After getting hammered on the bourses yesterday, Indian stock market indices once again began the day's proceedings on a cautious note. A larger part of the day saw the indices languishing well into the red before buying activity revived in the later hours and pushed the indices above the dotted line. This momentum was maintained in the final hour as well and indices closed well into the positive. The BSE-Sensex closed higher by around 158 points (up 1%), while the NSE-Nifty
closed higher by around 50 points (up 1%). The BSE Mid Cap and the BSE Small Cap also did well as they closed higher by 2% and 1% respectively. Gains were largely seen in auto, IT and oil and gas stocks.
As regards global markets, Asian indices closed mixed today while European indices have opened in the green. The rupee was trading at Rs 52.07 to the dollar at the time of writing.
Private banking stocks closed firm today and the key gainers were Axis Bank, Yes Bank and City Union Bank. As per a leading business daily, ICICI Bank is looking to increase its focus on the retail lending business after keeping a low profile for the past two years. Readers would do well to recall that the bank had aggressively sold unsecured credit cards and personal loans in the days before the 2008 global crisis. Once the crisis unfolded, the bank saw its non-performing loans rise more than 5% in 2010 as a large number of customers defaulted. Further, the bank had also halved its cards portfolio to about Rs 48 bn at the end of March 2011. Now that the reduction and restructuring of the portfolio has taken place the bank expects an increase in its retail business. Plus, it intends to be selective with respect to its unsecured loans compared to the scenario in the past. During 1HFY12, the bank had managed to arrest the fall in retail advances despite keeping the proportion lower. Further, the gross and net NPAs (non performing assets) stood at 4.6% and 0.8% of advances respectively at the end of September 2011. The stock closed higher today.
As per a leading business daily, food inflation eased back into single digits to touch a nine-week low of 9.01%, largely on account of the base effect. It must be noted that in the previous week, the annual WPI-based food inflation was recorded at 10.63%. The non-food articles index too eased sharply during the latest reported week, while fuel inflation remained steady at 15.49%. If this trend continues for a few more weeks, then the government is hoping that it will result in a drop in overall inflation. Inflation has remained persistently high for quite some time now, which has compelled the RBI to undertake 13 successive rate hikes. So far, these hikes instead of bringing down inflation have only made the scenario difficult for consumers and India Inc. in the form of higher interest costs thereby stifling growth. The sharp depreciation in the rupee has only made matters worse and is further likely to add to the inflationary pressures.