Nifty hit the support level of 6,286 on Wednesday and went up. The uptrend will be threatened only below 6,295
The market closed Wednesday in the negative for the second consecutive day, after hitting a three day low (including today). In the last few minutes the benchmark tried recovering the loss but failed to close in the positive.
Reserve Bank of India (RBI) Governor Dr Raghuram Rajan today said that the central bank's focus remains on controlling inflation. Rajan added the rupee had stabilised "somewhat", but said there is no room for complacency. He also called on the government to continue its efforts to contain the fiscal deficit and said raising subsidised diesel prices to market levels would help. Rajan also said the RBI would introduce measures to improve liquidity and depth in government bonds, known widely in India as G-secs. The Reserve Bank of India will announce next week’s steps to recognise and resolve financial stresses, including making it more expensive for so-called wilful defaulters to borrow funds.
The Sensex and the Nifty traded in the negative for the entire trading session. Sensex opened at 21,191 and Nifty at 6,307. In the last hour Sensex hit a low of 21,069 and closed at 21,171 (down 84 points or 0.39%) after hitting a high of 21,216. The Nifty hit a low of 6,280 from which it recovered to hit a high of 6,327 and closed at 6,307 (down 25 points or 0.39%). The NSE recorded a lower volume of 55.10 crore shares.
Among the other indices on the NSE, except for Media (up 1.14%); FMCG (up 0.63%) and MNC (up 0.18%) all the other indices closed in the negative. The top five losers were PSU Bank (2.16%); Infra (1.42%); Auto (1%); PSE (0.90%) and Nifty Midcap 50 (0.87%).
Of the 50 stocks on the Nifty, 19 ended in the green. The top five gainers were NTPC (2.32%); HDFC (1.86%); HCL Technologies (1.74%); Axis Bank (1.36%) and Coal India (1.26%). While the top five losers were Tata Motors (3.38%); Bank of Baroda (2.17%); State Bank of India (2.13%); BPCL (2.12%) and Tata Power (2.11%).
Out of the 1,220 stocks on the NSE, 460 closed in positive, 693 closed in the negative while 67 remain unchanged.
Rating agency Standard & Poor's (S&P) today said that India's sovereign rating may come under pressure if general elections due by May next year end up with a hung parliament or with a government unable to push through reforms. S&P has a "negative" outlook on India's sovereign ratings, meaning any downgrade from its current "BBB-minus" would place the country's debt in so-called "junk."
Finance Minister P Chidambaram today said that the government will not compromise on fiscal prudence and will contain its fiscal deficit and narrow it to 3% of gross domestic product by the fiscal year ending in March 2017. The comments come a day after Fitch Ratings had warned the setback for the Congress party in recent state elections could imperil the fiscal deficit target by tempting the government to have less restraint on spending. The finance minister also highlighted the government would do all it can to moderate inflation, given the RBI only has monetary policy as a "blunt tool" to contain rising food prices.
US indices closed in the negative on Tuesday. Investors weighed federal budget negotiations and better-than-estimated economic data to gauge the timing of any Federal Reserve stimulus cuts. The US budget deal, worked out between chief negotiators Senator Patty Murray and Representative Paul Ryan, would set spending at about $1.01 trillion in 2014, higher than the $967 billion required in a 2011 budget accord. A partial shutdown in October lasted for 16 days because lawmakers couldn't agree on how to fund the government. All the Asian indices closed on the negative. Hang Seng was the top loser which fell 1.71%.
Mr Sarma, former union secretary has asked every case of corporate debt restructuring-CDR to be investigated by CVC or CBI as he feels restructuring of bad loans are mostly the outcome of collusion among politicians, PSU banks and industrial houses
EAS Sarma, former secretary to the Government of India (GoI) has asked the finance services secretary to investigate the increasing non-performing assets (NPAs) in public sector banks (PSBs) and usage of corporate debt restructuring (CDR) by corporates.
Mr Sarma, in a letter to Rajiv Takru, secretary for financial services has said, "It is unfortunate that public funds should thus be misappropriated for private gains. Every case of CDR should be got investigated by Central Vigilance Commission (CVC), Central Bureau of Investigation (CBI) as CDR is mostly the outcome of collusion among politicians, PSU banks and industrial houses."
Referring to a story published by Moneylife on the lavish spending by Pramod Mittal, former chief of Ispat Industries and a bank defaulter, on his daughter’s wedding, Mr Sarma said, "I demand that the Ministry of Finance refers this case to CVC or CBI for an investigation to ascertain the circumstances that led to the CDR. Who are the politicians who exerted pressure on the PSU banks? Were there quid pro quos in this?"
Last month too, the former secretary has sent letters to Mr Takru. He had said, "From the statements coming from your office and RBI, I find that the banking system's NPAs have shot up to Rs1.93 lakh crore in 2013 from Rs50,513 crore in 2007, a four-fold increase within a short time span of five-six years! More than 80% of these NPAs are with the PSU banks. The banks have approved CDR packages for 415 companies covering a staggering amount of Rs2.50 lakh crore as on 30 June 2013. Many CDR packages also involved huge write-offs!"
"I suspect that the NPAs formally disclosed by the banks represent only the tip of the iceberg and a banking bubble is about to burst. The government should be circumspect in sinking public funds in the banks in the name of ‘re-capitalisation’, without addressing the root causes of the NPA disease. What distresses me most is that NPAs are allowed to erode the value of not only the deposits of small investors in PSU banks but also the premium remittances to public insurance companies by small life insurance policy holders," Mr Sarma said.
According to Mr Sarma, the excuse often cited by the banks is that the economy had slowed down, leading to lesser incomes of the corporates and their eroded ability to repay loans on schedule. "However," he said, "a closer investigation will reveal that this is only a lame excuse. Most of the defaults are either an outcome of dubious project loans given recklessly or sheer imprudence on the part of the banks. The project appraisal systems in PSU banks are fragile and deficient. Many loans were given under political pressure."
Sharing one instance of a syndicated loan package of Rs4,500 crore given by a consortium of PSU financial institutions for a power project, the former secretary, said, "The entire amount was credited to the account of an overseas company and ‘round-tripped’ later through FIPB as FDI! I have reported this to the CVC for instituting an investigation. I am sure there are many other similar cases. This kind of misappropriation of public money would not have taken place without the knowledge of the bank officials concerned."
Mr Sarma said, the government should revisit the concept of CDR as it has become a euphemism for regularising fraud in banking. Every case of CDR deserves an independent investigation. No future CDRs should be permitted without an independent exercise of due diligence and without vigilance vetting, he added.
"It is ironic that the government has consciously permitted CDR for defaulting corporate bodies but not considered debt restructuring for more deserving farmers and artisans who’s NPAs constitute only a small fraction of the total NPA amounts. I was distressed to find a farmer in Khammam district of AP committing suicide as the bank manager said he had no scheme to reschedule repayment of a Rs7,000 loan taken by the farmer. In the same breath, the banks had no compunction to reschedule the Rs7,000 crore loan defaulted by a mis-managed King Fisher Airline company!" Mr Sarma said in his letter to the financial services secretary.