LM: Moody’s downgrades SBI, HDFC Bank amid bleak outlook for Indian banks

2 June 2020: A day after downgrading the country’s sovereign rating to the lowest level, US-headquartered research and rating agency Moody’s Investor Service, on Tuesday, downgraded both the country’s largest private sector lender HDFC Bank Ltd and the state-owned State Bank of India, citing economic disruption caused by covid-19 outbreak, asset price declines creating severe credit shock across sectors and weakening borrowers’ credit profiles.

Seven other domestic banks saw either their rating or their outlook being negatively revised by Moody’s on Tuesday.

The rating agency announced a rating action on 11 banks. Apart from SBI and HDFC Bank, the nine other banks whose ratings faced an action by Moody’s include Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Export-Import Bank of India (EXIM India), Indian Overseas Bank, IndusInd Bank Ltd., Punjab National Bank and Union Bank of India.

“The rapid and widening spread of the coronavirus outbreak, volatile oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The Indian banking sector has been affected given the disruptions to India’s economic activity from the coronavirus outbreak, which is weakening borrowers’ credit profiles,” said Moody’s.

On Monday, India’s sovereign credit rating was cut by a notch to the lowest investment grade with negative outlook by Moody’s Investors Service, which cited growing risks that Asia’s third-largest economy will face a prolonged period of slower growth amid rising debt and persistent stress in parts of the financial system.

The country’s credit rating was downgraded to Baa3 from Baa2, according to a statement.

On Tuesday, Moody’s said disruptions from the coronavirus outbreak will worsen the economic slowdown in India that has been underway in the past year and will accelerate a deterioration in the banks’ asset quality and profitability.

The rating agency stated that the stimulus measures announced by the Indian government and the RBI will only help mitigate some of the credit pressures.

“The longer and broader the economic slowdown, the more these banks will face asset quality and profitability issues. At the same time, heightened liquidity stress at non-bank financial institutions will pose a risk to the stability of the broad financial system, given banks’ large direct exposures to these entities,” said Moody’s, adding that it expects the standalone credit profiles of most state-run banks to deteriorate.

Also, in the absence of external capital support from the Indian government, Moody’s expects the capitalization of the PSBs to deteriorate.

In Moody’s opinion, the state-run banks’ asset quality and profitability will also deteriorate due to rising loan delinquencies and defaults due to the coronavirus outbreak, which will result in an increase in credit costs.

However, most private sector banks have better loss absorbing capacity than their state-run peers because of stronger capitalization and loan loss reserves.

Moody’s has downgraded the long-term local and foreign currency deposit ratings of HDFC Bank and SBI to Baa3 from Baa2. EXIM’s long-term issuer rating has been downgraded to Baa3 from Baa2.

Moody’s maintains the rating outlooks of the three banks as negative.

Moody’s said the downgrades of HDFC Bank and SBI echo the sovereign rating of India since the rating agency assumes that the two banks will receive government support in times of need.

HDFC Bank reported total assets of Rs.15.3 trillion at 31 March 2020, while State Bank of India had total assets of Rs. 37.5 trillion at 31 December 2019.

“HDFC Bank and SBI’s ratings are unlikely to be upgraded in the next 12-18 months. Nevertheless, the rating outlook could be changed to stable if India’s rating outlook is stabilized,” said Moody’s.

Alongside, Moody’s has placed the “Baa3″ long-term local and foreign currency deposit ratings of Bank of Baroda, BOI, Canara Bank and UBI and their baseline credit assessment rating of “Ba3″ under a review for downgrade.

The review for downgrade reflects Moody’s expectation that the forward-looking improvements to these three bank’s credit profiles will be more difficult in the current environment, said the rating agency.

Bank of Baroda, headquartered in Mumbai, reported total assets of Rs.10.9 trillion at 31 December 2019. Bank of India had total assets of Rs.6.3 trillion, Canara Bank had assets of Rs.7.2 trillion and Central Bank of India reported total assets of Rs.3.5 trillion at 31 December 2019. Mumbai-headquartered Union Bank of India had assets of Rs.5.3 trillion at 31 December 2019.

Private lender IndusInd Bank’s long-term local and foreign currency deposit ratings too have been downgraded to “Ba1″ from Baa3 and its baseline credit assessment rating to ba2 from ba1.

Moody’s has also put its rating outlook as negative for IndusInd Bank.

The bank’s downgrade incorporates the risks to bank’s asset quality and profitability, said Moody’s.

The rating outlook of Punjab National Bank too has been downwardly revised to stable from positive by Moody’s, while the state-run lender’s long-term local and foreign currency deposit ratings at Ba1 has been affirmed.

Only in the case of Central Bank of India and Indian Overseas Bank, the rating agency has affirmed their long-term local and foreign currency deposit ratings at Ba2, while maintaining their rating outlook as stable.

In the case of CBI and IOB, Moody’s expects the asset quality and profitability pressures due to the coronavirus outbreak will be largely mitigated by the improvements in the banks’ credit profile over the past year.

The rating agency has downgraded the counterparty risk rating and counterparty risk assessment of HDFC Bank, PNB, CBI and IOB.

Source: LiveMint

BS: Covid-19 related provisioning knocks off 45% of top private banks’ profits

31 May 2020: A look at Q4FY20 numbers of top private-sector banks such as HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank and IndusInd Bank, shows that Covid-19 related provisioning has dented their profits.

On a cumulative basis, Covid-19-related provisioning at Rs 8,678 crore has shaved off 45 per cent of their pre-tax profit. In other words, had these banks not made the provisions, their combined reported pre-tax profit of Rs 10,792 crore would have stood at Rs 19,740 crore.

Due to a likely deterioration in borrowers’ credit profile, banks were mandated to make provisions in Q4. The Reserve Bank of India (RBI) had earlier announced a 3-month moratorium for repayments due between March to May (now extended to August) and had asked banks to provide at least 10 per cent for such accounts, which were overdue as of March 1, 2020 and have availed moratorium.

Many of these banks have made a higher provisioning based on their own assessment of the impact due to the moratorium following the Covid-19 outbreak and subsequent lockdown. According to data, Axis Bank and ICICI Bank consumed 37-59 per cent of their operating profit for Covid-19 provisioning, while the figure is 24 per cent in case of Kotak Mahindra Bank and 10-12 per cent for IndusInd Bank and HDFC Bank. As a proportion of advances, the Covid-19 provisioning of these lenders stood at 14-61 basis points in Q4.

“Banks have taken prudent step by making provisioning towards Covid-19, which had sharp impact on their bottom-line,” said Anil Gupta, head of financial sector ratings at ICRA. He, however, believes that the provisioning pain would remain elevated in the coming quarters and its impact on banks’ earnings could widen. This is due to uncertainty on the stress that could emerge because of the lockdown’s impact on borrowers’ ability to repay loans as well as the moratorium by the regulator. Banks’ loan book under the moratorium is expected to grow in the coming quarters, as borrowers may choose to conserve liquidity (cash) amid rising uncertainties.

Prakash Aggarwal, head-financial sector ratings, at India Ratings, shares a similar view. According to him, “While the proactive provisioning by banks is in the right direction, more will be needed given the way the pandemic is moving and the extension of the moratorium.”

Analysts at Edelweiss estimate that banks like Axis Bank, Kotak Mahindra Bank and ICICI Bank have 25-30 per cent of their loan book under the moratorium.

In the present situation, when income levels of individuals are getting impacted, either through salary cuts, or job losses, and a rating downgrade of key industries/companies is likely, concerns on asset quality are justifiable.

Credit Suisse also recently increased its credit cost estimates by 20-60 per cent for banks, due to lockdown and moratorium extension.

The silver lining, however, is that private banks have higher and relatively better provision coverage ratio, say experts. The foreign brokerage estimates that Indian banks would need to raise $20 billion in the next 12 months, of which $13 billion would be required by public-sector banks.

Against this backdrop, the position of public-sector banks’ moratorium book, provisioning for Covid-19 stress and management commentary would be critical.

Source: Business Standard

FE: McLeod Russel urges NCLT to quash ‘status quo’ order

19 September 2019: Debt-laden McLeod Russel on Wednesday urged the Kolkata-bench of the National Company Law Tribunal (NCLT) not to continue the interim order of “status quo” against its assets as it has very “serious repercussion” and negative “ramifications” for the operations of the bulk tea producer.

On September 3, the NCLT Kolkata bench passed an interim order of status quo of assets of the Kolkata-based company – once the biggest bulk tea producer in the world – as disclosed in the financial statement for the year ending March 31, 2019, till the next date of hearing.

The order was passed after one of the company’s financial creditors, Techno Electric & Engineering, apprehended disposal of the assets of the corporate debtor (McLeod) for defeating its interest.

Earlier, Techno Electric filed a petition for Corporate Insolvency Resolution Process (CIRP) before the tribunal under Section 7 of the IBC against the tea maker after it had defaulted on repayments of Rs 100-crore loan. “The documents referred to us add strength to the apprehension on the side of the applicant that if an ad interim order is not passed, there is every chance of removal of the assets of the CD (corporate debtor) for defeating the very purpose of (CIRP) resolution if any passed in favour of the applicant,” a two-member bench of Justices Jinan KR and Harish Chander Suri observed while passing the interim order.

On Wednesday, in his submission before the bench, Joy Saha, the counsel for McLeod Russel, said: “My entire line of credit will dry up because of this order. I am not able to pay the wages to around 65,000 workers of our tea gardens. It will have a catastrophic effect on the operations of the respondent company and likely to cause unrest amongst the workers. So far, as the interim order of injunction is concerned, this has very serious repercussion.”

According to Saha, each of the assets over which Techno Electric has asked for injunction are already mortgaged in favour of the banks. Stating that banks were considering a restructuring of loans proposal, Saha said, “All the banks, in common words, have been chastising me because I have not been defended the claim of an unsecured creditor.”

According to the latest annual report of McLeod Russel, part of the Williamson Magor Group, its financial creditors are ICICI Bank, HDFC Bank, State Bank of India, Yes Bank, RBL Bank, Axis Bank, Allahabad Bank, Uco Bank and United Bank of India.

The counsel for the tea company contended that the operational creditor now has taken the driver seat, while the banks, which are the the secured creditors and want to enter into loan restructuring agreement, are now “languishing in the background”.

“If an asset be mortgaged, can it be sold?” asked Saha, adding that as the assets were already mortgaged, the operational creditor would not need further protection from the tribunal. Saha urged the bench not to continue the interim order of ‘status quo’ against the company’s assets.

In his counter-argument, seeking continuation of status quo against McLeod’s assets, Techno Electric & Engineering’s counsel Ratnanko Banerjee said: “In one year, the corporate debtor sold Rs 500 crore worth of assets, even assets were mortgaged. For the purpose of the insolvency resolution process, their assets have to be preserved. I have expressed apprehensions that they will sell their assets, that is why the injunction is required.”

Banerjee allegedly said the Williamson Magor Group had siphoned off money from one group company to other group company. “This is a case for a forensic audit when the time comes,” he added.

Hearing the argument and counter argument, Justice Jinan KR said the bench was “only concerned” about whether the interim order required a ‘modification’ or not. “We are not going to confirm the order, we are not going to set aside the order,” he averred.

The Financial Express reported

MC: SBI moves intervention plea against HDFC claim on Jet Airways’ BKC property

24 July 2019: State Bank of India, the lead lender to the bankrupt Jet Airways, on July 24 moved an intervention application against mortgage lender HDFC’s plea claiming rights over a portion of the airline’s BKC property.

The National Company Law of Tribunal (NCLT) adjourned the matter for August 8.

On July 4, the mortgage lender HDFC had moved the NCLT seeking to keep the airline’s BKC property out of the bankruptcy process saying three floors of the BKC property are mortgaged with it as collateral for over Rs 400 crore loan.

Meanwhile, the tribunal approved Ashish Chhawchharia of Grant Thornton as the resolution professional for Jet Airways which stopped flying since April 17.

Chhawchharia, who got 81 percent votes of the committee of creditors, was the interim RP since June 20, when the airline was admitted for insolvency.

The liabilities and debt of the airline are over Rs 36,000 crore.

On July 18, the RP had said he received claims worth Rs 24,887 crore in 16,643 claims, including Rs 8,462 crore by financial creditors, against the company as of July 4.

Significantly, he rejected a claim of Rs 229 crore from JetAir, the privately held company of founder Naresh Goyal, which was the general sales agent of Jet Airways and the holding company the Goyals’s stake in the airline.

The lenders, who control 50 percent ownership of the airline, after failing to get a buyer, was forced to sent it for bankruptcy on June 17, and on the 20th of the month the Mumbai NCLT admitted the plea.

Last Saturday, the lenders in renewed bid to sell the remaining assets invited expression of interest from interested parties with a deadline of August 3.

Financial creditors, who also include banks, have made 37 claims worth Rs 10,231 crore as of July 4, he said. The list of financial creditors, whose claims have been admitted include 14 domestic banks and financial institutions, 12 foreign banks and eight lessors, the RP said.

State Bank has made a claim of Rs 1,644 crore, including cash credit inclusive of interest, term loans and bank guarantees issued but not invoked, it said, adding its claims worth Rs 19 crore were rejected. Private sector lender Yes Bank has claimed Rs 1,084 crore, followed by PNB’s Rs 963 crore and IDBI Bank’s Rs 594 crore.

Operational creditors excluding workmen and employees have made a claim of Rs 12,372 crore, with the entire amount being under verification, while the workmen and employees have made a claim of Rs 443 crore which is also under verification, Chhawchharia said.

Apart from this, authorised representatives of workmen and employees have made 11,965 claims of Rs 735 crore, he said, adding other creditors, including other financial creditors and operational creditors, have made 121 claims amounting to Rs 1,105 crore.

Moneycontrol reported

CNBCtv18: NCLAT dismisses HDFC’s insolvency plea against RHC Holding

10 July 2019: The National Company Law Appellate Tribunal (NCLAT) on July 10 dismissed a petition by HDFC to initiate insolvency proceedings against RHC Holding, an entity promoted by billionaire brothers Malvinder Mohan Singh and Shivinder Mohan Singh.

A two-member bench headed by Chairman Justice SJ Mukhopadhaya upheld the order of the principal bench of the National Company Law Tribunal (NCLT) which had rejected HDFC’s plea.

The appellate tribunal said it found “no merits” in HDFC’s petition and said that non-bank financial lenders come under the purview of the Reserve Bank of India (RBI) and should seek remedies from the central bank, not the bankruptcy court.

Passing an order on December 6, 2018, the NCLT had observed that RHC Holding was a non-banking financial company and does not come under the purview of the Insolvency and Bankruptcy Code (IBC).

HDFC had then approached the appellate tribunal to challenge the NCLT’s ruling.

The mortgage lender had moved the NCLT to recover an amount of Rs 41 crore.

RHC Holding, promoted by the Singh brothers, had taken a loan of Rs 200 crore from HDFC in April 2016. RHC Holding had paid the interest for the first quarter on time but later started defaulting on its dues.

According to HDFC, even after adjusting the proceeds from the sale of pledged shares, an amount of Rs 41.09 crore remained due.

To recover the remaining amount, HDFC filed an insolvency plea against RHC Holding before the NCLT.

The NCLAT had in January this year issued notices to RHC Holding and other parties and directed them to file their replies.

As reported on CNBCtv18

ET: HDFC wants NCLT to keep Jet Airways headquarters out of resolution plan

5 July 2019: Housing Development Finance Corporation has moved the bankruptcy court claiming that a portion of a Jet Airways office in Mumbai was mortgaged to it, and so should not be among the assets being considered for sale as part of the airline’s debt-resolution process.

The nation’s largest mortgage lender filed its application before the Mumbai bench of the National Company Law Tribunal (NCLT), which is hearing the grounded airline’s bankruptcy case.

On Thursday, HDFC’s counsel argued that three floors of the building, Jet Airways Godrej BKC, in the business district of Bandra Kurla Complex, were mortgaged to it. The NCLT bench presided over by VP Singh and Ravikumar Duraisamy posted the case for further hearing on Friday.

According to HDFC, Jet owes it Rs 414 crore. The lender recently put up a part of the office — 52,775 square feet on the fourth floor — for sale with a reserve price of Rs 245 crore, as part of efforts to recover the dues.

Lenders led by State Bank of India decided to take the airline to the bankruptcy court after failing to stitch together a revival plan, despite working on it for more than five months.

HDFC’s move is to pre-empt listing of the mortgaged office space among the assets for sale.

JET’S LANDLORD ISSUES NOTICE

Meanwhile, Luckystar Property Holdings, the owner of Siroya, Jet’s six-storey headquarters of in Andheri, have sent a notice through its law firm to the airline’s interim resolution professional (IRP), asking him to facilitate repossession of the building. The lease agreement was terminated on June 7, but goods including computers and files of Jet are still lying in the office premises.

“Luckystar is seeking the interim resolution professional’s intervention to remove all Jet Airways’ belongings so that it can give the premises on lease to another third-party,” said a person privy to the development. Dhaval Mehta, managing partner of Wadia Ghandy & Co, the law firm representing Luckystar, declined to comment on the matter citing client confidentiality. Jet Airways’ IRP, Ashish Chhawchharia of Grant Thornton India, refused to comment.

The Economic Times reported

ET: SBI, PNB, BoB, HDFC Bank, Yes Bank among lenders that may face action for unauthorised withdrawals of about Rs 800 cr.

10 June 2019: The government-appointed board of Infrastructure Leasing & Financial Services (IL&FS) is likely to file contempt proceedings against nine large banks including State Bank of India, Bank of Baroda, HDFC Bank, Yes Bank, Punjab and Sind Bank, Punjab National Bank, Indian Bank and Indian Overseas Bank for unauthorised withdrawals of about Rs 800 crore during the moratorium period, said people with knowledge of the matter. It will also seek refunds, they said.

They made “unauthorised auto-deduction from IL&FS escrow accounts,” in the last six months towards debt recovery, said one of them. These violated the protection granted to the financier and its subsidiaries by the National Company Law Appellate Tribunal (NCLAT), which restricted any lender from initiating recoveries, said the sources.

“Unauthorised deductions affected cash flow and it is also likely to affect timelines, which is detrimental to overall resolution framework being followed by the board toward speedy resolution,” said one of them.

The government appointed a new board to take charge of the company after it defaulted on repayments in September last year, sparking a liquidity crisis that hit nonbanking finance companies (NBFCs) and undermined the financial system. According to an IL&FS internal assessment, at least nine major banks made the deductions between October 2018 and April 2019.

IL&FS spokesperson Sharad Goel declined to comment. HDFC Bank, Yes Bank, State Bank of India and Bank of Baroda didn’t respond to queries.

The board is likely to seek refunds and file contempt cases to recover the deductions. The projects where such deductions have been made include the Chenani Nashri tunnel highway, where SBI is the lead bank and Rs 200 crore has been withdrawn. Another Rs 60 crore has been withdrawn from the escrow account for Jharkhand road projects, where Allahabad Bank is the lead bank.

Auto Debits from Escrow Accounts

Auto debits have been made from escrow accounts tied to the Hazaribagh Ranchi Expressway, Barwa Adda Expressway, Karyavattam sports facility, East Hyderabad Expressway and Baleshwar Kharagpur Expressway.

According to estimates, SBI has withdrawn over Rs 100 crore, HDFC Bank and BoB a combined Rs 90 crore, Canara Bank, Union Bank, Allahabad Bank, Punjab and Sind Bank together over 100 crore.

The IL&FS resolution framework has categorised its group units into green, amber and red, based on their ability to meet payment obligations over the coming 12 months. Those able to meet all payment obligations are green. Those that can only operational payments and senior secured debt obligations are categorised amber. Those unable to meet obligations to even senior secured financial creditors are categorised as red.

IL&FS group companies have an outstanding debt in excess of Rs 91,000 crore. The NCLT Mumbai bench superseded the board of IL&FS with government nominated on October 1 last year. The Ministry of Corporate Affairs (MCA) had approached the National Company Law Appellate Tribunal (NCLAT) for a 90-day moratorium on loans taken by group companies of the debt-laden IL&FS group.

The Economic Times reported

ET: Of Leelaventure’s total debt of Rs 7,500 crore, HDFC had advanced about Rs 826 crore.

8 June 2019: Stakeholders in debt-laden Hotel Leelaventure are apprehensive that a deal to sell company assets to Brookfield may go the way of Jet Airways after the market regulator stalled the transaction.

The Securities and Exchange Board of India, which acted on complaints by minority investors ITC and Life Insurance Corporation of India, has yet to take a decision on the matter.

“I don’t know what the objection of the shareholder (ITC) to this is, other than the fact that they are in the same business,” Keki Mistry, vice-chairman of Housing Development Finance Corporation, one of the lenders to Leelaventure, told ET. “In any merger, there will be some shareholders who will object and here the shareholder is actually a competitor. I am sure Sebi will look at that as well.”

Of Leelaventure’s total debt of Rs 7,500 crore, HDFC had advanced about Rs 826 crore.

The stakeholders are concerned that delays in completing the deal would dissuade investors and dilute brand equity much like Jet Airways. The debt-laden airline was grounded and has failed to find investors.

Tobacco-to-hotels conglomerate ITC, which holds a 7.92 per cent stake in Leelaventure, challenged the transaction in the National Company Law Tribunal (NCLT) in April, claiming mismanagement and oppression of minority shareholders.

After ITC approached Sebi, the market regulator asked both parties to wait till it examines the complaints. LIC, India’s largest life insurer, holds a 2.38 per cent stake in Leelaventure.

“The shareholders of Leela, both in numbers and value, have… approved the transaction. It is important that the deal gets cleared at the earliest,” Mistry said.

Almost 86 per cent of all shareholders in a postal ballot voted in favour of the deal and over 70 per cent of the institutional and non-institutional shareholders supported it.

Emails to Leelaventure and ITC went unanswered till the time of going to press. Brookfield declined to comment.

Leelaventure announced in March that Canadian alternative asset management company Brookfield had agreed to purchase its key hotel properties in New Delhi, Bengaluru, Udaipur and Chennai for Rs 3,950 crore in a slump sale. The promoters and their affiliates would also get consideration of Rs 300 crore for any asset-related intellectual property rights they hold and for business expansion services that they provide to the investor.

“The pause by Sebi on the country’s largest hotel acquisition transaction of Leela’s hotels does not augur well for the positive sentiment that has built up for hospitality transactions,” said Mandeep Lamba, president, South Asia, at HVS Anarock, a consultancy firm.

Hotel transaction volumes were expected to cross $800 million in 2019, the highest ever for the Indian hospitality sector, following the deal announcement, HVS Anarock had said.

“This defeats the very purpose of the NCLT disposition of nonperforming assets, where timebound completion of asset sales is the key component towards resolution,” he said.

ITC failed to get immediate relief from the NCLT in April after the tribunal cited a Companies Act provision that requires entities to own at least 10 per cent of the issued share capital to file such petitions.

All parties including JM Financial ARC, which holds a 26 per cent stake in the company after the conversion of debt into equity, were given time to reply and the next NCLT hearing on the matter is scheduled on June 18.

ITC had made an offer to lender JM Financial ARC, which holds most of Leela’s debt, for Leelaventure’s assets and if Brookfield walks away, the value of those properties would slide because the next best offer for the assets was Rs 3,000 crore, people familiar with the matter said.

“Selling Hotel Leelaventure’s properties in a fractional manner as against the entire company is unlikely to fetch value and can prove to be value destructive for shareholders as well as lenders,” a lender said.

All stakeholders that ET contacted are concerned over hurdles in the way of closing the deal.

“The transaction will help resolve the debt issue, protect shareholder value, protect jobs and most importantly, bring in foreign investment. When was the last time we have seen foreign direct investment in the Indian hospitality sectors ” asked an investor, who spoke on condition of anonymity.

The investor said most hospitality deals are brand and management contracts that take money out of India and in contrast, this transaction would bring in Rs 3,950 crore, which is just the initial investment.

The Economic Times reported

WEEKEND EQUITY UPDATE: 18 AUGUST 2012 – 19 AUGUST 2012

ASIA

Prices of new homes in China rose in 49 of the 70 cities in July over the previous month’s data. The cutting of interest rates, improved sentiment and incentives for new home buyers weighed in on the data. Prices declined in nine cities and were unchanged in twelve. (Bloomberg)

INDIA

FII’s have infused a total of USD 11 b in Indian equities in 2012 on a YTD basis. USD 1 b alone came in the month of August as the government could put in a fresh round of initiatives and reforms to stimulate the slowing economy. (Economic Times)

The combined market capitalization (m-cap) of top ten co.’s rose by INR 17,658 cr for the week ended 17 August. Reliance Industries contributed the most with gains of INR 10,696 cr followed by ONGC, Coal India, Infosys while TCS, HDFC Bank, ITC and NTPC saw their m-caps decline over the week. (Economic Times)

ONGC Videsh Ltd – OVL, the overseas arm of ONGC, is planning to invest in oil fields in Russia, mostly in the Arctic Ocean with joint-ventures. The co. is to form JVs with ExxonMobil and ENI. (Business Standard)

Tata Steel – Co.’s Ferro Alloys and Mineral Division to add 1.1 lac tons of ferro chrome and silico manages production capacity by 2012 at its Odisha plants.  (Financial Express)

Reliance Power – Co. refuted allegations made by India’s Comptroller and Auditor General (CAG) that the firm benefitted from the auctions of the coal mines. The co. is alleged to have made benefits of INR 29,000 cr by diverting its surplus coal output for its operations in Sasan, MP, India. The co, has stated that the allegations are erroneous and the co. did not receive any undue benefits. (Economic Times)

Lanco Infratech Limited – Co.’s management plans to increase the coal out to 5.5m tons per annum but March 2014 at its Griffin coal mines located in Western Australia. The Griffin coal mines are expected to hold total reserves over 1.1b tons and co. is expected to secure various clearances by the end of the current financial year. (The Hindu Business Line)

United Bank of India – Co. expects to recover INR 400-500cr in cash in this financial year, as gears up to fasten its recovery process, according to co.’s Executive Director Deepak Narang. (Business Standard/ PTI)

EUROPE

According to a German weekly magazine report, ECB is considering setting interest rate thresholds for any purchases of struggling euro zone country’s bonds so that it would buy such bonds if their interest rates exceeded a certain premium over German bonds. In other news the weekly magazine also reported that, Greece will likely need to cut additional EUR 2.5b in spending over the next two years to meet the requirement for financial aid. Der Spiegel cites an interim report by the troika. (Economic Times/Reuters)

Spain’s Economy Minister Luis de Guindos stated that the bank bailout fund would take care of restructuring and recapitalizing the banks. The funds received from the EU will be put up for approval by the Cabinet by 24 August. The non-performing assets of the bad banks will be transferred into the FROB fund to access loans. (Bloomberg)

Germany’s Finance Minister Wolfgang Schaeuble dismissed talks of providing a fresh round of funding to Greece even though the state of country remains in a difficult situation. The nation has received two rounds of funding worth EUR 240 b since the onset of the crisis. With GDP expected to contract at a slower pace in the next two years on the funding, Germany is aware of the additional constraints on the EU and other nations if the funding were to continue. (Bloomberg)

The U.S Justice Department have started investigating Deutsche Bank to understand its possible role in the transactions linked with Iran, Sudan and other nations currently facing international sanctions. (Reuters)

NORTH AMERICA

Rating agencies Moody’s and S&P are to face lawsuits filed by investors for falsely assigning inflated ratings to debt backed by subprime mortgages. Morgan Stanley sold the notes during the 2008 crisis incl. The Abu Dhabi Commercial Bank. (Bloomberg)

Caterpillar – Heavy equipment manufacturer stated that the uncertain outlook of the global economy was worse than the state during the 2008 crisis. Lower demand in the construction and infra sector on account of the slowdown has affected the co in terms of lower orders. (Financial Times)

 

 

 

 

 

 

DAILY MARKET REPORT – 06 AUGUST 2012

The markets rose today on the back of better than expected U.S Payrolls data and emerging solutions for the Euro crisis. Global cues too, are in the positive territory, with Asia setting the pace, followed by Europe. News of implementation of reforms during the monsoon session of the parliament also buoyed sentiments. In all, it was a good start to the week on the back of Friday’s data. India’s FM P. Chidambaram came up with plans to attract further investments in the country, policies to tackle inflation and promote growth. This could just be the precursor to the monsoon session of the parliament with investments expected to rise to 38.5 percent of the nation’s GDP.

The Nifty closed 5282.55 points, up 66.85 points or 1.28 percent on highs of 5293.20 and lows of 5260.85 in trade today.  The Sensex closed 215.03 points or 1.25 percent higher at 17412.96 points. It touched highs of 17451.53 points and low of 17313.05 in trade.

On the sub-indices news on the BSE, the Midcap Index inched 0.44 percent higher and the Smallcap Index rose 0.77 percent. The Oil & Gas Index gained 2.99 percent, mainly on news that benefited Reliance Industries, the Auto Index rose 1.69 percent and the Bankex advanced 1.34 percent. However, the FMCG Index fell 0.49 per cent and the BSE IT Index declined 0.25 per cent.

On the individual stocks, Reliance Industries rose almost 5.7 percent in trade as WTI crude saw a sharp rise on US payroll data. Developments between the oil ministry and the co. on investments in the KG-D6 basin to spur output also was favourable for the stock. Banks such as HDFC Bank and ICICI Bank also held onto their gains on hopes of rising investment in the country.

The Rupee hovered at 55.32, down 43 paise to the Dollar.

Kindly check the Market Summary tab for further information on stock-related data.

(Economic Times, Bloomberg ,Business Standard)