India Markets Thursday Wrap-Up: Budget Anxiety Keeps Investors Cautious

by: Equitymaster

Indian stock markets moved deeper into the negative territory during the final hours and closed well below the dotted line. With today's monetary policy being a non event, investors remained anxious about the outcome of tomorrow's Union Budget. While the BSE-Sensex closed lower by around 243 points (down 1.4%), the NSE-Nifty closed lower by around 83 points (down 1.5%). Both the BSE Mid cap and BSE Small cap indices lost around 1% each. With respect to sectoral indices, gains were largely seen in power and IT stocks.

As regards global markets, Asian indices closed mixed today while European indices have opened in the green. The rupee was trading at Rs 50.43 to the dollar at the time of writing.

As per a business daily, PSU banking entity IDBI Bank is likely to sell its equity holdings in 229 Indian unlisted and unquoted Indian companies. Through this divestment, the bank will be cleaning up dud portfolio as these investments span almost the whole industry spectrum from containers to paper to petrochemicals to textiles to electronics and to telecom. IDBI Bank had an equity portfolio of Rs 33 bn as on March 31 2011, against Rs 27 bn on March 31 2010.

The bank has performed in line with Reserve Bank Of India (RBI) estimates on banking sector growth for the current fiscal by clocking in 16% YoY growth in advances in 9mFY12. It has been particularly aggressive in growing its retail advance portfolio, which has grown at a fast clip. However, its SME portfolio saw a dip in the nine month period. The company is trying to grow its priority sector book in order to meet regulatory guidelines. It expects to reach the 40% priority sector target by FY13. The stock nearly 5% lower today.

Meanwhile, Coal India is likely to revise its product prices during the April-June quarter (1QFY13) to balance wage hike as it has effected a 30% wage hike to its 3.65 lakh employees, which will incur an additional wage burden of Rs 65 bn. It is going to review the new Gross Calorific Value (GCV) based mechanism after assessing its 4QFY12 quarter performance. The company has put off price hike under GCV mechanism in 3QFY12, following protests from consumers in sectors such as power and cement. Earlier, in the Useful Heat Value (UHV) method, the pricing was decided on the ash and the moisture of coal.