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Indian share markets surge ahead
Fri, 21 Sep 01:30 pm

Backed by buying interest across the board, Indian share markets continued to soar higher in the post-noon trading session. Barring technology, all sectoral indices are trading positive with power, banking and capital goods stocks leading the pack of gainers.

The Sensex today is up 411 points while NSE-Nifty is trading up by nearly 137 points. BSE Mid Cap is up 1.5% and BSE Small Cap index is up 1.4%. The rupee is trading at 53.5 to the US dollar.

Majority of private banking stocks are trading positive with Axis bank and ICICI bank leading the pack of gainers. According to Reserve Bank of India (RBI), the growth in bank deposits is outpacing the credit growth. This is reflected in the fact that during the first five months of FY12, deposits grew by Rs 2,000 bn whereas credit off-take increased by only Rs 449 bn. Economic slowdown has led to a sluggish demand for credit. On the other hand, people flocked to safer options such as bank deposits due to lack of investment avenues in an uncertain market. In a bid to protect margins, several banks such as ICICI bank, State bank of India (SBI), Axis Bank and HDFC Bank have lowered deposit rates by up to 100 basis points (1%). In addition, the lending and processing charges have been curtailed to boost credit demand. RBI has projected annual deposit growth of 16% and annual credit growth of 17% in FY13. The central bank in its mid-quarter monetary policy review lowered the cash reserve ratio (CRR) by 25 basis points (0.25%) to 4.5% to enhance liquidity. According to RBI, festive-related demand and advance tax outflows could increase pressure on liquidity in the immediate future.

Majority of the textile stocks are trading strong with Arvind Ltd and Grasim Industries being the biggest gainers. According to Confederation of Indian Textile Industry, the industry may find it difficult to achieve its export target of US$ 40.5 bn in FY13 with major markets of US and Europe in the midst of economic slowdown. In the first six months of FY13, there has been no major uptick in export demand with the garment sector being the worst affected. To further add to the woes, cheap imports from Vietnam, Cambodia, China and Bangladesh have further reduced the export potential of Indian garments. The textile ministry had scaled up the export target to USD 40.5 bn in FY13 from USD 38.2 bn set last year.

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