All major Asian stock markets have opened the day on a strong note with stock markets in Japan (up 1.5%) and Indonesia (up 1.1%) leading the pack of gainers. The Indian share market indices have also opened the day on a firm note. Stocks in the realty and capital goods space are leading the gains.
The Sensex today is up by around 95 points (0.5%), while the NSE-Nifty is up by around 23 points (0.4%). Mid and small cap stocks are also trading in the green with the BSE Mid Cap and BSE Small Cap indices up by around 0.8% and 0.7% respectively. The rupee is trading at Rs 54.67 to the US dollar.
Steel stocks have opened the day on a firm note with Hindustan Zinc, Adhunik Metaliks, Jindal Steel and JSW Steel leading the gains. As per a leading financial daily, rating-linked loans are set to debut in India with Tata Steel's Rs 228 bn loan. India's leading steel manufacturer has agreed for a floating rate loan that will be linked to its credit rating. As such, the cost of borrowing would go up if the credit rating gets downgraded. As per the terms of the loan, Tata Steel will pay 100 basis points (1%) over State Bank of India's (SBI) base rate as long as the loan is rated 'A' or above by rating agencies. However, in case the rating slips below 'A', banks would charge 150 basis points (1.5%) above the prevailing base rate of SBI. The steelmaker currently has an 'AA+' rating from Care, one of the four local rating agencies. Given that SBI's base rate at present is 9.70% the effective interest rate on Tata Steel's term loan would be 10.70%
Private bank stocks have opened the day on a firm note with Karnataka Bank, Development Credit Bank (DCB) and Dhanlaxmi Bank leading the gains. India's largest private sector bank ICICI Bank has announced that its wholly-owned banking subsidiary in Britain had repatriated US$ 100 m (Rs 5,490 m) of capital. The repatriated amount comprises redemption of US$ 50 m preference share capital and return of US$ 50 m on equity capital. The capital base of ICICI Bank UK now stands at US$ 495 m. As at year ended December 2012, ICICI Bank UK had a capital adequacy ratio (CAR) of 31.5%. The company has said that its CAR continues to remain strong even after the repatriation. It must be noted that sluggish business growth and a stringent regulatory environment had resulted in the decision to bring back the capital from UK.