MARKETS CONSOLIDATING IN RED ZONE

Indian equities continued their lackadaisical trade in red zone below the neutral line as selling pressure prevailed in absence of buying interest among investors who avoided blue chip front line counters amid lack of positive trigger. In the fight between bulls and bears to gain control over the market, bulls were seen butchered with bears holding the market firm giving no chance for bulls to enter. Traders were seen piling up the position in FMCG, HealthCare and IT sector selling was witnessed in Capital Goods, Realty and Metal sector.
L&T, BHEL, Thermax, Siemens, Crompton Greaves and BEL from Capital Goods space was seen trading in red pulling the markets down. Unitech, DLF, DB Realty, Godrej Properties and HDIL from Realty space were trading weak in red exerting pressures on the markets. Tata steel, Sterlite industries, Sesa Goa, JSW Steel, Jindal Steel and Hindalco from Metal sector were trading in red drifting the markets lower. HUL, ITC, Marico, Dabur India and Nestle from FMCG pack were firm in green giving the much needed supports for the market. Infosys, TCS and Wipro from IT pack were in green giving helping the markets to drift lower.
On the global front, all Asian markets were seen trading in green barring Jakarta Composite and Straits Times. Globally, the US markets ended lower overnight. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 4,600 and 15,400 levels, respectively. The market breadth on the BSE was in favor of declines in the ratio of 691:1344 while 87 scrips remained unchanged.
The BSE Sensex is currently trading at 15,379.34, down by 69.63 points or 0.45%. The index has touched a high and a low of 15,448.13 and 15,280.42 respectively. There were just 10 stocks advancing against 20 declining one's on the index.
The broader indices too surrendered; the BSE Mid cap and Small cap indices were down by 0.88% and 0.95% respectively.
On the BSE sectoral front, FMCG up 0.72%, HealthCare up 0.20% and IT up 0.12% were the only gainers while Capital goods down by 2.22%, Realty down by 1.86%, Metal down by 1.60%, Auto down by 1.33% and Bankex down by 1.26% were the top losers on the index.
ITC up by 1.39%, ONGC up by 1.37%, HDFC Bank up 1.10%, Sun Pharma up 0.39% and Wipro up by 0.36% were the top gainers on the Sensex.
On the flip side, JP Associates down by 4.67%, L&T down by 3.14%, Jindal Steel down by 3.04%, Tata Steel down by 2.79% and Tata Motors down by 2.72% were the top losers on the index.
Meanwhile, in its bid to help and widen the fund raising sources of capital-starved micro finance institutions (MFIs), the Reserve Bank of India (RBI) on December 19, allowed MFIs to raise funds via external commercial borrowings (ECBs) up to $10 million or equivalent during a financial year for permitted end-uses under the automatic route.
The MFIs eligible for the same will be those registered under the Societies Registration Act, 1860; those registered under Indian Trust Act, 1882; MFIs registered either under the conventional state-level cooperative acts, the national level multi-state cooperative legislation or under the new state-level mutually aided cooperative acts and not being a co-operative bank; non-banking finance companies (NBFCs) categorized as 'non-banking finance company-micro finance institutions' (NBFC-MFIs) and companies registered under section 25 of the Companies Act, 1956, and involved in micro finance activity.

Further, the MFIs registered as societies, trusts and co-operatives and engaged in micro finance activities should have a satisfactory borrowing relationship for at least 3 years with a scheduled commercial bank authorized to deal in foreign exchange; and would require a certificate of due diligence on 'fit and proper' status of the board/committee of management of the borrowing entity from the designated authorized dealer (AD) bank.

Currently only non-government organizations, which function as microfinance institutions are allowed to raise up to $5 million. The new notification will cover all microfinance lenders. The Microfinance industry, which has witnessed one of its toughest years on account of the crackdown by the Andhra Pradesh government, tough new regulatory requirements laid down by the RBI and a shortage of funds, could see some improvement in its prospects and bring stability to the market.
The notification further said ECB funds should be routed through normal banking channels. NBFC-MFIs will be permitted to avail of ECBs from multilateral institutions, such as IFC, ADB etc. Companies registered under section 25 of the Companies Act and engaged in micro finance will be permitted to avail of ECBs from international banks, multilateral financial institutions, export credit agencies, foreign equity holders, overseas organizations and individuals.
Last week, RBI issued new guidelines for NBFC-MFIs to have minimum net owned funds of Rs 5 crore, up from Rs 2 crore earlier and capital adequacy ratio (CAR) of 15%, up from 12% earlier. According the new rules, the MFIs which have a 25% exposure to Andhra Pradesh, must achieve 12% capital adequacy by April 2012.
The S&P CNX Nifty is currently trading at 4,588.10, down by 25.00 points or 0.54%. The index touched a high and a low of 4,637.25 and 4,580.20 respectively. There were 17 stocks advancing against 33 declining ones on the index.
The top gainers of the Nifty were ONGC up by 1.62%, Ranbaxy up by 1.62%, ITC up by 1.27%, HDFC Bank up by 1.13% and BPCL up by 1.06%.
JP Associates down by 4.51%, Axis Bank down by 4.19%, L&T down by 3.22%, Jindal Steel down by 3.00% and Hero MotoCorp down by 2.98% were the major losers on the index.
Most of the Asian equity indices were trading on a optimistic note; Shanghai Composite edged higher 0.16%, Hang Seng added 0.54%, Nikkei 225 jumped 0.50%, Seoul Composite soared 0.90% and Taiwan Weighted was up 0.40%. On the flip side, Jakarta Composite declined 0.04% and Straits Times descended 0.05%.