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After opening the day on a flat note, the Indian stock markets have moved upwards. Sectoral indices are trading on a positive note with stocks from the oil & gas and pharmaceutical sectors leading the gains.
The BSE Sensex is trading up by 70 points (up 0.3%) and the NSE Nifty is trading up by 21 points (up 0.3%). Both, BSE Mid Cap and the BSE Small Cap are trading higher by 0.6%. The rupee is trading at 67.14 to the US$.
As per a leading financial daily, the government provided Rs 229 billion of capital to 13 state-run banks. The recapitalization took place on account of weak position of the public sector banks.
This is one of the many instances wherein the government has bailed out public sector banks with the hard earned money of the taxpayers. Public Sector Banks are increasingly reducing their exposure towards corporates on account of their weak asset quality position. This has partially contributed to a slowdown in the credit growth. The credit growth remained muted at 8% in May as against 8.5% in the corresponding period a year earlier.
The government has recapitalized the banks with the intention that they would start lending to the corporate sector, which in-turn will boost the economic activity.
Further, the biggest beneficiary in the lot of capital allocation is the country's largest lender State Bank of India (SBI). The bank has got nearly a third of the total allocation which amounts to Rs 75.7 billion. Next to this on the chart is Indian Overseas Bank which has got a capital allocation of Rs 31 billion. The stock of SBI and Indian Overseas Bank is trading up by 0.5% and 0.6% respectively.
Moving on to the news from commodity markets... Crude oil is witnessing selling pressure today. This is seen ahead of the release of official weekly US inventory figures later today. Market participants are cautious as they fear a possible supply glut on the back of rising crude stockpiles. Also, a rally in the greenback has weighed on crude oil this week.
The downtrend is seen despite a report from the American Petroleum Institute (API) stating that US crude stockpiles fell by 2.3 million barrels last week. All eyes are now on the data to be released by the US Energy Information Administration (EIA).
To keep a regular tab on the movements in crude oil and other commodities, you can read weekly market commentary from the Daily Profit Hunter team. Their weekly commentary tracks the developments in the global economy as well as currency and commodity markets.
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