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FDI logjam keeps indices jittery
Wed, 5 Dec Closing

Despite some buying interest seen in key heavyweights from auto, commodity and banking sectors, the indices in Indian stock markets failed to build on the momentum seen in the earlier part of the session. Thanks to the Parliament logjam over FDI in retail, the indices closed marginally above the dotted line. While the Sensex closed higher by around 44 points, the NSE-Nifty closed higher by 11 points. The BSE Mid Cap and BSE Small Cap indices also ended higher by around 0.5% each.

Asian indices closed a mixed bag today while Europe is trading in the positive currently. The rupee was placed at Rs 54.59 to the dollar at the time of writing.

Gold prices hovered near their lowest level in a month today as investors and importers eyed the impact of key parliament vote on FDI in retail on the rupee.

As per a business daily, the government is looking to infuse Rs 40 bn in State Bank of India (SBI). This funding comes at a time when the bank is struggling with substantial write-offs on restructured loans that have turned into NPAs. Meanwhile, according to global rating agency Moody's, Indian banks' asset quality is far worse than reported. Provisioning norms prescribed to them are weak compared to global standards. The current classification, especially of restructured loans is inadequate and masks the extent of the damages. The rating agency predicts that both NPAs and restructured loans will rise further.

Moody's believes that the combined NPA and restructured loan ratio of 7.63% at the end of FY12 more accurately reflects the economic position of banks. This is as opposed to the reported 2.95% NPA ratio.

According to global consultancy firm Grant Thornton, Indian corporates clocked merger and acquisition deals worth nearly US$ 10 bn in the month of November, taking the year-to-date total to over US$ 41 bn.

Though the number of M&A deals in the country declined to 56 from as much as 71 a year ago, in value terms it increased significantly boosted by several billion-dollar deals. The total value of outbound deals - wherein Indian companies acquired businesses outside India - amounted to US$ 6.7 bn. Inbound deals, wherein foreign companies acquired Indian businesses, amounted to US$ 2.1 bn.

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