After starting today’s session on a cautious note, Indian indices have failed to recoup early losses. Other key Asian markets are trading weak as well. Currently, heavyweights in the Sensex are trading mixed with stocks from the auto and oil & gas space leading the pack of losers. However, stocks from the consumer durables and metals’ space are trading firm.
Currently, the BSE-Sensex is trading down by around 61 points, while the NSE-Nifty is down by about 20 points. Buying interest amongst the mid and small cap stocks is muted with the BSE-Midcap index trading lower by 0.03% each. However, BSE-Smallcap index is trading marginally higher with gains of 0.01%.
Banking stocks are trading weak with Indian Bank and United Bank of India being the top losers. However, SBI is trading flat. The central bank had recently outlined a few proposals with respect to provisioning on teaser loans in the November monetary policy. However, RBI has revisited the earlier norms and has tightened the accounting rules on teaser loans. With this the provisioning on all outstanding teaser loans has gone up to 2% from 0.4% as proposed earlier. Nonetheless, the provisioning is likely to revert to 0.4% after a year once the rates are reset at higher levels. It may be noted that teaser loans are the ones where initial rates are lower in the first few years after which they increase gradually to higher levels. Banks like SBI and PNB are most likely to be impacted by this move as they are the only ones offering teaser home loans now.
Retail stocks are trading mixed with Koutons Retail and Provogue leading the pack of losers. However, Zodiac Clothing and Titan Industries are trading strong. Titan Industries is investing heavily to boost sales of its mass brand Sonata. The company is looking to up the ante in rural markets by expanding the distribution network and plans to launch newer models at lower price points to entice customers. As low price mass market constitutes majority of the prospective demand the move is likely to drive growth in future. It may be noted that Titan launched Sonata brand in 1997 at a price point of Rs 500. Recently, the company re-launched the brand with new collection and strong marketing initiatives with an aim to almost double the sales volume. It may be noted that out of 13 m watches that Titan sells annually, 6 m are Sonatas. And over the next three years the company proposes to increase the volume to about 10 m.