The Indian stock markets started the day on a strong positive note but could not hold on to the momentum. Towards the middle of trade, they started moving towards the dotted line. The indices moved below par towards the afternoon session, however they recovered finally closed flat. The BSE-Sensex closed negative, lower by around 3 points (down 0.02%). The NSE-Nifty also closed lower by around 3 points (down 0.05%). The smaller indices also had a negative day on the bourses. The BSE Mid Cap index and the BSE Small Cap 0.3% both closed 0.5% lower. FMCG and consumer durables saw a bulk of the losses. Banking and oil and gas stocks saw some gains, however power and healthcare stocks closed weak.
As regards global markets, Asian indices had a mixed outing today. European indices also opened the day on a mixed note. The rupee was trading at Rs 54.64 to the dollar at the time of writing.
The government seems to finally be moving quickly ahead on the disinvestment bandwagon. The government has an ambitious proposal to raise Rs 300 bn by way of disinvestment in 2012-13, however it has barely scratched the surface. So far in FY13, the government has been able to realise just over Rs 69 bn through stake sale in Public Sector Undertakings. Further stake sale in Oil India and National Thermal Power Corporation (NTPC) is lined up for January and February. The government today approved 10% stake sale in Engineers India Ltd (EIL), an engineering consultancy firm, which may fetch the government around Rs 8 bn. The government currently holds 80.4% stake in EIL. In 2010, the government divested 10% stake in the company through a Follow-on Public Offering in EIL.
But, government money coming in through divestments may just go back into other companies through capital infusions. The government today approved a proposal to inject Rs 125.2 crore in public sector banks to help them enhance lending activity and meet capital adequacy norms. This is especially considering that Basel III norms kick off soon (Starting in April 2013) and this new regulation requires stricter capital norms. The capital infusion is based on an assessment made by the Finance Ministry about the capital needs of public sector banks for meeting Basel III norms, to be complied with in a phased manner, ending by March 2018. Around 9-10 public sector banks will benefit from the capital infusion programme including the leading PSU bank, State Bank of India. The quantum of capital infusion and the terms and conditions would be decided after some consultation with each bank. These funds will be infused before the year ends in order to shore up the balance sheet towards the end of the year. The government had already budgeted these funds for the current fiscal year. Over the past two fiscals, the government has injected about Rs 320 bn in banks. Rs 120 bn was pumped in FY12 and Rs 201.6 bn in FY11.