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Major Asian stock markets have opened the day on a negative note with stock markets in Singapore and Japan trading down by 1.9% and 1.3% respectively.
Major indices in Europe ended their previous session deep in red. Wall Street witnessed heavy selling activity on Friday with benchmark indices ending the day lower by 2.4%. The rupee is trading at 67.43 per US$.
Indian stock markets have opened the day on a flattish note. The BSE Sensex is trading lower by 30 points (down 0.1%) and NSE Nifty is trading lower by 13 points (down 0.2%). Both BSE Mid Cap and BSE Small Cap are trading lower by 0.9% and 0.7% respectively. Barring, information technology stocks, major sectoral indices have opened the day in red with stocks from capital goods and automobile sectors witnessing selling pressure.
As per an article in leading financial daily, India's leading PSU bank State Bank of India has declared that it will be cautiously opting for the Strategic Debt Restructuring (SDR) plan going forward. This scheme was recently proposed by RBI governor Raghuram Rajan. The SDR scheme allows the banks to convert a part of the debt given to corporates into equity. Post conversion of this debt into equity, banks need to find a buyer for the asset within a period of 18 months. Presently, banks are increasingly finding problems to get buyers for these assets within the specified time. There have been slew of companies, where banks have converted debt into a controlling equity stake, that belonged to companies in the stressed sectors such as steel and infrastructure. Here buyers are not easy to find. Reportedly, the top management of SBI has asked its officials to invoke SDR only in cases where there is clarity on a potential buyer.
While announcing the monetary policy on 1 December, RBI governor Raghuram Rajan had said that the central bank is in constant dialogue with banks and is insisting that the facilities provided to them in relation to SDR to clean up their balance sheets are used in the right way.
As per an article in leading financial daily, Indian Hotels Company Limited (IHCL) declared its results for the quarter ended December 2015. The company reported a growth in revenues by 10.5% YoY on a standalone basis. However, on a consolidated basis the revenues decline by 8.5% YoY.
Operating Profits reported a growth of 12% YoY on a consolidated basis. Operating profits were impacted on account of higher employee and raw-material cost. Company also provided write offs on infructuous projects and losses on sale of long term investments which dragged the net profits down.
Presently, company is facing a situation of excess capacity that is weighing down the room tariffs. Going forward, pickup in the foreign tourist arrivals and economy will be the key things to watch out for the topline growth of the company. IHCL is trading down by 8%.
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