Indian Markets ended flat

Tue, 22 Oct Closing

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The markets struggled to gather pace and witnessed selling pressures during the course of the day. And they eventually closed the day on a flat note. Sectors such as consumer durables, auto, and oil and gas have faced the maximum selling pressures while power and Capital goods' stocks have fared well. Mid-cap and small cap stocks continued to gather momentum during the day. The BSE-Sensex closed lower by 29 points while the NSE-Nifty was seen down too by 2 points. That said, the BSE Mid Cap and BSE Mid Cap indices closed today on a positive note and were up by 1.0% and 0.7% respectively.

The global markets, including both Asian as well as European markets, have fared on a mixed note today. The rupee was trading at Rs 61.6 to the dollar at the time of writing.

Except few, most of the PSU banks stocks closed the day on a firm note with Andhra Bank and Punjab and Sind Bank turning out to be major gainers.

As per the Finance Ministry sources, public sector banks are up for a capital infusion from the government today. The government has earmarked Rs 140 bn for capital infusion in the public sector banks during the current fiscal. All 26 banks are expected to get capital infusion from the government. In cases where in the government holding is already exceeding 58%, such banks would be asked to raise capital via QIPs. While most of the PSU banks are fulfilling the BASEL III requirements for capitalization, few such as Indian Overseas Bank, IDBI Bank, Bank of Maharashtra and Dena Bank are falling short of 8% Tier I target. In order to stand fully BASEL III compliant, government will ensure that these banks have the required Tier I. Others such as State Bank of India, Punjab National Bank and Canara Bank have already sought for funding from the government amounting to Rs 40 bn, Rs 15 bn and Rs 10 bn respectively. The government had infused about Rs 120 bn in 2011-12 and Rs 201 bn in 2010-11 in public sector banks. This much required step from the government will go a long way in ensuring enhancement of core equity for these banks.

Few Private sector banking stocks have been in favor today with Yes bank and Development Credit Bank turning out to be the major gainers for the day.

In its second quarter earnings for FY14 reported today, the private sector lender, YES bank has registered healthy profitability that grew at 21.2% YoY on the back of strong core income and other income performance. The Net interest income (NII) rose 28.2% to Rs 6.7 bn during 2Q from Rs 5.2 bn a year ago. Steady growth in advances and investments coupled with stable net interest margins (NIMs) boosted the core income performance for the bank. The other income grew by whopping 61.6% YoY to Rs 4.5 bn owing to surge in financial advisory, financial markets, transaction banking, and retail banking fees. The provisions were reported higher for the quarter and the provisions coverage ratio stood at 85.3% as at the end of 2QFY14. The asset quality has deteriorated marginally with gross NPAs moving up to 0.28% in 2QFY14 from 0.24% a year ago. The loan book reported 13.6% YoY growth while the deposits grew by healthy 29.2% YoY. The capital adequacy for the quarter stood at 13.8% during the quarter.

Despite the tough market conditions, YES bank has done well, both in terms of profitability and business growth for the quarter gone by.