The Indian markets fell deeper into the red as the day progressed. The BSE-Sensex closed with losses of about 109 points or 0.5%, while the NSE-Nifty ended lower by about 23 points or 0.4%. Barring stocks from the realty and information technology spaces, losses were seen across the board with metal and pharmaceutical stocks leading the pack of underperformers. Stocks from the midcap space ended lower by about 0.3% on an average, while smallcaps ended on a flat note.
Stock markets in other parts of Asia ended on a firm note with Japan, China and Hong Kong up by about 0.7%, 0.1% and 0.02% respectively. The rupee was trading at Rs 60.69 to the dollar at the time of writing.
Stocks of steel companiaes ended the day on a weak note with Tata Steel and SAIL leading the pack of losers. As reported in the Hindu Business Line, the management of steel major SAIL is of the view that the long term growth prospects of the steel sector remain intact given the country's low per capita steel consumption and the planned increases in infrastructure spending by the government. The per capita steel consumption in the country stood at 59 kg in FY13 as compared to 29 kg in FY00. However, when it comes to rural per capita steel consumption, it stands at close to one-fifth of the national average, thereby indicating the huge potential. This when compared to the world average of about 217 kg, gives an indication about the massive opportunity available in the country.
Further, the infrastructure spending in the country is expected to rise to 10% of the GDP as compared to current levels of 5%. For the 12th-Five Year plan, the planned expenditure stands at a massive US$ 1 trillion. As per the company's management, assuming 15% of this spending for steel demand, steel worth US$ 75 bn would be required in the next few years; or an additional demand of 18.7 tonnes per annum. Current steel demand stands at 81 m tonnes (FY13). This figure has risen by 11% on a compounded basis over a long term period. However, in the nine month period ended December 2013, steel demand increased by 0.5% YoY only.
Banking stocks ended the day on a weak note with Yes Bank, Federal Bank and IDBI Bank leading the pack of losers. Oriental Bank of Commerce (OBC) management is hopeful of reduction in bad loans of PSU banks starting September quarter. For PSU banks, the non-performing assets (NPAs) have climbed to 5.17% of their advances in December quarter 2013 as against 4.18% a year before. While big ticket advances are a major concern for PSU banks, small loans emerging from rural segment are showing up strong recoveries. For the bank per se, the NPAs were reported as 3.9% as at the end of December quarter. The bank expects to restrict the NPAs below 4% and focus on recoveries. The bank currently is reported to recover about Rs 1.5 bn per month. The slippages for OBC have been in the range of Rs 7-8 bn. While slippages for the bank have remained higher, the bank is confident to arrest further deterioration in asset quality.