Domestic stock indices have finally showed some resilience after being slaughtered for over four percent points in the week gone by. The smart pull-back came on the back of better than expected third quarter earnings from software giant TCS while jubilant European markets too underpinned sentiments in the second half. The NSE's 50-share broadly followed index, Nifty surged by around 70 points, to regain the psychological 5,700 support level while the Bombay Stock Exchange's Sensitive Index or Sensex hit a double century to re-conquer the crucial 19,000 mark. However, broader markets underperformed the larger peers by quite a margin as they slipped a great deal after surging in the initial moments of trade. The BSE's midcap and smallcap indices ended the day with moderate gains below half a percent point. Investors showed intense buying interests on information technology counter right from the start of trade as Tata Consultancy Services (TCS) skyrocketed around 6% on reporting a better than expected surge of 32.01% in net profit for the quarter ended December. The IT counter kept buzzing all through the day and remained top sectoral gainer with 2.60% gains on the BSE. Wipro ended higher by 2.7% ahead of its financial results, scheduled later in the evening, for the third quarter while Infosys overcame the disappointment of its numbers to rise by 1.5%. Investors also stayed bullish on metal and healthcare pockets in today's trade. On the other hand, Reliance Infra saw profit booking for the second consecutive session to end lower by 4.5% and thereby leading the list of losers on the BSE. Oil & Gas pack remained the only laggard in the BSE sectoral space.
On the global front, majority of the Asian markets ended in the green territory led by the rise in technology companies, on speculation that prices for dynamic random-access memory chips will increase. European stocks jumped in today's trade taking support of the gains in banks and miners. While key benchmark indices in the region garnered around a percent point in early trade with FTSE 100 being the biggest gainer in the space. US index futures have bounced back in the green after making a subdued start, indicating that the markets could climb at the opening.
Earlier on the Dalal Street, the benchmarks indices got an optimistic start on the back of strong results posted by TCS in the after markets hours yesterday. The benchmarks surged in the initial hours of trade as positions build up was evident. However some position squaring between the late morning - mid afternoon session led the indices to gyrate in a tight band. But position build up gathered pace in the dying hours of trade which helped the bourses to eventually end the session with strong gains of over a percent. Volumes stayed marginally lower than Monday at around Rs 1.35 lakh crore while the turnover for NSE F&O segment too was on the lower side at over Rs 1.21 lakh crore. The market breadth on the BSE was positive as there were 1490 shares on the gaining side against a 1342 shares on the losing side while 169 shares remained unchanged.
On Charts: The S&P CNX Nifty may face resistance around 5774 and 5798 levels while supports will be around 5640 and 5610. Meanwhile, if it breaks and closes below 5610 in near term the downward trend may continue further.
Finally, the BSE Sensex zoomed 209.80 points or 1.11% to settle at 19,092.05 while the S&P CNX Nifty jumped 69.30 points or 1.23% to end at 5724.05.
The BSE Sensex touched a high and a low of 19,120.62 and 18,933.47, respectively.
The top gainers on the Sensex were TCS up 5.48%, Sterlite Inds up 4.42%, Jindal Steel up 3.06%, Wipro up 2.79% and Cipla up 2.67%.
Reliace Infra down 4.53%, Tata Power down 0.92%, Bharti Airtel down 0.89%, HDFC down 0.63% and DLF down 0.62% were top losers on the Sensex.
The BSE Mid-cap and Small-cap indices rose 0.45% and 0.28%, respectively.
Meanwhile, 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.
The main gainers in the BSE sectoral space were Information Technology (IT) up 2.60%, Metal up 2.31%, TECk up 1.80%, Healthcare (HC) up 1.64% and FMCG up 1.52%, while Oil & Gas down by 0.12% was the lone loser in the BSE sectoral space.
The S&P CNX Nifty touched a high and a low of 5730.50 and 5671.25, respectively.
The top gainers on the Nifty were TCS up 5.19%, Sterlite Inds up 4.71%, Sun Pharma up 4.62%, Ambuja Cement up 4.61% and Ranbaxy up 4.20%.
The top losers on the index were Reliance Infrastructure down 4.14%, Bharti Airtel down 1.32%, Sesa Goa down 1.32%, GAIL down 1% and HDFC down 0.78%.
Industry body CII has urged the government top hike the foreign direct investment (FDI) cap in private companies to 49%, from the current level of 26%. The industry lobby contends the move will help raise the penetration level, particularly in the rural market and hence will improve the overall risk management in hinterlands.
"Rural and Social Sectors offer huge potential for improving Insurance penetration for the uninsured sections of the population and this calls for better risk management, innovations on product design and distribution, infusing technology and greater investments," said the CII in its comments on the Insurance Laws (Amendment) Bill, 2008..
The CII opines that insurance penetration in the rural and social sectors will be marked by high risk and hence more dynamic and efficient risk management systems would be crucial. It would necessitate innovative strategies not just in terms of insurance products but also in ways of distributing them. In addition, use of better technologies right from issuance to servicing of insurance services is also crucial for long term growth of Insurance sector in India that can also serve the interests of rural populations and businesses including agriculture and related activities.
"This clearly justifies greater engagement of foreign partners in bringing in better risk management practices, innovation in production and distribution, technology, specialized skills and hence there is a strong need to raise FDI cap in insurance sector from the current 26 % to 49%," the industry body concluded.
The Indian government has been contemplating liberalizing the insurance sector by hiking the FDI limit to 49% but the move has been held up due to political issues. Various industry bodies as well as foreign governments including those of the US and France have urged government to open up the insurance sector. While the government accepts that greater FDI into the insurance will help the cause of increasing penetration in rural areas, it also wants to ensure that Indian insurance sector remains protected from global economic problems, like the ones reflected in the financial crisis of late 2008.
European markets were trading in the green on Tuesday. France's CAC 40 gained 0.75%, Germany's DAX added 0.98% and Britain's FTSE 100 surged 1.08%.
Most of the Asian equity indices finished in the positive terrain on Tuesday led by the rise in technology companies, on speculation that prices for dynamic random-access memory chips will increase. Shares of Samsung Electronics Co, the world's top memory chipmaker and No.2 handset vendor, jumped 3.3% in trade today to record highs and second-ranked memory chip maker Hynix Semiconductor surged 4.3% on hopes of a rebound in computer memory chips. Taiwanese shares closed more than one percent, led by the financial sector on hopes of an increase in rate hike cycle that would widen interest rate and boost banks' earnings.
| Asian Indices | Last Trade | Change in Points | Change in % |
| Shanghai Composite | 2,709.17 | 2.51 | 0.09 |
| Hang Seng | 24,153.98 | -2.99 | -0.01 |
| Jakarta Composite | 3,548.65 | 12.92 | 0.37 |
| KLSE Composite | 1,570.04 | -4.45 | -0.28 |
| Nikkei 225 | 10,518.98 | 16.12 | 0.15 |
| Straits Times | 3,249.58 | 10.95 | 0.34 |
| Seoul Composite | 2,096.48 | -3.37 | -0.16 |
| Taiwan Weighted | 8,988.00 | 99.36 | 1.12 |
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