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Mid & Small Caps Tumble
Tue, 16 Feb Closing

After hovering around the dotted line for most part of the morning session, selling activity intensified post noon after export data for January was released - exports shrank for the fourteenth straight month. Stocks from the PSU, banking and capital goods spaces fared the worst. At the closing bell, the BSE Sensex finished lower by 362 points, while NSE Nifty ended down by 115 points. The S&P BSE Mid Cap and the S&P Small Cap also finished well below the dotted line as the respective indices were down by 2.4% and 2.2%.

Major Asian markets closed firm, extending Monday's rally. The Shanghai Composite ended higher by 3.29%, while Hong Kong's Hang Seng and Japan's Nikkei 225 ended higher by 1.08% and 0.20% respectively. European stock markets were steady on Tuesday, keeping afloat by stronger energy stocks which moved higher following the increase in oil prices. The FTSE 100 is up 0.52% while France's CAC 40 is up 0.37% and Germany's DAX is up 0.04%. The rupee was trading at 68.34 against the US$ in the afternoon session.

According to a leading financial daily, Yes Bank has signed a Memorandum of Understanding (MoU) with the Indian Renewable Energy Development Agency (IREDA) to foster development of the renewable energy sector in India. The MoU will boost green energy financing and help forge to close partnership between both institutions to create a supporting framework for funding of renewable energy and energy efficiency projects.

In other news, shares of United Breweries (Holdings) plunged more than 11% today after Punjab National Bank declared the company as a 'Willful Defaulter'. In November, State Bank of India had declared Vijay Mallya, Kingfisher Airlines and its holding company United Breweries Holdings as willful defaulters. Reportedly, majority of the banks led by SBI have decided to auction Kingfisher House in Mumbai on March 17 this year in a bid to recover a part of Rs 69.63 billion debt due from the now grounded Kingfisher Airlines. Punjab National Bank has an exposure of Rs 8 billion to the defunct airlines while SBI has an exposure of Rs 16 billion. Out of this, the banks, which recalled the loan in February 2013, could recover only around Rs 11 billion after selling pledged shares of UB Group companies.

Many leading public sector banks, including Bank of Baroda, Bank of India and IDBI Bank, reported their highest ever quarterly losses aggregating to over Rs 120 billion which have been hit hard by mounting bad loans. Others like SBI and PNB witnessed sharp erosion in profits (Subscription Required). In our recent edition of Vivek Kaul's Diary, Vivek explains why taxpayers will have to pick-up the final bill of the mess in government banks .

Vedanta has reportedly signed an agreement with the Odisha government to set up an aluminum park across 240 acres of land, adjacent to its aluminum smelter at Jhasarguda. The park has the potential to attract investment of Rs 1,000 crore and generate direct and indirect employment to about 17,000 people.

The Odisha government will provide the necessary infrastructure for setting up the industries with financial incentives. Both the company and the Odisha government will hold global road shows to attract investment.

The company would be able to sell aluminum in molten form to manufacture within the park, rather than supplying it in ingots or sheets, thus saving huge costs for both the company and the manufacturers. It would also make the production of aluminum products cost-efficient. Vedanta closed lower by 4.8% today. The stock has fallen by over 30% in the last six months.

After much deliberation and delay, the Mines and Minerals (Development and Regulation) Act, 1957 has been revised and the government has passed the Mines and Minerals Amendment Bill, 2015. In our recent edition of The 5 Minute WrapUp Premium, we have looked at the impact of the Act on various mining and metal companies (Subscription Required). This comes at a time when the aluminum industry has been hit badly by the global meltdown in commodity prices (Subscription Required). Slowdown in China, the largest consumer market, has further added to its woes.

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Jan 19, 2018 (Close)