Indian share markets remain in green

Thu, 4 Jul 11:30 am

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Indian share markets have generally traded in green during the previous two hours of trade. The most noticeable upward movements have been witnessed in the consumer durables and FMCG sectors while metals and PSU sectors have witnessed some selling pressures.

The BSE Sensex is up by 150 points and the NSE-Nifty is up by 45 points. BSE Mid Cap is up by 0.3% and BSE Small Cap is up by 0.2%. The rupee is trading at 60.06 to the US dollar.

Most of the PSU banks' shares have slipped in red with Corporation Bank and Bank of Baroda leading the pack of few gainers while Canara Bank and Allahabad bank are facing the maximum selling pressures. According to a leading financial news medium, State Bank of India (SBI), the country's largest lender has ruled out the possibility of a cut in its base rate. The Finance Ministry has urged the public sector banks to consider reducing lending rates to stimulate credit growth in the system. However, SBI would prefer to maintain status-quo since the base rate of the bank already stands lowest in the industry at 9.7%. Lenders have remained hard-pressed to pass on the rate cut benefits to end consumers. That's because the increased provisioning norms and the spike in cost of money have taken a toll on the banks' margins. Nonetheless, public sector lenders other than SBI have reassured the Ministry to review their lending rates and may be re-align them with SBI's rates. The average base rate of all other banks fall in the range of 10.2%-10.25%. SBI stands ahead of the curve, offering the lowest rate at 9.95% on its home loan portfolio as well.

SBI maintains a comfortable liquidity position and carries excess liquidity in its books to the tune of Rs 500 bn. However, the bank may have to go for a capital raise in the second half of the current fiscal to boost its asset growth. The bank's capital adequacy ratio stands at 12.9% with Tier-I at 9.5% as at the end of March quarter of FY13. SBI's share is down by 0.7%.

Engineering shares are trading on a mixed note with Suzlon Energy and L&T leading the gains while Punj Llyod and Crompton Greaves are facing the maximum selling pressures. According to a leading financial news daily, Larsen and Toubro (L&T), the engineering giant, has turned out to be a successful bidder to build Batinah road project in the northwest of Oman. The estimated project cost is around $352 mn (approximately Rs 21 bn) and has a construction period of two years. The company board has also recommended the issue of bonus shares in the ratio of 1:2 (i.e. one equity share for every two shares held) and has fixed July 13, 2013 as the record date.

The company reported a 10% YoY growth in profitability with a total revenue growth of 14% YoY for FY13. For the full year, the order inflow stood at Rs 880 bn, a growth of 25% YoY. The total order book at the end of the year stood at Rs 1,536 bn. 49% of the backlog belongs to the infrastructure sector while 28% belongs to the power sector. The company enjoys a well-diversified product portfolio and aims to focus on improving return on capital, monetizing non-core assets by exiting unviable businesses and focusing on international markets.