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Sensex, Nifty Finish Strong; Banking Sector Up 1.6%
Thu, 8 Dec Closing

Indian share markets maintained the upbeat mood in the afternoon session supported by positive global cues along with gains in metal, auto and IT stocks. At the closing bell, the BSE Sensex stood higher by 457 points, while the NSE Nifty finished up by 145 points. Meanwhile, the S&P BSE Mid Cap & the S&P BSE Small Cap finished up by 1.5% and 1.3% respectively.

Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 1.45% and the Hang Seng rose 0.27%. The Shanghai Composite lost 0.21%. European markets are mixed today. The DAX is up 0.19% while the CAC 40 gains 0.11%. The FTSE 100 is off 0.12%.

The rupee was trading at 67.43 against the US$ in the afternoon session. Oil prices were trading at US$ 50.07 at the time of writing.

According to an article in The Economic Times, Public sector banks (PSBs) have written off Rs 1.54 trillion of bad loans between April 2013 and June 2016. During 2013-14, all PSBs wrote off Rs 344 billion non-performing assets (NPAs). The amount increased further to Rs 490 billion in the following year.

Banks wrote off NPAs of Rs 560 billion during 2015-16. Meanwhile, there were 661 NPA accounts above Rs 1 billion amounting to Rs 3.78 trillion from public sector banks as on March 31, 2016. As on September 30, gross NPAs of public sector banks rose to Rs 6.3 trillion as against Rs 5.5 trillion by June end. This works out to an increase of Rs 799 billion on quarter on quarter basis.

As per the reports, most of the NPAs continue to be contributed by "the usual five-six sectors" from the industry segment that have been the cause for much of the stress in the banking system for the last few quarters. Steel, power, shipping, sugar and infrastructure are the industries which have seen the maximum amount of stress in the last few years.

The government has taken specific measures like enactment of the Insolvency and Bankruptcy Code (IBC) and amendment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) and the Recovery of Debt due to Banks and Financial Institutions (RDDBFI) Act aimed at improving resolution or recovery of bank loans.

The problem of bad loans is indeed quite severe and when we compare it with other global peers it looks daunting. Out of the ten major economies facing NPA problems, India is ranked seventh.

India is Near the Bottom of the Global NPA List

Further, according a leading financial daily, a comparison of the NPAs of 25 large Asia-Pacific banks shows that the large Indian banks have the worst NPA ratio when compared to their large cap peers in the region. For FY16, India has been the worst performer with NPAs of 4.6%. Thailand has been the second performer with NPAs of 3.2%.

PSB's finished the trading day on a firm note with Indian Bank and State bank of India leading the gains.

In another development, the production of tea in the country stood at 147.64 million kgs in October, a decrease of 15.79 million kgs (9.66%) over the corresponding period, due to unfavorable weather. India is the world's second biggest tea producer and exports CTC (crush-tear-curl) grade mainly to Egypt, Pakistan and the UK and the orthodox variety to Iraq, Iran and Russia.

The production of tea in North India dropped 10.69% to 129.40 million kg in October 2016 as compared to 144.89 million kg production in October last year. Tea production in South India slipped up by 1.62% to 18.24 million kg as compared to 18.54 million kg in October last year.

The production in West Bengal slipped 7.68% to 41.33 million kg as compared to 44.77 million kg last year in October, while output in Assam dropped by 12.52% to 84.72 million kg in October 2016.

Assam contributed majorly with a production 652.95 million kg of tea in 2015-16 helping the country with a highest ever tea production during the fiscal year of 2015-16. This even led to the breaching of exports mark of 230 million kg after 35 years.

Also, India's tea exports declined by 2% to Rs 20.84 billion in the first six months of the current fiscal. In the April-September period of last year, the total value of tea exports was Rs 21.24 billion.

India is the second-largest tea producer in the world after China, with over 70% of the beverage produced, being consumed in the country itself.

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Jun 28, 2017 09:12 AM

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