Sensex, Nifty may continue to have a positive bias: Wednesday Closing Report

Nifty has to refrain from breaking today’s low to record some more gains

The market opened on a positive note encouraged by the RBI’s rate cut on Tuesday. But the gains tapered off in the second half as the key European indices were in the red. Yesterday we had mentioned that if the Nifty closes above 5,310, it is likely to hit 5,370. Although the index crossed the level of 5,310, it settled 10 points below it. We may now see the benchmark moving sideways with an upward bias. However, for the uptrend to be intact, the Nifty has to hold itself above today’s low of 5,293. The National Stock Exchange (NSE) saw a volume of 66.44 crore shares.

Extending the gains after the Reserve Bank of India (RBI) on Tuesday cut key rates by 50 basis points, the market opened higher this morning. A positive trend in the Asian pack, following overnight gains in the US markets, also supported the investor sentiment back here. The Nifty opened 31 points up at 5,321 and the Sensex resumed trade at 17,447, a gain of 89 points over its previous close. All sectoral indices, led by metals and realty, were in the green in early trade.

The benchmarks hit their intraday highs in initial trade itself with the Nifty going up to 5,342 and the Sensex rising to 17,523. The market came off the highs as consumer inflation for March came in at 9.47% compared to 8.83% in the previous month.

The indices were range-bound in subsequent trade in the absence of any fresh triggers. The benchmarks inched lower in noon trade following a flat opening of the key European indices.

The market slipped further southwards in post-noon trade as the European markets extended their losses in early trade. The domestic indices touched their lows in the last half hour of trade. At the lows, the Nifty went back to 5,293 and the Sensex slipped to 17,372.

The market settled a tad above the lows. The Nifty closed 10 points higher at 5,300 and the Sensex rose 34 points to finish trade at 17,392.

The advance-decline ratio on the NSE was 996:720.

The broader markets outperformed the Sensex today, as the BSE Mid-cap index gained 0.46% and the BSE Small-cap index advanced 0.50%.

The top sectoral gainers were BSE Auto (up 1.52%); BSE Healthcare (up 1.01%); BSE Oil & Gas (up 0.77%); BSE Metal (up 0.75%) and BSE Consumer Durables (up 0.46%). The main losers were BSE Realty (down 0.97%); BSE Fast Moving Consumer Goods (down 0.53%); BSE Capital Goods (down 0.27%) and BSE Bankex (down 0.10%).

Bajaj Auto, Tata Motors (up 2.70% each); Sun Pharma (up 2.52%); Tata Power (up 2.30%) and Hindalco Industries (up 2.15%) were the top Sensex gainers. The losers were led by DLF (down 2.05%); ITC (down 1.79%); Larsen & Toubro (down 0.95%); BHEL (down 0.82%) and Coal India (down 0.60%).

ACC (up 4%); Tata Power (up 2.88%); Cairn India (up 2.85%); HCL Technologies (up 2.80%) and Ambuja Cement (up 2.69%) settled higher on the Nifty. The laggards were DLF (down 2.46%); Reliance Communications (down 2.42%); IDFC (down 1.87%); Axis Bank (down 1.72%) and ITC (down 1.54%).

Markets in Asia settled higher on higher demand for Spanish government bonds, better-than-expected US corporate earnings and IMF’s global forecast supported investor confidence. Raising its growth forecast for the global economy, the IMF said the world economy will expand 3.5% this year compared with a January projection of 3.3%.

The Shanghai Composite surged 1.96%; the Hang Seng climbed 1.06%; the Jakarta Composite gained 0.21%; the KLSE Composite rose 0.17%; the Nikkei 225 jumped 2.14%; the Straits Times advanced 0.47%; the Seoul Composite surged 0.97% and the Taiwan Weighted settled 0.25% higher. At the time of writing, the key European indices were mostly lower and the US stock futures were mixed.

Back home, foreign institutional investors were net buyers of shares totalling Rs441.15 crore on Tuesday. On the other hand, domestic institutional investors pulled out Rs213.21 crore from the equities segment.

Turnkey engineering major Punj Lloyd has bagged a contract from Horizon Terminals, an Emirates National Oil Company (ENOC) subsidiary, to build a bulk oil terminal. The terminal inside the Jebel Ali Free Zone, along with a 60 km jet fuel pipeline to the Dubai International Airport, will have state-of-the-art oil terminal facilities with storage tanks capacity of 141,000 cubic metres. The stock closed 0.96% lower at Rs56.65 on the NSE.

Simbhaoli Sugars is setting up a 1,000 tonnes per day sugar refinery in a joint venture with global agri-business group EDF & Man Holdings near the Kandla Port. The 50:50 joint venture—Uniworld Sugars Pvt Ltd—will invest Rs 235 crore in the refinery project. Simbhaoli Sugars settled 0.34% lower at Rs29.30 on the NSE.

IDBI Bank has cut deposit rates by 10-50 basis points across various maturities, becoming the first lender to cut rates following the RBI 50 basis point rate cut on Tuesday. It has also reduced lending rate benchmarks—base rate and benchmark private lending rate—by 25 basis points. Following the rate cut, the new base rate is 10.5% and the BPLR is 15%. The stock declined 1.79% to close at Rs107.05 on the NSE.


Economy & Nation Exclusive
Rate cuts not incentive enough for homebuyers

An analyst with a brokerage firm commented that it would take more cuts and a longer period of time for sentiments to revive because this is one single cut in interest rates, whereas over the last two years the RBI has raised rates 13 times

The Reserve Bank of India (RBI) may have slashed policy rates by 50 basis points (bps), but that wasn’t enough to lure in homebuyers. “While the rate cut of 50 basis points is definitely a ray of hope, this ray does not dispel the shadows as much as may be initially supposed. It is unlikely that residential property prices will come down because of this rate cut and it is the price of properties that is the decisive factor in residential real estate sales,” says Om Ahuja, CEO-Residential Services at Jones Lang LaSalle India.

Even for those who are hoping for a slight decrease in their EMIs (equated monthly installments) for home loans, it could turn out to be a dampener. “Banks are likely to wait for some time before incorporating the decreased rates,” said a spokesperson of State Bank of India.

Already, banks are stressed because the profit margins have been under pressure; despite offering higher interest on deposits the numbers have not gone up. “In such a situation it will be difficult to lend at a decreased rate,” said an official of HSBC Bank.

For homebuyers, things are not looking brighter. “I wouldn’t bother much if I have to pay Rs1,000 more or less per month when I am paying for a flat worth Rs60 lakh for over 10 years,” said Rahul Sadanand, who has bought a flat near Man Sarovar in Navi Mumbai. He added, “I would rather pay more per month and have the price of the flat reduced.”

To add to his worries, there are experts who believe that the situation is not going to be any different for at least a year. “Construction has stopped because the new Development Control Rules (DCR) has thrown everyone into a tizzy. On the contrary, builders are not willing to sell at a loss and are holding up prices. In such a case, hardly anyone is gaining by a measly cut,” said an analyst with a brokerage firm.

The analyst said that it would take more cuts and a longer period of time for sentiments to revive, because this is one single cut in interest rates whereas over the last two years, the RBI has raised rates 13 times. “And right now, we do not see any more cuts in some time,” he commented. He said that new home loan customers are more likely to enjoy the advantage, while people who are already paying their EMIs may have to continue with their old rates.

However, there seems to be a silver lining. The RBI has asked banks not to levy pre-payment charges on their customers, which may come as a relief.


HDFC Bank Q4 net profit up 30% at Rs1,453 crore

The lender's fourth quarter net profit rose on higher income from fee and robust credit demand as well as lower provisions for loan losses

Mumbai: Private sector lender HDFC Bank on Wednesday reported 30.4% jump in its net profit at Rs1,453.1 crore for the fourth quarter ended March, driven by increase in advances, reports PTI. Its net profit in Q4, 2010-11 was Rs1,114.70 crore.

Total income of HDFC rose 32.1% to Rs8,880 crore in the January-March quarter of 2011-12, from Rs6,724.3 crore in the year-ago period, HDFC Bank said in a filing to the BSE.

Net interest income (interest earned less interest expended) during the fourth quarter was Rs3,388.3 crore, as against Rs2,839.5 crore in the same period a year ago, registering a growth of 19.3%. This was driven by loan growth of 22.2% and a core net interest margin (NIM) for the quarter of 4.2%, the bank said.

The board of HDFC Bank has proposed a dividend of 215% or Rs4.30 per share for the financial year ended March 2012.

For 2011-12, the bank posted net profit of Rs5,167.1 crore, an increase of 31.6% from Rs3,926.39 crore in the previous year. HDFC earned an income of Rs32,530 crore during the year, compared to Rs24,263.4 crore in the previous fiscal. The bank's consolidated net profit increased by 31.4% to Rs5,247 crore in 2011-2012.

Its total balance sheet size increased by 21.8% to Rs3.37 lakh crore, from Rs2.77 lakh crore as of March  2011. Recording a growth of 22.2%, total gross advances were at Rs1.95 lakh crore while total deposits grew by 18.3% at Rs2.46 lakh crore.

The Capital Adequacy Ratio (CAR) of the bank stood at 16.5% at the end of 2011-2012 as against 16.2% as of March 2011.

The gross non-performance asset (NPA) as a proportion of advances declined to 1% against 1.1% in the previous fiscal. Net NPA, however, remained stable at 0.2% during the year, it said.


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