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Flat with a positive bias
Thu, 24 Mar 01:30 pm

After trading firm during the previous two hours of trade, Indian stock market indices have given away some of the early gains but continue to trade in the green. Stocks from the realty and consumer goods space are trading firm, while those from health care and oil & gas are trading weak.

Currently, the BSE-Sensex is up by 112 points while NSE-Nifty is trading 30 points above the dotted line. BSE Midcap and BSE Small cap indices are both up by 0.58% and 0.80% respectively. The rupee is trading at 44.84 to the US dollar.

PSU banks are trading firm with Dena Bank and Allahabad Bank leading the gains. In order to meet the increasing demand for corporate loans SBI is planning to raise approximately US$ 5 bn (Rs 225 bn) through overseas bond offering. The money will be raised through multiple tranches over the next one year. It may be noted that SBI through an existing Medium Term Note (MTN) programme has already raised US$ 3.9 bn (Rs 175.5 bn) and has further headroom to raise US$ 1.1 bn (Rs 49.5 bn). So overall the bank has total leeway to raise US$ 6.1 bn (Rs 274.5 bn) through the existing MTN programme and the proposed bond offering. It may be noted that in light of higher borrowing cost in the domestic markets banks are looking for cheaper alternatives abroad to raise money. Host of other banks like ICICI Bank, Axis and IDBI Bank have raised money from the overseas markets in the past. Separately in order to consolidate its position in the global banking market, SBI has been on a look out for acquisitions in the overseas markets as well.

Power stocks are trading firm with PTC India Ltd and GVK Power & Infrastructure leading the gains. NTPC plans to raise US$ 500 m (Rs 22.5 bn) through dollar denominated bonds from overseas markets. The proceeds to be received via the bond sale will be used to fund capex plans of the company which includes adding about 5,000 MW of capacity next fiscal. In light of huge planned capacity addition targets, NTPC would require massive amount of funds over the next few years. As a result the company has made a request to the power ministry to allow it to raise funds through issuance of tax free bonds. Although NTPC has about Rs 200 bn of cash reserves on its balance sheet it needs approximately Rs 250-300 bn per year to meet its future capex requirements. Considering such huge requirement of funds raising money at affordable interest cost will be a key to profitability in the longer term.

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Mar 22, 2018 (Close)