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Final Hour Sell Off
Mon, 8 Feb Closing

After trading in a range bound for majority of the day, Indian benchmark indices plunged 1.3% in the final hour of trading due to heavy selling in IT, FMCG, oil & gas and auto stocks amid weak European cues. While the BSE Sensex closed lower by 330 points, the NSE-Nifty closed lower by 102 points. The S&P BSE Midcap also followed this trend and finished lower by 0.2%. The S&P BSE Small Cap finished on a flat note. Realty and consumer durable sector, however managed to end in the green with moderate gains.

Asian shares pared losses on Monday. Japan's Nikkei 225 erased early losses as the dollar gained on the yen, and ended up 1.1%. Meanwhile, Chinese markets were closed on account of Lunar New Year Holiday and finished mixed last week with the Hang Seng gaining 0.55% while the Shanghai Composite lost 0.63%. European markets are sharply lower today with shares in Germany off the most. The DAX is down 1.99% while France's CAC 40 is off 1.83% and London's FTSE 100 is lower by 1.48%. The rupee was trading at 67.82 against the US$ in the afternoon session.

Shares of Axis Bank surged more than 3% today in intraday trading after it was reported that the bank plans to raise US$500 million through Tier-II capital bonds to shore up its capital base. The bank is likely to raise the capital either in the quarter ended March 2016 or by the first quarter of the next financial year. In September last year, the lender raised Rs 15 billion via tier-II bonds. These bonds were rated 'AAA' by CRISIL, CARE and ICRA.

As per the Basel-III norms, the Capital Adequacy Ratio (CAR) and Tier-I CAR of the bank at the end of quarter ended December 2015 stood at 15.47% and 12.35% respectively. On the other hand, the tier-II capital stood at 3.12% as compared to 3.21% at the end of the September quarter.

In the quarter ended December, provisions and contingencies increased to Rs 7.12 billion from Rs 5.07 billion (Subscription Required) in the October-December quarter last financial year. The loan loss provisioning for the third quarter was Rs 6.26 billion as compared to Rs 3.62 billion during the same period last year. This was on the back of an increase in bad loans on the book.

As on September 30, 2015, the bad loans of the banking system amounted to 5.1% of the total loans given by banks. The number was at 4.6% as on March 31, 2015. This is a huge jump of 50 basis points in a short period of just six months.

In other news, as a part of its continued commitment to serve the Defense sector, Axis Bank has signed a Memorandum of understanding with the Indian Army, the Navy and the Coast Guard to offer a comprehensive lifetime solution from Pay to Pension, under its umbrella suite - 'Power Salute'. Banking stocks finished the day on a negative bias with Indusind Bank and Kotak Mahindra Bank leading the losses.

Oil and gas stocks fell sharply lower in today's trade with BPCL and Petronet LNG bearing majority of the brunt. According to a leading financial daily, Indian Oil Corporation (IOC) has commissioned production of petrol from the Rs 345.5 billion Paradip refinery. This 15-million-tonne refinery is also the largest on the country's Eastern coast, and is equipped with the latest technology, including IOC's own patented IndMax technology for better and higher LPG output.

The refinery had incurred a cost overrun of over Rs 35 billion due to delays that it had to face apart from two cyclones. It also has a 17 metre deep natural draft for its oil jetty that can berth very large ships and has captive multi fuel power plant that can generate over 360-MW electricity. Though the refinery will primarily be processing high-Sulphur crude oil, cheaper by $2-3 a barrel, reported the facility can process any type of crude from the Gulf nations, Africa and South America.

After dedicating the largest Paradip refinery to the nation, Prime Minister Narendra Modi today said oil imports should be reduced by at least 10% by 2022. He also stated that a fertilizer factory will also be set up in Paradip soon.

Crude oil prices were volatile and hovering near US$30 a barrel after a meeting between OPEC producers Saudi Arabia and Venezuela to discuss coordination on prices ended with few signs there would be steps taken to boost prices.

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May 26, 2017 11:00 AM

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