Key indices show recovery

Wed, 21 Aug 11:30 am

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After opening firm Indian share markets have continued their recovery after the RBI's announcement that it will buy bonds and ease out bond-holding rules for banks in order to ease liquidity. The sectoral indices are trading mixed with BSE Banker and Capital Goods index being the leading indices in green; while software companies continue to remain in the red.

BSE-Sensex is up 146 points and NSE-Nifty is trading up 50 points. BSE Mid Cap is trading up 1.4% and BSE Small Cap index is trading up 1.2%. The rupee is trading at 63.3 to the US dollar at the time of writing.

Most of the Auto stocks are trading positive today. M&M and Bajaj Auto are leading the gainers, while Ashok Leyland and Mah. Scooters are the only stocks in red. According to a leading business daily, Hero Motor Corp is expediting its efforts to become technologically independent. It has successfully test-fired at least two new home-grown engines- 100 cc engine and a 250 cc engine. Earlier, the company was reliant on Honda for sourcing engines. This testing is a part of its process of coming up with several new launches in next few months. It is noteworthy that over 80% of its bike volumes come from 110cc and sub 110cc models. The company has three technology partners - AVL of Austria, Erik Buell Racing (EBR) of the US and EE of Italy. The company is also setting up a world-class technology & integrated R&D Centre at Kukas, Jaipur. The stock of Hero is trading 1.67% up today

All the stocks in the banking index are trading higher today. Yes Bank is up 13.7% and IndusInd Bank is up 10%. The country's largest bank State Bank of India (SBI) is close to a decision to merge one of its subsidiaries with itself. The bank is looking to take the final decision by the end of September. The merger proposal will then be sent for regulatory approvals. While announcing the first quarter earnings, Chairman Pratip Chaudhuri had said the bank was in advanced stage of a decision and the name of the entity for merger would be finalised by September.

State banks of Bikaner and Jaipur, Mysore, Patiala and Travancore are s the possible merger candidates. The merger could cost SBI up to Rs 20 bn. SBI's total capital adequacy stood at 12.1% as of June quarter, with the core tier 1 capital at 9%. It is also expecting some capital infusion from the government this fiscal. SBI is currently ranked in the lower 60s among the top banks in the world and can grow its balance sheet size through the merger of its subsidiaries. SBI did the first amalgamation of one of its associates, State Bank of Saurashtra in 2008, followed by State Bank of Indore in August, 2010. The stock of SBI is trading 3.8% higher.