The Indian stock markets started the day on a positive note and continued to trade positive for the entire session today. Towards the final hour before closing, markets moved steadily higher and finally closed the day in the green. Finally the indices closed well in the positive. The BSE-Sensex closed positive, higher by around 121 points (up 0.6%). The NSE-Nifty also closed higher by around 38 points (up 0.7%). The smaller indices also had a positive day on the bourses. The BSE Mid Cap index closed 0.8% higher and the BSE Small Cap 0.3% higher. Oil and gas and IT stocks saw a bulk of the gains today. Pharma stocks closed lower.
As regards global markets, Asian indices had a positive outing today. European indices however opened the day on a negative note, however most markets were shut today. The rupee was trading at Rs 54.86 to the dollar at the time of writing.
The power sector is still facing a huge fuel shortage and this is a crisis that still needs to be addressed. In light of this situation, the Coal Ministry has opined that diversion of a portion of e-auction coal to power producers will affect the fuel supply to other sectors, including steel and cement. 5 Million Tonnes per Annum (MTPA) of approximately 40-45 MTPA of e-auction pertained to mines having rail connectivity. Under e-auction, coal is sold at spot market price. Around 10% of the total coal produced by public sector entity Coal India (CIL) is sold through e-auction. Earlier, CIL had offered a certain portion of its coal meant for e-auction to power companies in order to ease the coal shortage that caused frequent disruptions in the generation of electricity. But, keeping in mind the shortfall in meeting power sector demands and the obligation by CIL to honour its commitments, the issue of reducing the quantity sold under this route was discussed.
Asset quality issues, especially in the mid corporate segments have plagued most banks. State Bank of India especially has seen its net non-performing assets grow to 3.96% of its mid-corporate book in September compared to 2.83% previously. Plus demand from large corporates has also been subdued on account of high interest rates and an absence in investment activity on account of the uncertain economic environment. Rather than project finance, the bank is focusing more on working capital lending. SBI has thus turned its focus to retail loans, primarily auto and housing loans in order to grow its asset book. According to the management, home loan sanctions have increased to Rs 1.5 bn a day from Rs 650 mn in September. This has been on account of lower lending rates compared to competitors, reduced processing time, removal of prepayment penalties, and transfer of loans from other institutions at attractive rates. With a 13.6% growth year-on-year in the September quarter, the management expects it to grow at 25-30% by the end of FY13. Auto loans have also seen a robust 28% year-on-year growth in 1HFY13 which was led by the new seven year loan scheme and lower interest rates. SBI is now one of the latest players in the home loan as well as the auto segment now and is looking at these segments for incremental growth.