Optimism at Dalal Street dwindles; benchmark’s come off from their highs

A turnaround in global sentiments egged on investor confidence in early trade at Dalal Street, however the optimism in the Indian equity markets seem to be dwindling as the benchmark indices have trimmed some of its gains as traders await the talks between leaders of France and Germany on what further measures can be taken to contain Europe's debt crisis as they fear that any disappointment could dampen cheerful global sentiment. Overnight, the Dow rose for the third straight day, adding 213 points to 11,482.90 as investors saw Google's offer for phone maker Motorola Mobility as an excuse to jump back into the market after weeks of sharp selling. Meanwhile, Asian stocks rose following the longest series of weekly losses since June after U.S. retail sales increased by the most in four months and Japan's second- quarter gross domestic product beat economist estimates. However, the US future indices were showing a downtick in the screen trade.  Back to Indian equity markets, sentiment is also cautious as investor's eye the monthly Wholesale price index (WPI) data for the month of July due to be released later in the noon. The expectation is that India's benchmark wholesale-price inflation for the month will probably fall around 9.2 percent, staying above 9 percent for eight straight months. Meanwhile, on the BSE Sectoral front, stocks from Consumer Durable, TECk and Capital Goods were shining bright, while stocks from Realty counter remained the non starrer, dragging the benchmark lower. The 30 scrip sensitive index -Sensex- after piercing through the 17k mark is currently trading off it. The 50 share index capturing gain of over 30 points is comfortably trading above the 5100 mark. Meanwhile, the broader indices are showing mixed trend. The overall market breadth on BSE is in the favour of advances which have thrashed declines in the ratio of 1316:924, while 93 shares remained unchanged.

The BSE Sensex is currently trading at 16,963.01, up by 123.38 points or 0.73%. The index has touched a high and low of 17,035.49 and 16,927.16 respectively. There were 23 stocks advancing against 7 declines on the index.

The broader indices were trading mixed; the BSE Mid cap index declined by 0.02% and Small cap index rose 0.42%.

The top gaining sectoral indices on the BSE were, CD up by 0.91%, TECk up by 0.88%, CG up by 0.87%, IT up by 0.82% and Bankex up by 0.77%. Meanwhile, Realty down by 1.60% remained the lone loser on the index.

The top gainers on the Sensex were Coal India up by 2.18%, BHEL up by 1.97%, SBI up by 1.81%, Sterlite Industries up by 1.76% and ICICI Bank up by 1.22%.

On the flip side, DLF was down by 2.07%, Maruti Suzuki was down by 1.60%, HDFC down by 0.63%, Jaiprakash Associates was down by 0.32% and HUL was down by 0.30% were the top losers on the Sensex.

Meanwhile, the RBI Deputy Governor K C Chakrabarty expressing his views on saving bank rates has said that the interest rates on saving deposits should be determined by the market. He further said 'If all the other rates are deregulated, then why savings rates should not be deregulated? The only question is when and how.'

However, there is difference between the banks and the RBI on the issue of deregulation of saving rates. Earlier, Indian Banks' Association (IBA) an organization of public and private sector banks had written to RBI and expressed the view of lenders against deregulating the saving banks interest rates, which currently stands at 4 per cent.

RBI Deputy Governor said that a decision would be taken on the basis of a consensus by all stakeholders. The RBI already has floated a discussion paper on freeing up of the saving banks interest rates.

Interest rates on fixed deposit schemes were deregulated in 1997 but unlike the time deposits, the SB account interest rates are still regulated. RBI in it May policy review hiked the savings bank accounts rate by half a percentage point, to four per cent.

However, the move raised the cost of borrowing for the banks which leverage high on the 'Current Account, Savings Account' (CASA) funds. The CASA deposits are much cheaper than the time deposits, where the going rate for six-months and above is about eight per cent.

The S&P CNX Nifty is currently trading at 5,110.70, higher by 37.75 points or 0.74%. The index has touched a high and low of 5,132.20 and 5,096.10 respectively. There were 35 stocks advancing against 15 declines on the index.

The top gainers of the Nifty were Ambuja Cement up by 2.48%, BHEL up by 2.16%, Sterlite Industries up by 1.99%, Dr Reddy down by 1.75% and TCS down by 1.68%.

On the flip side, Reliance Capital down by 1.69%, Maruti Suzuki down by 1.68%, Gail India down by 1.66%, DLF down by 1.55% and Kotak Bank down by 1.33%, were the major losers on the index.

Most of the Asian equity indices were trading in the green; Hang Seng was up by 0.41%, Jakarta Composite was up by 0.57%, KLSE Composite was up by 0.38%, Straits Times up by 0.24% and Seoul Composite was up by 4.57%.

On the flip side, Shanghai Composite down by 0.29%, Nikkei 225 was down 0.13 points and Taiwan Weighted was down by 0.26% remained the losers among the Asian pack .

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