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Small-cap stocks in demand

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A bout of volatility was witnessed as key benchmark indices lost ground after staging recovery from lower level in afternoon trade. The barometer index, the S&P Sensex, was currently off 94.18 points or 0.33% at 28,791.03. The market breadth indicating the overall health of the market was positive. Small-cap stocks were in demand. Among the gainers from the constituents of the Small-Cap index, gains ranged from 2% to about 20% for quite a few stocks.

Shares of public sector banks were in demand. Most private sector banks were trading lower. Metal shares were mixed.

Meanwhile, a committee headed by M S Sahoo, a former member of the Securities and Exchange Board of India (Sebi), has reportedly suggested removal of the limits on corporates' external commercial borrowings (ECBs).

Meanwhile, global credit rating agency Fitch Ratings yesterday, 9 April 2015, affirmed India's sovereign credit rating at 'BBB-' with a stable outlook. The government's broad-based structural reform agenda has brought dynamism back to the Indian economy after a couple of years of limited progress on the structural front, the rating agency said adding that India's sovereign ratings are constrained by limited improvement in India's fiscal position, which is a long standing key weakness.

Foreign portfolio investors (FPIs) bought shares worth a net Rs 193.81 crore yesterday, 9 April 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 492.79 crore yesterday, 9 April 2015, as per provisional data.

In the foreign exchange market, the rupee edged lower against the dollar.

Brent crude oil futures edged lower in volatile trade.

In overseas markets, European stocks edged higher. Asian stocks rose after news that Greece had made a 450 million euro loan payment to the International Monetary Fund. US stocks edged higher yesterday, 9 April 2015, helped by a rally in energy and health-care sectors.

At 13:21 IST, the S&P was down 94.18 points or 0.33% at 28,791.03. The index fell 128.46 points at the day's low of 28,756.75 in afternoon trade. The index gained 13.98 points at the day's high of 28,899.19 in morning trade.

The CNX Nifty was down 42.05 points or 0.48% at 8,736.25. The index hit a low of 8,733.60 in intraday trade. The index hit a high of 8,781.40 in intraday trade.

The Mid-Cap index was up 47.49 points or 0.43% at 11,097.74. The Small-Cap index was up 73.89 points or 0.63% at 11,791.37. Both these indices outperformed the

The market breadth indicating the overall health of the market was positive. On BSE, 1,504 shares gained and 1,111 shares fell. A total of 106 shares were unchanged.

Shares of public sector banks were in demand. Punjab and Sind Bank (up 4.69%), United Bank of India (up 4.38%), Bank of India (up 2.21%), IDBI Bank (up 1.74%), State Bank of India (up 1.73%), Punjab National Bank (up 1.64%), Canara Bank (up 1.60%), Corporation Bank (up 1.52%), Syndicate Bank (up 1.32%), Bank of Maharashtra (up 1.27%), Indian Bank (up 1.01%), Dena Bank (up 0.95%), Union Bank of India (up 0.93%), UCO Bank (up 0.59%), Allahabad Bank (up 0.58%), Vijaya Bank (up 0.53%), Bank of Baroda (up 0.52%), Andhra Bank (up 0.37%) and Central Bank of India (up 0.19%) edged higher.

Most private sector banks were trading lower. HDFC Bank (down 1.3%), Federal Bank (down 1%), Axis Bank (down 0.47%), ING Vysya Bank (down 0.4%), Kotak Mahindra Bank (down 0.35%) and ICICI Bank (down 0.23%), edged lower. City Union Bank (up 0.32%) and Yes Bank (up 0.33%), edged higher.

Global credit rating agency Fitch Ratings yesterday, 9 April 2015, said that the performance of India's banking sector is likely to remain weak for some time. The rating agency also said that the pace of deterioration in asset quality has eased at some large banks. The rating agency said that state-run banks account for majority of the banking system's stressed assets. The government's ability to provide substantial financial support to the banking system in a potential crisis is limited given the already high government debt burden, Fitch said. Fitch yesterday, 9 April 2015, affirmed India's sovereign credit rating at 'BBB-' with a stable outlook.

Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said today, 10 April 2015, that the banking sector will undergo major changes over the next few years. Rajan was addressing students during a convocation ceremony at a banking institute established by the central bank near Pune city.

IndusInd Bank rose 0.10% after the bank entered into an agreement to acquire Royal Bank of Scotland N.V.'s diamond and jewellery financing business in India and related deposit portfolio. This is a part of ABN AMRO Bank N.V.'s diamond and jewellery clients that is housed in Royal Bank of Scotland N.V. acting through its Mumbai branch in India. The announcement was made during trading hours today, 10 April 2015. The Royal Bank of Scotland N.V. diamond and jewellery financing loan book size is around Rs 4500 crore, IndusInd Bank said.

IndusInd Bank said that until ownership of the loans transfer to IndusInd Bank, the day-to-day management of the loan portfolio will remain with Royal Bank of Scotland N.V. IndusInd Bank specialises in diamond and jewellery financing business and this acquisition will enhance its position, IndusInd said. A critical success factor in diamond financing is global client knowledge and this is being achieved through a long term partnership agreement with ABN AMRO Bank N.V., IndusInd Bank said.

Metal shares were mixed. Hindustan Copper (up 5.06%), Steel Authority of India (up 2.42%), NMDC (up 2.12%), Sesa Sterlite (up 1.09%), Tata Steel (up 0.78%), Hindalco Industries (up 0.74%) and National Aluminum Company (up 0.21%), edged higher. JSW Steel (down 0.02%), Bhushan Steel (down 1.03%), Jindal Steel & Power (down 1.15%) and Hindustan Zinc (down 1.25%), edged lower.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 62.3825, compared with closing of 62.245 during the previous trading session.

Brent crude oil futures edged lower in volatile trade. Brent for May settlement was off 21 cents at $56.36 a barrel. The contract had risen $1.02 a barrel or 1.93% to settle at $56.57 a barrel during previous trading session.

Macroeconomic data to be released starting today, 10 April 2015, is likely to show a pick up in industrial production growth in February 2015 and consumer price inflation remaining stable in March 2015. Growth in industrial production is seen rising to 3.3% in February 2015 from 2.6% expansion registered in January 2015, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil data on industrial production for February 2015 after trading hours today, 10 April 2015.

Inflation based on the consumer price index (CPI) is expected to remain steady at 5.4% in March 2015, as per the median estimate of a poll of economists carried out by Capital Market. CPI inflation stood at 5.4% in February 2015. The government will unveil data on CPI for March 2015 after trading hours on Monday, 13 April 2015.

Inflation based on the wholesale price index (WPI) is expected to remain in negative zone in March 2015. WPI inflation is expected at negative 2.2% for March 2015, as per the median estimate of a poll of economists carried out by Capital Market. WPI inflation was negative 2.1% in February 2015. The government will unveil data on WPI for March 2015 at 12:10 noon on 14 April 2015.

Meanwhile, global credit rating agency Fitch Ratings yesterday, 9 April 2015, affirmed India's sovereign credit rating at 'BBB-' with a stable outlook. The government's broad-based structural reform agenda has brought dynamism back to the Indian economy after a couple of years of limited progress on the structural front, the rating agency said adding that India's sovereign ratings are constrained by limited improvement in India's fiscal position, which is a long standing key weakness. Implementation of the government's structural reform agenda and structurally lower inflation would improve the sovereign credit profile, as both would improve the investment climate and benefit real GDP growth, Fitch said in a statement.

The announcement from Fitch came hours after another global credit rating agency Investors Service raised India's credit rating outlook to positive from stable. The driver for the upgrade in rating outlook is view that India's growth will continue to outperform that of its peers over the medium-term. affirmed the Government of India's Baa3 issuer and senior unsecured ratings.

Meanwhile, Paris-based think tank Organisation for Economic Cooperation and Development (OECD) said yesterday, 9 April 2015, that India's economic expansion continues to firm up even as growth is easing in the neighboring China. The think tank's assessment is based on its Composite Leading Indicators (CLIs) that are designed to anticipate turning points in economic activity relative to trend.

In overseas markets, European shares edged higher today, 10 April 2015. Key benchmark indices in UK, France and Germany were up 0.23% to 0.56%.

French industrial production failed to grow month on month in February, following 0.3% growth in January. The year on year figures were more positive, however. Industrial production in February was 0.6% higher than the same month in February 2014.

Asian markets rose today, 10 April 2015, after news that Greece had made a 450 million euro loan payment to the International Monetary Fund. Key indices in China, South Korea, Taiwan, Singapore, and Hong Kong rose by 0.28% to 1.94%. Indonesia's Jakarta Composite declined 0.11%. Japan's Nikkei Average declined 0.15%.

China's consumer inflation stayed flat at 1.4% in March, while producer prices fell slightly less than projected, official data showed today, 10 April 2015, keeping pressure on profit margins at Chinese companies as Beijing struggles to stimulate growth. The producer price index (PPI) declined 4.6%, the National Bureau of Statistics (NBS) said today, 10 April 2015, extending a long-running factory deflation cycle that began in March 2012 to three years.

Trading in US index futures indicates that the Dow may decline 17.50 points at opening bell today, 10 April 2015. US stocks rose yesterday, 9 April 2015, helped by a rally in energy and health-care sectors. On economic front, the US Labor Department said workers filing for first-time jobless benefits totalled 281,000 last week, fewer than what had forecast, and bringing the four-week average of claims to its lowest since 2000.

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