Buying witnessed across the board

Wed, 2 Jul Closing

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The Indian markets continued to gain strength as the day progressed. The BSE-Sensex closed higher by about 325 points or 1.3% today, while the NSE-Nifty closed with gains of about 90 points or 1.2%. Gains were seen in stocks across the board with those from the metals, power and pharmaceuticals spaces being the top performers. Realty and information technology stocks were the least in demand today. Midcap and smallcap stocks joined the overall gains with the BSE Mid Cap and BSE Small Cap indices closing higher by about 0.8% and 1.1% respectively

Stock markets in other parts of Asia ended the day on a firm note with Hong Kong, China and Japan ending higher by about 1.6%, 0.4% and 0.3% respectively. The rupee was trading at Rs 59.97 to the dollar at the time of writing.

Stocks of public sector banks ended the day on a firm note led by United Bank of India, Vijaya Bank and Corporation Bank respectively. As per the senior management of the State Bank of India, the distressed loan situation seems to be improving given the improving market conditions. With sentiment in the capital markets improving, it is expected that companies will be able to raise more capital, which would help towards curbing the debt levels. As reported by the Business Standard, the bank is working on varied solutions to curb the problem of bad loans. As of March 2014, SBI's bad loans stood at 4.95% of total advances as compared to 4.75% in the year before. In absolute terms, the figure stood at Rs 616 bn as compared to Rs 512 bn in FY13. Speaking on the outlook of interest rates, the bank's management expects the situation to remain stable. On discussing the bank's fund raising plans, it seems that there are none in the short term and will depend on the credit growth a few months down the line. It may be noted that at the end of FY14, the bank's capital adequacy ratio stood at 12.5%.

Stocks of information technology companies ended the day on a firm note, with Wipro, Hexaware Technologies and TCS leading the pack of gainers. As per research firm Gartner, global IT spending is likely to rise to US$ 3.7 trillion in 2014, which would be higher by 2.1% on a YoY basis. This growth rate is lower than earlier projections (of 3.2%) due to reduction in growth expectations for devices, data centre systems and IT services. However, as per the research firm, the spending is likely to pick up in 2015 (by 3.7%) on the back of pricing and purchasing styles reaching new equilibrium. Further, it is expected that spending on devices (such as PCs, mobile phones, tablets and printers) is expected to grow by 1.2% in 2014 to US$ 685 bn, while spending on data centre systems and enterprise software is expected to grow 0.4% and 6.9%, to sizes of US$ 140 bn and US$ 321 bn respectively. It is expected that IT services will see a growth of 3.8% in the year to touch levels of US$ 967 bn. Further, spending on telecom services is expected to grow by 0.7% to US$ 1.6 trillion during the period. Given this outlook, it would be a positive for the major IT players given that US, the biggest market for them, is the largest spender. And from what it seems, the outlook is likely to improve a year from now.