Markets swing into the positive

Thu, 17 Dec 02:30 pm

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Strong buying activity in key index heavyweights led the Indian indices to once again swing into the positive territory during the previous two hours of trade. Currently, buying activity is being witnessed in stocks from sectors like consumer durables and pharma. However, stocks from the realty and energy spaces are amongst the top losers.

The BSE Sensex and NSE Nifty are currently trading in the positive, up by 60 and 20 points respectively. The BSE-Midcap and BSE-Smallcap are also trading firm, up by around 1.2% and 1.1% respectively. The rupee is trading at 46.79 to the dollar.

Bank credit growth stood at 10.5% YoY during the fortnight upto 4th December 2009. This was faster than the credit growth during the previous 3 fortnights. However, the sustainability of this faster pace of credit growth is at question. This is much lower than the RBI’s target of around 13% to 14%. It shows that Indian banks are still wary of lending to segments such as personal loans and credit cards. Borrowings from corporate clients too has not picked up a good pace. This is in contrast to the enthusiastic lending by banks to segments such as home loans which have a collateral backing them and are considered more safe. It may be noted that the total outstanding deposits of banks as of the 4th of December grew 18% YoY. Banking stocks are currently trading in the positive with SBI and PNB trading marginally higher.

Telecom stocks are currently trading mixed with Idea Cellular and RCom leading the list of losers. As per a leading business daily, the introduction of mobile number portability (MNP) across the country could be delayed by another 2 to 3 months by telecom regulator Telecom Regulatory Authority of India (TRAI). MNP is a service which allows subscribers to change operators while retaining their numbers. One possible reason for the same could be that some telecom players are not still ready. As per reports state-owned operators MTNL and Bharat Sanchar Nigam Ltd (BSNL) wrote to the government that they would not be able to implement MNP before April 2010 for a number of reasons. These include lack of time to tweak the technology, tariff plans and billing, among others. The other is related to US-based Telcordia Technologies, one of the firm which is implementing the MNP technology in India. Thus, if the implementation of MNP is actually postponed to the end of March 2010, it will give companies like Bharti some more breathing time to fend off the intense competition that is eating up the profitability of telecom companies. This is because once MNP is implemented, it will become even more difficult for telecom companies to retain their old customers. While MNP is expected to act as a catalyst for the service providers to improve their quality of service, it may also set the ball rolling for consolidation in the sector.