While the indices in the Indian equity market did manage to pare losses during the closing stages of the day, they still closed the day marginally in the negative. While the Sensex edged lower by around 20 points, NSE-Nifty closed around 5 points lower. BSE Mid Cap and BSE Small Cap indices also closed in the red, down 0.2% and 0.4% respectively. Advance to decline on the Sensex was evenly split with there being one loser for every gainer.
While Asian indices closed mostly higher today, Europe is trading mixed currently. The rupee was trading at Rs 54.85 to the dollar at the time of writing.
Caution continued to be the buzzword on the street today even as election results for the two states that went to polls recently came out. Even otherwise, there hardly seemed a development in recent times that was big enough to have an impact on the markets. The fact that the indices have a decent run up also did not help matters. Thus, while the near term outlook seems to be circumspect, long term India remains one of the most attractive stories we believe.
Banks are facing rising non-performing assets (NPAs) in high value education loans, thus they are now geared up for funding vocational courses as part of government's skill development agenda. They find these loans to be much safer than lending to students for overseas education. Banks have had a difficult experience in trying to recover money from some of these students. A depressed job market globally also has contributed to the rise in NPAs. According to an article in the Economic Times, about 5% of such loans have turned bad while some lenders have witnessed NPA ratios as high as 15% as per senior bankers. India needs 10 to 15 m skilled workers every year to support its economic development. According to the Indian Banks' Association, banks need to lend about Rs 30 bn every year in order to meet this gap. National Council on Skill Development has estimated that about 2.5 m people are expected to avail of credit for skill development in the next three years. Courses offered by industrial training institutes , polytechnics and other technical bodies are eligible for loans under this scheme. Students will get loans up to Rs 50,000 for short courses and Rs 1.5 lakh for courses of over 12 months. The duration of such loans will vary between 2 and 7 years. Banks will not seek margin cover for loans for vocational studies. They usually ask for a 5-15 % margin for regular education loans, depending on the quantum of the loan.