After opening in the green, the Indian markets continued to trade in the positive territory amidst strong buying activity in the index heavyweights. Gains are led by stocks from banking and oil and gas space.
The BSE-Sensex is trading higher 252 points and the NSE-Nifty is trading higher 73 points. The BSE Mid Cap index is trading up by 0.2% and the BSE Small Cap index is trading up 0.4%. The rupee is trading at 61.05 to the US dollar.
Most energy stocks are trading higher today. While Indraprastha Gas and Gail India are leading the pack of gainers, Gujarat Gas is trading lower. As per a leading business daily, government owned Oil and Natural Gas Corporation Ltd.'s (ONGC) board has approved its partner Cairn India's plan of revising the cost of developing the second biggest oilfield in the prolific Rajasthan block. Cairn India has revised field development plan of the Bhagyam field in the Rajasthan block by raising the capex required by about 30% from USD 470 million to USD 608 million. Cairn holds 70% interest in the block, while balance 30% is owned by ONGC. Under the new plan, Cairn has increased the reserves to 525 million barrels from 415 million barrel previously but the cumulative production is envisaged at 85.56 million barrels as compared to 93.05 million barrels till the Rajasthan contract term until May 2020.
Almost all of the PSU banking stocks are trading on a positive note today. Canara Bank and State Bank of India (SBI) are leading the stock of gainers. As per a leading business daily, nation's largest lender SBI plans to sell its bad loans of about Rs 30 bn during the current quarter. The bank's management have plans to sell the bad loans in order to lower and contain its mounting NPAs (non performing assets) during the recent times. For this, the bank would invite bids from 18 assets reconstruction companies. And it will sell the bad assets worth Rs 30 bn to the highest bidder. NPAs are loan assets where buyers default paying interest over past 90 days. During the December 2013 quarter, SBI's gross NPA increased from 5.3% to as high as 5.7% of gross advances. Well, given the economic slowdown NPAs stand inevitable unless efficient control measures are initiated. Prolonged economic slowdown have led to increased bad loans and thereafter the rise in restructured loans for the Indian banking system. Moreover, the provisioning norms towards restructured assets are expected to increase starting April 2014. This will tend to hurt the earnings of the banks. Therefore, SBI's move to sell off bad assets comes at the opportune time and is expected to be bank's bold step- first of its kind- to rectify the NPA problem.