Benchmark indices trim loss; Nifty remains below 5700 mark

Benchmark equity indices after making a gap down start tracking weak global cues, have trimmed some of it losses, though continue to trade below their physiological level. The moods improved a little bit after Asia's largest biotechnology company-- Biocon --reported strong Q3 performance with growth across businesses. Biocon's net profit registered an impressive growth of 221.56% at Rs 211.59 crore for the quarter ended December 31, 2010.On the global front, Asian peers retreated from two-month highs tailing negative close of US markets, with Nikkei 225 and Jakarta Composite plunging over 1% of trade. As US markets suffered sharp cut overnight due to disappointing slate of earnings from heavyweights like Goldman Sachs and Wells Fargo. Back home, the broader indices which were initially showing sign of resilience, too have now succumbed to selling pressure as the small pocket index entered into the negative terrain, while, Midcap index is managing to hang in green. On the BSE Sectoral space, stocks from Oil & Gas, Auto, Bankex, fast Moving Consumer Goods and power space are tapering off at an accelerated rate, while, stock from Information Technology, Healthcare, Consumer Durables, TECk and Metal counters are helping the benchmark indices to pose some resistance. The market breadth on BSE is in the favour of declines which are outperforming advances in the ratio of 1187:1040, while, 98 shares remained unchanged.

The BSE Sensex is currently trading at 18,910.53, down by 67.79 points or 0.36%. There were 12 stocks advancing against 18 declines on the index.

The broader indices too were feeling some selling pressure; the BSE Small cap index edged lower by 0.13% , while, Midcap index was floating in green with marginal gains of  0.05%.

The top gaining sectoral indices on the BSE were, IT up by 0.65 %, HC up by 0.59 %, CD up by 0.46%, TECk up by 0.36%  and Metal up by 0.12%.While, Oil and Gas down by 1.22%, Auto down by 0.78%, Bankex down by 0.61%, FMCG down by 0.53% and Power down by 0.24% were the major losers on the index.

The top gainers on the Sensex were TCS up by 1.78%, Jindal Steel up by 0.94%, Hero Honda up by 0.64%, NTPC up by 0.59% and M&M was up by 0.45%.

Tata Motors down by 1.97%, Bajaj Auto down by 1.47%, SBI down by 1.42%, ITC and Sterlite Industries both down by 1.40% were the top losers on the index.

Meanwhile, the Reserve Bank of India (RBI) has taken few steps to help ease the credit crunch being faced by the micro-finance institutions (MFIs). It has relaxed norms for restructuring of bank loans to MFIs and also extended the special regulatory asset classification benefit to such restructuring accounts up to March 31.

"The Reserve Bank has asked banks to extend the regulatory asset classification benefit to standard restructured MFI accounts, even if they were not fully secured. This relaxation was given considering the fact that the problems afflicting the MFI sector were not necessarily on account of any credit weakness per-se but were mainly due to environmental factors," read a statement released by the central bank on Wednesday.

The microfinance industry came into eye of the storm following an ordinance issued by the Andhra Pradesh government which sought to strictly regulate the MFI business there. Since then the state government has also passed the requisite legislation imposing a number of restriction. While the industry is already facing pressure from the government to improve its corporate ethics, even banks are pressing the MFIs by stopping lines of credit. As a result, MFIs have been facing stoppage of credit inflow.

There have been allegations that MFIs were engaged in illegitimate practices for recovering their loans. Some MFIs have also been accused of following the practice called ever-greening which implies giving fresh loans to pay old loans and hence catching the customer in vicious cycles of loans and interest payment. The ordinance by Andhra Pradesh government, the state with largest share of MFI business, was aimed at stopping such behavior but has been affecting usual business of all MFIs there.

The RBI hopes that measures announced by its will help the MFIs carry on the business till a more permanent fix is found. "This measure initiated by the Reserve Bank is expected to impart some liquidity support by banks to MFIs and facilitate a 'holding on' operation for some time till measures are taken to bring about long term and structural changes in the functioning of MFIs," said the central bank.

The S&P CNX Nifty is currently trading at 5,673.10, down by 17.95 points or 0.32%. There were 22 stocks advancing against 28 declines while one stock remained unchanged on the index.

The top gainers of the Nifty were Sun Pharmaceuticals up by 2.18%, TCS up by 1.92%, Kotak Bank up by 1.09%, Jindal Steel up by 1.07% and Ambuja Cement up by 1.02%.

The top losers of the index were GAIL down by 2.75%, HCL Technologies down by 1.99%, Tata Motors down by 1.87%, Baja Auto down by 1.80% and Sterlite Industries down by 1.45%.

All the Asian markets were trading in the red; Shanghai Composite was down by 1.32%, Hang Seng slid 1.26%, Jakarta Composite declined 1.65%, Nikkei 225 shed 1.25%, Straits Timesd dropped 0.29%, Seoul Composite was down by 0.29%and Taiwan Weighted slid 0.40%.

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