Asian stock markets have opened the day on a mixed note. Stock markets in China (up 0.9%), Taiwan (up 0.4%) and South Korea (up 0.2%) are trading firm. However, markets in Japan (down 0.3%) and Hong Kong (down 0.2%) are facing selling pressure. The Indian stock markets have opened the day on a firm note. Stocks in the realty, capital goods and power space are leading the pack of gainers.
The BSE-Sensex is trading higher by around 133 points (0.7%), while the NSE-Nifty is up by around 40 points (0.7%). Midcap and smallcap stocks are trading in the positive as well with the BSE-Midcap and BSE-Smallcap indices up by 0.7% and 0.6% respectively. The rupee is trading at 44.96 to the US dollar.
Power stocks have opened the day on a strong note with Reliance Infra, Reliance Power, GVK Power and Suzlon Energy trading firmly in the green. The environment ministry has cracked its whip at yet another company. This time the one to suffer is none other than the government owned coal major Coal India. As per a recent order, the ministry has stated that the company needs to obtain clearances before mining in even the barren areas if another part of the coal block has a forest. Thanks to this new rule, Coal India's annual output is expected to decline by 11.5 m tones during the current fiscal. The Coal ministry has requested the Planning Commission to exempt coal projects from this rule as most coal bearing areas have forests. The rule would adversely impact the coal production in the country as obtaining a forest clearance from the ministry takes anywhere between 3 to 5 years. So far, the environment ministry has blocked 203 coal blocks that have nearly 660 m tones of coal reserves.
Finance stocks have opened the day on a firm note with IDFC, IFCI and Mahindra Finance trading firm. However, HDFC is trading in the red. The National Housing Bank (NHB) has increased the standard assets provisioning on retail home loans to 0.4%. Earlier, the same was lower at 0.1%. So far, the provision for non-retail loans such as developers, loan against property and top-up loans was at 0.4%. After this hike in provisioning norms, housing finance companies will be in parity with banks.
The impact of higher provision on HDFC which is India's largest home loan provider would be a miniscule Rs 1,400 m. In fact, according to the officials of the company, it has already made an excess provision of Rs 3,100 m on their books. Hence, HDFC would not be affected by the upward revision in provisioning norms.