Nifty is still on an uptrend and would appear to be weak below 6,285
After three days of rise, the domestic indices closed in the negative Tuesday breaking the uptrend. The indices opened in the red and continued to head lower on profit booking. Around 1.30pm the indices hit their respective low from where it tried recovering but closed in the negative.
After the poor performance in assembly elections in Madhya Pradesh, Chhattisgarh, Rajasthan with the Bharatiya Janata Party (BJP) getting victory, the Congress has retained power in Mizoram with a landslide margin.
The Sensex and the Nifty opened at 21,294 and 6,355. The indices immediately hit their days high at 21,328 and 6,362, respectively after which it started its downward journey. The Sensex and the Nifty hit low of 21,175 and 6,308. The Sensex closed at 21,255 (down 71 points or 0.33%) while the Nifty closed at 6,333 (down 31 points or 0.49%). The National Stock Exchange recorded a volume of 68.40 crore shares.
Among the other indices on the NSE, only four indices rose which were IT (1.90%); FMCG (0.92%); Metal (0.61%) and Pharma (0.30%) while the top five losers were Infra (3.20%); PSE (3.17%); Bank Nifty (1.84%); PSU Bank (1.83%) and Finance (1.75%).
Of the 50 stocks on the Nifty, 19 ended in the green. The top five gainers were TCS (4.10%); Hero MotoCorp (3.81%); Sesa Sterlite (2.42%); Lupin (2.36%) and ITC (1.58%). While the top five losers were NTPC (11.37%); LT (4.11%); Power Grid (3.85%); I C I C I Bank (3.55%) and BHEL (3.21%).
Out of the 1,223 stocks on the NSE, 354 ended in the positive, 814 closed in the negative while 55 remained unchanged.
NTPC, a benchmark stock, fell 11.26% to Rs136 on the BSE after the Central Electricity Regulatory Commission released draft regulations that will decide the multi-year power tariffs for 2014-2019.
The setback for ruling Congress Party in recent state elections could imperil the country's fiscal deficit target by tempting the government to have less restraint on spending, Fitch Ratings warned on Tuesday. Fitch noted that unless revenue unexpectedly surged, India would ultimately need to cut spending if it wanted to meet its fiscal deficit target. US indices closed in the positive on Monday.
Fed Bank of St. Louis President James Bullard said in a speech the odds of tapering bond purchases have risen along with gains in the labour market, and any reduction should be modest to account for low inflation. His Dallas counterpart, Richard Fisher, said in a Chicago speech that the Fed needs to begin tapering at the earliest opportunity, as the current pace of stimulus comes at a cost that far exceeds its purported benefits.
Except for Jakarta Composite (up 1.46%) and KLSE Composite (up 0.11%) all the other Asian indices closed in the negative. Straits Times fell the most (1.03%).
A series of Chinese data was released today. Industrial output for November rose 10% from a year earlier, slowing from the previous month's 10.3% increase. Retail sales rose 13.7% in November, accelerating from October's 13.3% rise. Tuesday's data also included urban fixed-asset investment, which was up an annualized 19.9% in the January-November period, slowing from a 20.1% gain for January-October. Fixed-asset investment, which is reported on a year-to-date basis, is seen as an indicator of construction activity in China. The European indices were trading in the green. The US Futures were trading marginally higher.
Bank union, AIBEA, demands that banks recover bad loans from wilful defaulters
Trade unions are usually quick to announce protests to demand higher wages or better working conditions. This time, however, the All India Bank Employees Union (AIBEA), one of the biggest employees unions in India, has decided to turn into a powerful whistleblower. On 5th December, AIBEA gave a call to ‘stop the loot of public funds’ and start recovery of bad loans. This is a welcome development. I have always held that the destruction of giant entities, such as Air India, Unit Trust of India, and giant public sector entities in telecom and engineering, is as much due to employee apathy as it is due to the loot by politicians and bureaucrats. AIBEA has signalled that it will name and shame defaulters, if necessary, to force banks to start acting tough and recover bad loans. The Reserve Bank of India (RBI), as the banking regulator, is fully aware of what is going on; but now, the unions are asking it to move from rhetoric to action. The AIBEA cites the overused quote about India having sick industries but no sick industrialists. It also quotes RBI governor, Dr Raghuram Rajan, who recently told banks, “You can put lipstick on a pig but it doesn’t become a princess. So dressing up a loan and showing it as restructured and not provisioning for it when it stops paying, is an issue. Anything which postpones a problem (rather) than recognising it, is to be avoided.” AIBEA points out that the top four bad loan accounts add up to a massive Rs22,666 crore, which include Kingfisher Airlines and Winsome Diamond and Jewellery Co. Will RBI stop the “systematic loot of public money” by recognising these as pigs with lipstick?
The data collated and released by the AIBEA is a frightening indictment of the banking regulator and the finance ministry. While the government has been boasting about India having escaped the global financial crisis, how does it explain the four-fold increase in bad loans—from Rs39,000 crore in 2008 to Rs164,000 crore today? The creation of new bad loans is a mind-boggling Rs495,000 crore, according to AIBEA. And, corporate debt restructuring through provisioning, concessions, waivers, write-offs, concessions, one-time settlements (which are done multiple times), compromise proposals, etc, add up to a massive Rs325,000 crore.
Write-offs of bad loans by PSU banks in the past seven years amount to a massive Rs140,000 crore. If we include the bad loans of private banks and foreign banks and other financial institutions, the total bad loans are more than Rs2,50,000 crore, says the AIBEA statement. Worryingly, it says, things have reached a point where management is making banks vulnerable by reducing the provisioning of bad loans. RBI has pointed out, and is aware, that the provision coverage ratio of India’s banking system has dropped from 55% to 45% as against a global average ratio of 70% to 80%.
AIBEA’s demand will resonate with depositors who are being asked to pay higher charges for every service, to ensure higher profits for banks every quarter. AIBEA, for once, is on the same side as two big stakeholders of banks—bank customers and shareholders. Clearly, the call to publish the names of defaulters, to make wilful default a criminal offence, investigate collusion between banks and borrowers and the demand not to ‘incentivise corporate delinquency’, will find huge support among ordinary people.
The price of LPG cylinder was hiked after the government raised commission paid to dealers by over 9% to Rs40.71 per 14.2-kg cylinder
The price of domestic cooking gas (LPG) was on Tuesday hiked by Rs3.46 per cylinder after the union government raised the commission paid to dealers by over 9% to Rs40.71.
An official from the Oil Ministry said, “The commission paid to dealers has been increased by Rs3.46 per 14.2-kg cylinder to Rs40.71. Consequently, the retail selling price of domestic LPG too has been increased in the same proportion”.
The increase in commission — which as per practice is passed on to consumers — has been effected from today.
LPG in Delhi costs Rs410.50 per 14.2-kg cylinder and after the increase will cost Rs413.96.
The last revision in cooking gas prices happened in October last year when because of an increase in dealers’ commission the rates were raised from Rs 399 per cylinder to Rs 410.50.
Also, the dealers’ commission on 5-kg LPG cylinders has been increased by Rs1.73 to Rs 20.36 per bottle. At present a 5-kg LPG cylinder costs Rs353 in Delhi.
The official said an annual revision in dealers’ commission is being proposed keeping in view the increase in expenses such as salary and wages.
He, however, said no revision in the additional distributor commission of 75 paisa paid on sale of non- subsidised sale of 14.2-kg cylinder was required for the time being. The 75 paisa is over and above the commission of Rs40.71.
Non-subsidised LPG is sold at market price of Rs1,017.50 per cylinder in Delhi.
The LPG dealers’ commission was last revised on 7 October 2012, when it was raised to Rs37.25 from Rs25.83 per 14.2-kg cylinder. The same for the 5-kg cylinder was hiked to Rs18.63 from Rs13.30 per bottle.
The commission has more than doubled in the past six years with almost yearly increases. The commission was raised from Rs16.71 per 14.2-kg LPG cylinder to Rs19.05 on 1 March 2007; to Rs20.54 on 4 June 2008; to Rs21.94 on 30 June 30 2009, and to Rs25.83 per bottle on 1 July 2011.