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Cautious undertone in Indian markets
Wed, 14 Dec 01:30 pm

Indian stock market indices, after a brief fall on above 9% headline inflation for November, bounced back to positive territory in the last two hours of trade. Most of the sectoral indices are trading in the positive with FMCG and banking stocks leading the gains. Power and realty stocks continued to be in red.

The BSE-Sensex is trading up 46 points and NSE-Nifty is trading up by 12 points. Both BSE Mid Cap and BSE Small Cap indices are trading up 0.03% and 0.16%. The rupee is trading at 53.61 to the US dollar.

Aviation stocks are trading in the red today led by Kingfisher Airlines (down 0.84%), Spicejet (down 0.53%) and Jet Airways (down 0.23%). The aviation sector is grappling with hardening price of aviation turbine fuel (ATF). Reportedly, the state-owned oil marketing companies hiked jet fuel price by a steep 3.7% on 1 December 2011 as weak rupee has inflated impost costs. Moreover with a significant share of the industry's expenses denominated in dollars, the depreciating rupee has further hit them hard.

As per a business daily the country's largest PSU bank State Bank of India (SBI), has seen its non-performing assets (NPAs) in the farm loans segment increase nearly fourfold in absolute terms the past 6 months. NPAs in the agricultural book increased from 6.4% in 1HFY11 to 8.9% of advances in 1HFY12. The bank's gross NPAs stood at 4.2% of advances at the end of September 2011. SBI has taken a number of initiatives to tackle this situation, including restructuring of eligible accounts. Slippages under the RBI's restructured assets scheme stood at 23.8% at the end of September 2011. However towards the second half this may see some improvement as the harvest was late this year. Almost every other counter also saw a spike in NPA accounts, and even large corporate slipped into this category. Delinquencies were higher in export related categories like gems and jewellery, iron and steel etc. The bank however expects to maintain its net NPA ratio at 1.7% in FY12. SBI has a 4.2% exposure to the power sector, out of which only 0.1% or Rs 12 bn is to distribution companies, which is the segment currently seeing stress.

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