Stocks
Nifty, Bank Nifty and Sensex struggling to rally – Weekly closing report
Nifty will remain on an uptrend, as long as, it stays above 8,150
 
The S&P BSE Sensex closed the week that ended on 15th May at 27,324 (up 219 points or 0.81%), while the NSE’s CNX Nifty closed at 8,262.35 (up 71 points or 0.86%). We had mentioned that Nifty may close the week positively, recovering some of its recent losses.
 
On Monday, the positive cues from US, which gave out data showing unemployment rate dropping to a near seven-year low of 5.4% and non-farm payrolls increased 223,000 in April 2015 boosted market sentiments. In line with Asian indices, domestic indices too closed in the green. Nifty closed at 8,325 (up 134 points or 1.63%).  Rating agency Moody's said credit conditions are likely to improve for rated Indian corporates over the next 12-18 months on the back of upturn in economic activities, government's reform push and transmission of monetary easing.
 
Nifty was pulled lower Tuesday with the news of insufficient progress on talks between debt-strapped Greece and its creditors and forecast by Japan confirming El Nino's to return this year. The return of El Nino will affect economies that are heavily dependent on agriculture, particularly India, which is already reeling from bad weather. Nifty closed at 8,127 (down 198 points or 2.38%). The Index of Industrial Production data for March 2015, stands at 197.3, 2.1% higher as compared to the level in the month of March 2014.
 
On Wednesday, Nifty closed at 8,235 (up 109 points or 1.34%). Consumer price index (CPI)-based retail inflation eased to a four-month low of 4.87% in April from a revised 5.25% in March, which created an anticipation of interest rate cut by Reserve Bank of India. Rating agency Moody's said monsoon and global financial volatility will pose additional risks to India's growth this year, but the GDP is likely to average around 7.5% over the next 18-24 months due to improvement in business environment induced by reforms.
 
Nifty closed Thursday lower, however, made an effort to move higher. Nifty closed at 8,224 (down 11 points or 0.14%). The wholesale price index (WPI) inflation stood at negative 2.65% in April 2015. WPI inflation was minus 2.33% in March 2015. Rating agency Moody's Investors Service said that of the non-financial and infrastructure corporates that it rates in India, the vast majority carry either positive or stable outlooks. The Supreme Court Thursday dismissed a batch of petitions filed by various telecom companies seeking extension of their spectrum licences.
 
With the positive momentum on most of the Asian bourses on Friday and the higher closing of the US indices on Thursday gave a boost to the domestic indices as well. Nifty closed at 8,262 (up 38 points or 0.46%). Initial jobless claims in the US decreased by 1,000 to a seasonally adjusted 264,000 in the week ended May 9. This is near a 15-year low. India Meteorological Department (IMD) on Thursday gave out its forecast that the southwest monsoon will hit the Kerala coast around 30 May.
 
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
 

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COMMENTS

VGANESAN

2 years ago

looks like prices are rigged in jubilant food .The result announced is not that great.Market operators and manipulators using derivatives to rob in daylight from common traders.

'Tough times ahead for public sector banks'
Government-owned banks command a market share of around 70 percent
 
Government-owned mortgage lenders are suffering slippages in their non-performing assets (NPA) and would continue to lose business to private sector players till the Indian economy picks up, say experts.
 
"It is seen from the results declared by the government-owned banks they are continuing to suffer slippages in their NPA levels. Many banks are posting profits due to income from treasury operations and others," P.Karthikeyan, research analyst, Cholamandalam Investment and Finance Company Ltd, told IANS.
 
"The credit growth for banks remain muted. The NPA slippages have peaked out and should start coming down once the economy recovers and interest rates go down," he added.
 
According to Karthikeyan, the government-owned banks would lose market share to private banks in the meantime.
 
"Their profits would improve only from lower NPA when economy improves rather than increased business volumes. It would be difficult for government banks to regain from private banks the lost market share," he said.
 
Government-owned banks command a market share of around 70 percent.
 
Global credit rating agency Moody's Investors Service also expressed a similar view.
 
According to Moody's, the improvement in the credit profiles of Indian public sector banks will be achieved only in the medium term, given their high levels of impaired loans and weak capital positions.
 
"The improvement in the asset quality of Indian public sector banks for the fiscal year ended March 31, 2015, was marginal and much weaker than we had expected at the start of the same year," said Srikanth Vadlamani, a vice president and senior credit officer at Moody's.
 
Vadlamani was speaking at the first Moody's and ICRA Annual Credit Conference in Mumbai on Wednesday.
 
"A longer time-frame is needed for the credit profiles of public sector banks to improve, because their asset quality is tied to the slow, multi-year recovery of corporate balance sheets, and the lagging recognition of associated credit costs," he added.
 
According to Vadlamani, public sector banks exhibit significant capital requirements over the next few years, but their internal capital generation capacity is weak, while access to equity markets has been difficult.
 
The banks are therefore highly dependent on the Indian government (Baa3 positive) for fresh capital.
 
Experts however say that government will not be infusing additional funds into banks as in the past.
 
The central government has said capital infusions into its banks would happen only to relatively profitable banks.
 
"This may result in some weak banks getting merged with stronger one," Karthikeyan said.
 
"Given the low capital levels of public sector banks as a whole, the government's selective approach to capital infusions will put further negative pressure on the credit profiles of weaker banks," Vadlamani said.
 
On the modifications to India's framework for corporate bankruptcy, Vadlamani said the Indian budget's proposed introduction of a new bankruptcy law is credit positive if implemented as recommended, because the current weak framework is a major impediment in the banks' enforcement of creditor rights.
 
According to him, poor implementation of such bankruptcy regimes in the past was due to institutional capacity issues, and unless such issues are addressed, the weak mechanisms for the resolution of stressed corporates will remain a structural weakness within the Indian banking system.

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HC notice to Delhi government on non-appointment of Lokayukta
The Delhi High Court on Friday issued notice to the AAP government in Delhi on a plea seeking directions to fill up the post of lokayukta, which has been lying vacant since November 2013.
 
Justice Rajiv Shakdher also issued notice to the Centre, lieutenant governor of Delhi and chief minister and sought their respective responses by July 24.
 
Hearing the plea filed by Sat Prakash Rana, a former legislator, the court asked government to fill the post "as soon as possible".
 
"The quicker you (Delhi government) do, the better it would be," the court said.
 
The Delhi government counsel told the court that to fill the post of lokayukta, the Centre's nod was needed.
 
The petitioner told the court that though the Aam Aadmi Party (AAP) government assumed charge on February 14, it has not yet taken any steps for the appointment of the lokayukta and uplokayukta here, even after a lapse of 18 months.
 
The plea sought "immediate appointment" of lokayukta saying the non-appointment is "adding to the pendency of cases and, more importantly, has blocked a legal right of the residents of Delhi".
 
On September 26 last year, the Delhi High Court, while hearing a different PIL on the same issue, had asked the lieutenant governor to initiate the process to fill the post of lokayukta saying the statutory provisions make it mandatory on the part of the state to ensure that the post is filled "without any delay".

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COMMENTS

G.KRISHNASWAMY

2 years ago

Not only in Delhi but also in other states also. Why the SC or HC not directed or reminded or pass a stitch on other states too. by saying the statutory provisions make it mandatory on the part of the state to ensure that the post is filled "without any delay" . We expect other states also shall introduce immediately without any delay as directed by H.C.

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