India Markets Thursday Wrap-Up: Economic Woes Weigh On Indices

by: Equitymaster

Profit booking in realty, auto, banking and power stocks led the indices in Indian stock markets deeper into the negative territory after a cautious start today. Selective buying in index heavyweights failed to help the indices recover. While the BSE-Sensex closed lower by around 168 points (down 0.9%), the NSE-Nifty closed lower by around 45 points (up 0.8%). The BSE Mid cap and the BSE Small cap indices were not spared either and they lost around 0.5% each. Barring healthcare, stocks across sectors witnessed profit booking today.

As regards global markets, Asian indices closed in the positive today while most European indices have opened higher. The rupee was trading at Rs 49.07 to the dollar at the time of writing.

Auto major, Mahindra & Mahindra Ltd. (M&M) reported dismal number for tractor sales for the month of February. The Farm Equipment division has reported a fall of 19.6% YoY in tractor sales to 15,316 units in February 2012 as against 19,041 units for the same period last year. Domestic sales in February 2012 stood at 14,341 units, down by 20.92% as against 18,134 units during February 2011. Exports for the month stood at 975 units, having registered a growth of 7% YoY. For the period April 2011 to February 2012, the domestic sales stood at 205810 units, having registered a growth of 12% YoY. Most auto stocks remained under pressure in a choppy session today on concerns over possibility of excise duty hike and slowing economic growth impacting demand.

Meanwhile, Indian banks too are facing pressure on their asset quality given the slowdown in economic growth. In a meeting with the Reserve Bank Of India (RBI), Indian bankers have complained over the policies concerning restructured accounts. At present every restructured is seen as equivalent to non performing asset (NPA). This in turn is impacting banks' asset quality and provisioning requirements.

Loans worth Rs 500 bn were referred for corporate debt restructuring (CDR) during the April-December 2011 period. Currently, total outstanding loans referred for restructuring are worth Rs 1.4 trillion, according to CDR forum data. With a share of 26.8%, the iron and steel sector accounts for most of these, followed by infrastructure (12%) and textiles (8%). Axis Bank and ICICI Bank (NYSE:IBN) featured amongst the top losers in banking sector today.