Bank Credit Growth, World Bank on Developments in India, and Top Cues in Focus Today

Fri, 18 Oct Pre-Open

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On Thursday, Indian share markets rose sharply during closing hours and ended on a strong note, extending gains to the fifth day.

The BSE Sensex closed higher by 453 points to end the day at 39,052. Yes Bank and Tata Motors were among the top gainers.

While the broader NSE Nifty ended up by 122 points to end at 11,586.

Among BSE sectoral indices, automobile stocks gained the most, followed by banking stocks and finance stocks.

Speaking of Indian stock markets, the stock market has not been kind to investors of late.

There has been a sudden shift in market sentiment on the back of same major developments.

And investors across the rank and file - from institutional to retail - have been at the receiving end. The mayhem has spared no one.

Amid all these, Tanushree Banerjee, in the video below, talks about the Rebirth of India phenomenon and how 3 specific trends are racing ahead even in these gloomy times.

Tune in to find out more...

Top Stocks in Focus Today

From the engineering sector, Bharat Electronics share price will be in focus today as the company has inked a memorandum of understanding (MoU) with Tamil Nadu Industrial Explosives, a Tamil Nadu government undertaking, for co-operation in the explosives segment.

Reports state that the company is investing for the upgradation of existing facilities and the addition of new facilities. They also aim to set up a centre of excellence for ammunition related technologies for both defence and aerospace requirements.

From the realty sector, HDIL share price will be in focus today as the promoters of real estate group have requested the Reserve Bank of India (RBI) and investigating agencies to sell off their assets to pay off Punjab & Maharashtra Co-operative (PMC) Bank's dues.

As per an article in a leading financial daily, Rakesh Wadhawan and Sarang Wadhawan, who are the prime accused in the PMC Bank scam, have requested to sell assets which include a yacht, a Rolls Royce and an aircraft.

Apart from the above, market participants will also be tracking Force Motors share price, Mastek share price, and PVR share price as these companies announced their September quarter (Q2FY20) results yesterday.

You can also read our recently released Q2FY20 results of other companies here: Infosys, TCS, IndusInd Bank, Bajaj Consumer Care, Wipro, ACC, HUL.

Bank Credit Growth at Lowest in 2 Years

As per the latest Reserve Bank of India (RBI) data, credit growth at Indian banks has dropped to its lowest level in nearly two years, as slowing domestic consumption weighs on demand.

This adds to the challenges facing Narendra Modi as he begins his second term as prime minister with India's economy at its weakest levels in six years.

Lending growth by banks had nearly halved to 8.8% at the end-September from the start of the year.

The RBI data includes all banks in India, which is dominated by state-run lenders Bank of Baroda, Punjab National Bank and Union Bank of India as well as private ones such as HDFC Bank and ICICI Bank.

While retail lending has driven growth, banks are taking a more cautious approach on some consumer loans.

India's lending problems have been compounded by a drying up of liquidity in the NBFC sector last year after the collapse of infrastructure lending group IL&FS.

While some major NBFCs have been going slow on lending, others stopped completely.

However, banks have not used this opportunity to win market share from NBFCs, which accounted for 30% of auto loans and more than 40% of home loans until the end of last year.

The weak growth in lending comes at a time when banks have been cutting interest rates and making it cheaper to borrow.

So far in 2019, the RBI has reduced the repo rate by 135 basis points. Even though banks have not matched this, the pace of cuts has picked up in the last few months.

A high credit-deposit ratio has been one of the key reasons why banks have struggled to cut interest rates. But with credit growth falling faster than deposit growth, banks may have a bit more room to transmit rate cuts, the report noted.

How this trend pans out in the coming months remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

World Bank Highlights Indian Developments...

Highlighting developments achieved by India, the World Bank has said that the country has halved its poverty rate since the 1990s and achieved a seven-plus growth rate over the last 15 years.

It also noted that India is both critical to the success of global development efforts, including eliminating extreme poverty, and as an influential leader for global goods such as addressing climate change.

World Bank is expecting India's growth to continue and elimination of extreme poverty in the decade is within reach and added that the country's development trajectory nonetheless faces considerable challenges.

It further said that India will need to achieve greater resource efficiency as it sustains growth, given its resource endowments and large population.

As per the World Bank, India's rapidly growing economy needs investment in infrastructure, an estimated 8.8% of GDP or US$343 billion a year until 2030.

Besides, sustained growth will also need to accelerate inclusion, especially to create more and better jobs.

Britain, EU reach Brexit Deal

On Thursday, Britain and the European Union said that they have struck an outline Brexit deal after days of intense see-saw negotiations, though it must still be formally approved by the bloc and ratified by the European and UK Parliaments.

British Prime Minister Boris Johnson tweeted that the two sides had struck a "great new deal'' and urged UK lawmakers to ratify it in a special session on Saturday.

The breakthrough came just hours after Johnson's Northern Irish government allies threw a spanner in the works by saying they couldn't support the draft agreement because of provisions for the Irish border.

Sterling rose on news after the UK made concessions over the Irish border, an issue that had proven to be the biggest obstacle to a deal up to that point. The pound also rose 0.8% against the dollar, at US$ 1.2929, reaching a five-month high.

As per the economic schedule released by Vijay Bhambwani, here are the important events due later today:

• China - Q3 GDP Q-o-Q & Y-o-Y, Industrial Production September (Y-o-Y)
• India - FX Reserves, RBI MPC Meeting Minutes
• USA - Total Oil Rig Count

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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