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Listless Gains for Indian Indices
Thu, 25 Aug 11:30 am

After opening the day on a flat note, the Indian stock markets have continued to trade near the dotted line. Sectoral indices are trading on a mixed note with stocks from the FMCG, healthcare and realty sectors leading the gains. IT stocks are trading in the red.

The BSE Sensex is trading up by 67 points (up 0.2%) and the NSE Nifty is trading up by 24 points (up 0.3%). The BSE Mid Cap index and the BSE Small Cap index are also trading positively, up by 0.4% and 0.5% respectively. The rupee is trading at 67.07 to the US$.

As per a leading financial daily, public sector banks (PSBs) are lagging far behind their private sector peers. This comes as data at the Reserve Bank of India (RBI) showed that the total bad loan ratio of the state-run banks has ballooned to 11.4% in the 15 months since March 2015. On the other hand, during the same period, private banks' bad loans have risen from 2.2% to 2.8%.

Notably, gross bad loans for the entire banking sector stood at 8.7% in June 2016 from 4.6% as of March 2015. Most of the pain here was followed on the back of doubling of the ratio of bad loans in PSBs to 11.3% from 5.4% in the same period.

Owing to this bad loan problem in the PSUs, the RBI has called for reforms in PSU banks. Some of the major reforms proposed by the RBI include the dilution of government stake in PSUs below 50%, extending CEO tenures to five years and providing managerial autonomy to banks.

All of the above proposals were made by RBI deputy governor S S Mundra in a speech yesterday where he stressed on how PSBs have continued to drive the deterioration in the asset quality of the banking sector in the first quarter of FY16. When and how these proposals will pan out remains the test of time.

However, there remain many concerns for the Indian economy if the problem of bad loans at PSUs continues to lag. Vivek Kaul, editor of Vivek Kaul's Diary, had written about the mess at PSUs and how it remains one of the major problems for the Indian economy in many of his articles. He's also explained why the government shouldn't be running 27 public sector banks.

And this problem is just one part of the puzzle. Vivek Kaul has spotted a trend which he thinks has the potential to derail India's long-term growth story. Apart from the rising bad loans in PSUs, there are many macro trends that could directly impact you and your family. These are the big issues like the government's handling of oil prices, India's disastrous jobs situation, the current state of India's real estate bubble...and a lot more!

In fact, as you read this, Vivek has just come out with a full note that details all...including how this trend could impact you.

Click here to know more.

Moving on to the news from the commodities space... Crude oil is witnessing selling pressure this week. The sell-off is seen on the back of an unexpected increase in US crude stocks. This in turn has revived worries about the global supply glut and led market participants to reduce their exposure towards the commodity.

Data showed that US crude stockpiles rose by 2.5 million barrels to a total of 523.6 million barrels in the week through August 19. This was seen as refinery inputs decreased and gasoline production fell. Analysts had expected a 455,000-barrel fall.

Traders are also skeptical on whether the Organization of the Petroleum Exporting Countries (OPEC) will come to an agreement at a meeting in Algeria scheduled next month. The doubts here have also fueled volatility for crude oil prices.

To keep a 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 stock, currency and commodity markets.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

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Mar 22, 2018 11:39 AM