Thursday, March 01, 2012 11:22 AM
Losses widen at Dalal Street; mixed regional counterparts fail to provide cues
Losses have widened at Dalal Street as market men preferred to go short on their position after two consecutive sessions of gains in the wake of forthcoming budget, regional elections and rise in oil prices. Mixed cues in the domestic and global economy also kept trader’s finicky about risky asset class. On the global front, Asian markets traded flat to negative on Thursday tracking a similar trend in US markets overnight. The street expected signs of a fiscal stimulus from the US Federal Reserve. However, Ben Bernanke, chairman of US Federal Reserve said that the US job market was far from being normal and warned against rising inflation due to high fuel prices. This was despite US commerce department saying that the economy expanded at a 3 per cent annual rate in the quarter to December 2011, the fastest since 2010. Meanwhile, the US future indices too failed to provide any cues.
Back on the home turf, stocks from rate sensitive Realty, Bankex sector coupled with Capital Goods counters were bearing maximum brunt of profit taking. However, stocks from Health Care counters (HC) stage immense resilience amidst sluggish trade, with the index trading above 0.50%. Thus, after negative start benchmark 30 share index-Sensex- was trading lower by over 150 points at level which was far away from 17,700 mark. Similarly, 50 share index-Nifty-on NSE declining over 50 points was holding its 5300 level. Broader indices too enticed losses, but not in the magnitude of frontline indices, both Small cap and Midcap Indices were down over 0.25% each. The overall market breadth on BSE was in the favor of declines which outpaced advances in the ratio of 1192:894, while 90 shares remained unchanged.
The BSE Sensex is currently trading lower by 176.30 points or 0.99% at 17,576.38. The index has touched a high and a low of 17,717.53 and 17,513.76 respectively. There were 5 stocks advancing against 24 declining one’s on the index, while 1 stock remained unchanged.
The broader indices too edged lower the BSE Mid cap and Small cap indices declined by 0.38% and 0.25% respectively.
The only gaining sectoral index on the BSE was Health Care up by 0.54%. While, Realty down by 2.33%, Bankex down by 1.66%, Capital Goods down by 1.65%, Information Technology down by 1.53% and Consumer Durable down by 1.15% were the top losers on the index.
The top gainers on the Sensex were Maruti Suzuiki up by 2.29%, Sun Pharma up by 1.46%, Tata Power up by 1.22%, Hero MOtoCorp up by 1.02% and Cipla up by 0.03%.
On the flip side, DLF down by 3.38%, BHEL was down by 3.37%, ICICI Bank down by 2.77%, Wipro down by 2.19% and SBI down by 2.02% were the top losers on the Sensex.
Meanwhile, banks have asked for greater clarity on the definition of a restructured loan from the RBI. The banks are of the opinion that every restructured loan should not be treated as a non performing assets (NPA) and as and when payments become regular for a specific period of time, the account should be treated as a normal asset.
In a meeting with the Reserve Bank of India, Indian bankers have stated that currently there is no clear definition of a restructured account. In fact everything restructured is seen as equivalent to NPA. Restructured means that the dues are not being paid according to the schedule, not according to the revised schedule and the ultimate recovery of the debt is not in doubt. Hence the bankers have demanded that the RBI should give a clear guideline so that there is no divergence in approach when auditors come in. Banks have further suggested that if an account adheres to the revised schedule for two years, it should be taken out of the categorisation of the restructured account. Pratip Chaudhuri, chairman of India’s largest lender State Bank of India, has proposed a timeline of three years. However all bankers are of the opinion that a restructured loan should not remain classified as such for its lifetime.
It has also been suggested that restructuring should be extended to smaller accounts instead of just large-ticket size accounts. Once an account is restructured, it demands higher provisioning. If the banks have the option of treating it as a normal account after a stipulated time, it would reduce the provisioning burden on banks. Of late, most banks have been plagued with mounting restructured assets. Rising interest rates and the slowdown in the economy are seen as major reasons behind this. Sectors like aviation, textile, infrastructure, iron and steel and telecom have been the worst hit.
Loans worth Rs 50,250 crore were referred for corporate debt restructuring (CDR) during the April-December period of the current financial year. Currently, total outstanding loans referred for restructuring are worth Rs 1.43 lakh crore, according to CDR forum data. With a share of 26.8%, the iron and steel sector accounts for most of these, followed by infrastructure (12%) and textiles (8%). However, the banks have said that the NPA situation is very much manageable and under control.
The S&P CNX Nifty is currently trading at 5,323.35, lower by 61.85 points or 1.15%. The index has touched a high and a low of 5,372.45 and 5,310.30 respectively. There were 13 stocks advancing against 37 declining one’s on the index.
The top gainers of the Nifty were Maruti Suzuki up by 2.00%, Sun Pharma up by 1.71%, Reliance Infra up by 1.62%, Hero MotoCorp up by 1.48% and Tata Power up by 1.39%.
On the flip side, DLF down by 3.64%, Axis Bank down by 3.16%, BHEL down by 3.07%, ICICI bank down by 2.82% and Wipro down by 2.51%, were the major losers on the index.
Most of the Asian equity indices were trading in the red; Shanghai Composite gained 0.12%, KLSE Composite added 0.30%, Seoul Composite surged 1.33% and Taiwan Weighted rose 0.20%.
On the flip side, Straits Times declined by 0.05%, Nikkei 225 slid 0.35%, Jakarta Composite declined by 0.26% and Hang Seng was down by 0.49%.