Decent earnings, retreat in commodities abet Indian equities to convalesce

A session after showing some signs of recovery and settling in the positive terrain, Indian benchmarks managed to further the gaining momentum as wilt in commodity prices, especially international crude oil, and better corporate earnings spurred conviction amongst investor. The frontline indices snapped the second straight session in the green zone as it amassed around a percent however, it was not enough to wipe out losses of 2.4% in the first three days this week caused by worries about rising interest rates. The marketmen showed renewed vigor on the last trading session of the week which is evident as they went on to over looked the reports that of government raising subsidy burden on upstream oil companies like ONGC, OIL and GAIL, as they will now have to shell out Rs 24,892.4cr, Rs 3,293 cr and Rs 2,111 cr in FY 2010-11 of the total subsidy burden of 78,000 cr on oil industry. The sustained rally in bellwether L&T, better than expected earnings by Tata Power and short covering rally in index heavyweight Reliance industries boosted sentiments in the local markets. Positive trends from the European counterparts too gave the much needed support to the local indices while the overnight plunge in international crude oil prices gave some respite to market participants who are reeling under interest rate hike fears. The NSE's 50-share broadly followed index, Nifty failed to cling on to the psychological 5,500 support level and settled just below it with around a percent gain while the Bombay Stock Exchange's Sensitive Index Sensex advanced close to two hundred points and ended the day above the psychological 18,300 level. The broader markets too managed to shut shop in the green terrain but failed to match their larger peers. The midcap index advanced 0.61% and the smallcap index gained 0.49% points. On the BSE sectoral space, the Capital Goods pack remained the top performer for yet another session as it garnered 2.31% supported by 3.57% jump in capital goods heavyweight L&T. While some short covering in Auto majors like Bajaj Auto and Ashok Leyland which gained 3.05% and 5.25% helped the Auto pack too soar by 1.37% by the end of trade. While the index heavyweight Reliance Industries too made its presence felt after climbing over half a percent point by the end of session. On the other hand the FMCG counter languished at the bottom of the BSE sectoral space with losses of 0.85% as stocks like ITC and Dabur India shrunk by 1.82% and 0.34% respectively. While the profit booking in upstream oil company ONGC and India's largest lender SBI too weighed on sentiments. On the result front, apart from Tata Power, stocks like Karur Vysya Bank, Wire and Wireless, Voltas, Emami and Mahindra Satyam got commended by the investors in the session.

On the global front, Asian equity indices settled on a mixed note with the South Korean benchmark being the top gainer in the space after climbing by over half a percent. Taiwanese shares remained weak and slipped by over half a percent, being the top laggard in the space. The European counterparts got off to a quite start and are currently trading with moderate gains as France's CAC 40 added 0.15%, Germany's DAX rose 0.12% and London's FTSE 100 advanced 0.51%. On the other hand, the screen trading for US index futures too indicated that the Dow could open on a negative note.

Earlier on Dalal Street, the benchmark got off to a quiet but positive start in line with most Asian peers which rose as investors in the region largely remained influenced by Wall Street which closed higher on the back of decline in crude prices. After the positive opening the frontline indices managed to capitalize on the initial momentum and spurted as engineering and construction conglomerate Larsen and Toubro continued its upward trend while better than expected results by power major Tata Power boosted investor sentiment. Thereafter the indices traded in a tight range through the morning session but hefty bouts of profit booking in upstream oil companies like ONGC, OIL and GAIL pounded on the markets nearly halving the gains in the early afternoon session. However, the bourses managed to overlook the selling pressure and rallied to intraday high levels in the dying hours of trade but the indices met with stern resistance around the 5,500 and 18,400 levels and eventually settled with around the a percent gains. Markets soared on volumes of over Rs 1.58 lakh crore while the turnover for NSE F&O segment remained higher compared to Thursday at over 1.30 lakh crore. Market breadth remained positive as there were 1462 shares on the gaining side against 1047 shares on the losing side while 140 shares remained unchanged.

Finally, the BSE Sensex surged 184.69 points or 1.02% to settle at 18,326.09 while the S&P CNX Nifty soared 58.25 points or 1.07% to end at 5486.35.

The BSE Sensex touched a high and a low of 18,429.47 and 18,161.38, respectively. The BSE Mid-cap and Small-cap indices rose 0.61% and 0.49% respectively.

The top gainers of the Sensex were L&T up 3.57%, Cipla up 3.22%, Bajaj Auto up 3.05%, Tata Steel up 2.76% and Rel Infra up 2.73%; while ITC down 1.82%, ONGC down 1.17% and SBI down 0.24% were the only losers on the index.

All the sectoral indices on the BSE were trading in the green. Capital Goods (CG) up 2.31%, Auto up 1.37%, Healthcare (HC) up 1.34%, Power up 1.32% and Realty up 1.31% were the top gainers in the BSE sectoral space.

Meanwhile, the Central bank has turned down a request from banks to restructure securitized papers bought from microfinance institutions (MFIs). In securitization, MFIs bundle up micro loans while structuring debt papers around it. Microfinance institutions are estimated to have issued securitized papers worth Rs 4,000 crore to banks.

Banks lend to MFIs either directly or by purchasing securitized papers.  A number of private banks had appealed to RBI to restructure securitized papers. However, some private banks and public banks opposed it on grounds that the reworking loans would hit financial ratios of MFIs.  Bankers against restructuring of securitized papers said if the central bank had allowed restructuring, it would not be considering as true sale. Banks classify securitized papers purchased from MFIs as priority sector loan and not direct exposure to MFIs. On the other hand, banks in favour said even as the portfolio is sold to banks, MFIs are servicing the loan on behalf of banks that hold the pass through certificate.

The RBI said in a note to Indian banks' Association that the securitized portfolio that banks have been acquired from microfinance institutions will not be considered for restructuring under special dispensation. The central bank did not give any motive for rejecting the request. However it said that loans given by banks in consortium to microfinance institutions may be considered for restructuring.

In corporate debt restructuring, an obliged company is normally given relaxation in refund schedule and interest rates, on conditions such as restrictions on new lending and borrowing. The corporate debt restructuring forum is likely to be in talks with half a dozen MFIs to revise almost 10,000-crore loans.

Last year Andhra Pradesh government had issued an ordinance, to restrain new loans and recovery, Microfinance institutions had requested banks to set up a fund to infuse liquidity into the cash-strapped system and sought the RBI intervention to build the fund.

The S&P CNX Nifty touched a high and a low of 5517.55 and 5432.75, respectively.

The top gainers of the Nifty were IDFC up 4.30%, L&T up 3.83%, DLF up 3.13%, Sun Pharma up 3.11% and Rel Infra up 3.09%.

On the flip side, Ambuja Cement down 1.25%, ITC down 1.24%, ONGC down 1.15%, Sesa Goa down 0.95% and PNB down 0.53% were the major losers on the index.

European markets were trading mostly in the red. France's CAC 40 dipped 0.23%, Germany's DAX dropped 0.03% and Britain's FTSE 100 was trading higher by 0.45%.

Asian equity indices finished the day's on a mixed note on the last trading day of the week with Tokyo suffering a late sell-off as traders remained worried over utilities and the economy after data showed on Thursday that Japan had sunk into a technical recession because of the effects of the March 11 earthquake and tsunami. While, Chinese stocks remained choppy as uncertainty over country's economic outlook remained an overhang for the market.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,858.38	1.19	-0.04
Hang Seng	23,199.39	36.01	0.16
Jakarta Composite	3,872.95	13.14	0.34
KLSE Composite	1,541.03	2.99	-0.19
Nikkei 225	9,607.08	13.74	-0.14
Straits Times	3,168.54	4.02	-0.13
Seoul Composite	2,111.50	15.99	0.76
Taiwan Weighted	8,837.03	55.85	-0.63

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