been taking some counter cyclic steps over last couple of quarters as growth in Indian economy recovers strongly and some signals of overheating as well as apprehension of potential asset bubbles emerge. It had earlier hiked the risk-weight on the home loans given by banks under the so called 'teaser loan' schemes where interest rate is generally low at the beginning but increases in subsequent years. It also heightened provisioning for home loans above Rs 75 lakh.

"In terms of Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms... all NBFCs are required to make necessary provisions for non performing assets. In the interests of counter cyclicality and so as to ensure that NBFCs create a financial buffer to protect them from the effect of economic downturns, it has been decided to introduce provisioning for standard assets also," said the RBI in a notification released on Monday.

Accordingly, both deposit and non-deposit taking NBFCs will have to set aside 0.25% of their performing assets to meet any financial exigencies. Earlier, the NBFCs were required to only set aside funds for doubtful and bad assets. Since provisioning has to be made for all loans now, it would raise the implicit cost of capital for NBFCs and therefore interest rate charged by them will also go up by up to 25 basis points. However, banking experts have welcomed the move as it brings up NBFCs at par with banks since the latter too have to make a provisioning of 0.25% on standard assets.

The S&P CNX Nifty was up by 30.15 points or 0.53% to 5684.90.The index touched a high and a low of 5723.40 and 5671.25 respectively.

The top gainers on the Nifty were TCS up 3.56%, SAIL up 2.50%, Axis Bank up 2.94%,Wipro up 2.54% and Cipla up 2.09%.

The top losers on the index were Reliance Infra down by 2.97%, Sesa Goa down 2.53%, Tata Power down 2.19%, HDFC down 1.80% and Jindal Steel down 1.43%.

The majority of the regional peers were trading in green; Hang Seng  surged  0.75%, Nikkei 225 climbed 0.28%, Straits Times advanced  0.21%, Seoul Composite inched up 0.04% and Taiwan Weighted zoomed 1.12%.Whereas Shanghai Composite declined 0.52%, Jakarta Composite trimmed 0.15% and KLSE Composite lost 0.24%.

 

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