The major Asian stock markets have opened the day on a mixed note with markets in Japan (up 1.0%) and China (up 1.3%) leading the gains. However, the stock markets in Taiwan (down 0.2%) and Malaysia (down 0.1%) have opened in the red. The Indian share markets have opened the day on a positive note. The sectoral indices have opened mixed with the stocks in the FMCG and consumer durables facing selling pressure. However, stocks in the realty and banking segment leading the gains.
Investment stocks have opened the day mainly in the green with Shriram Transport Finance Company and Indiabulls Financial Services Ltd leading the gains. The Reserve Bank of India (RBI) has tightened the rules for non banking finance companies (NBFCs). The new sets of changes have raised the minimum capital requirement for NBFCs and placed some restrictions on the deposits with an aim to protect consumers and the market without hampering growth. At a time when traditional banks are saddled with huge bad loans and are held back, NBFCs have been lending heavily to sectors like infrastructure. However, they are not subject to tougher rules unlike commercial banks and also do not hold full banking licenses. RBI has warned the risks from the growth of such unregulated financial firms. As a defensive measure, the central bank has tightened Tier 1 capital requirements for NBFCs. The latter would now need to hold capital levels of at least of Rs 10 m by the end of March 2016 and Rs 20 m by March-end 2017 to avoid losing their right to operate. Further, only certain investment-grade NBFCs would be allowed to take deposits and would have to acquire a credit rating until the end-March 2016. The central bank has also capped deposit-taking at 1.5 times the size of a firm's minimum capital - down from four times previously.
Engineering stocks have opened mixed with Opto Circuits Ltd and Everest Kanto Cylinder Ltd leading the gains. However, Jindal Drilling Industries Ltd and Jyoti Structure Ltd were leading the losses. Bharat Forge Ltd has announced results for the quarter ended September 2014 (2QFY14). Total income from operations for the quarter grew by 34.7% year on year (YoY). This was mainly driven robust export growth (in particular from North American industrial and commercial vehicle market). Export revenue during the quarter jumped 50.5 % YoY while domestic revenue was up 14.9 % YoY. Shipment tonnage was up 22.8% YoY for the quarter. The operating profit for the quarter grew 45.9 % YoY and margin expanded by 2.1% to 28.5%. Net profit for the quarter grew by 81% YoY. The management expects demand to improve across all quarters and to achieve significant order wins in the coming quarters. While demand from North America is likely to increase, demand from Europe is likely to soften a bit.