Markets zoom on move to recapitalise banks

Economy is in so much danger that Sensex breaches 33,000-mark for the first time and Nifty hits all-time high of 10,340..

— TheFrustratedIndian (@FrustIndian) October 25, 2017 Besides new intra-day highs, the S&P BSE Sensex which opened at 32,995.28 points, closed at a new high of 33,042.50 points, up 435.16 points or 1.33 per cent from its previous day’s close at 32,607.34 points. The index had slipped to a low of 32,804.60 points during the trade session. Similarly, the NSE Nifty 50 closed at a new high of 10,295.35 points, up 0.86 per cent or 87.65 points.

‘Modi govt has put economy in ICU’

The Congress on Wednesday hit out at Union Finance Minister Arun Jaitley for giving a “factually wrong picture” of India’s economy and said the Modi government has put the “economy in ICU”. “Whatever the Finance Minister said about the economy is not true. It is wrong to say that the country’s economic fundamentals are strong. Jaitley’s claim that India’s economy is the world’s fastest growing is incorrect and factually wrong,” said Congress spokesperson Anand Sharma while briefing mediapersons. The Congress alleged that 33 per cent jobs have been lost in the Micro, Small and Medium Enterprises (MSME) sector, which is 3.7 crore jobs, after last year’s demonetisation. The party also hit out at the government for hasty implementation of GST and causing hardships for the farmers, businessmen, labourers, youth and others. The government has no plan to put the economy back on track, he added. Sharma asked: “Who is responsible for contraction of GDP from 9.2% to 5.7% resulting in a loss of over Rs three lakh crore? Actually the GDP had fallen to 3.7 and 4.1 per cent. “China is growing at 6.9 per cent. The Finance Minister should have used the words before understanding it,” he added.  
“Markets zoomed higher on Wednesday to close at new life highs. The index had opened on a strong note in the morning session on the back of positive sentiments due to various measures taken by the government to spur economy including capitalisation of public sector banks and a massive road building programme,” Deepak Jasani, Head – Retail Research, HDFC Securities, told IANS. “It corrected a bit early in the morning but later resumed the uptrend closing near the intra day highs. The Sensex settled above the psychologically important 33,000 level for the first time in history.” Even global cues supported the Indian indices as major Asian and European markets ended on a positive note, barring the Nikkei index. However, the day’s trade session belonged to the PSBs. Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS: “Almost all PSBs’ stocks like those of SBI, BoB and PNB rose to touch their new 52-week highs during the intra-day trade.” “The rise in PSB stocks not only lifted the sectoral index but also the benchmark indices — BSE Sensex and NSE Nifty — to touch their all time highs during the intra-day trade.” “SBI was the top percentage gainer in the NSE Nifty, surging as much as 27 per cent to its highest since January 2015. L&T was the third-largest gainer in the index as it rose as much as 6.3 per cent,” Desai said. Market observers pointed out that almost all the major PSBs like SBI, PNB and BoB rose in the band of 20-40 per cent. The S&P BSE bank — BANKEX — zoomed by 1,274.17 points or 4.71 per cent. On bank-specific basis, SBI’s scrip gained Rs 70.20 or 27.58 per cent to Rs 324.70 per equity share. Other gainers include — PNB whose shares rose by Rs 63.80 or 46.20 per cent to Rs 201.90; BoB’s stocks edged higher by Rs 45.05 or 31.47 per cent to Rs 188.20; Bank of India’s scrip was up Rs 47.70 or per cent 33.96 per cent to Rs 188.15 and Canara Bank’s stock was up Rs 120.70 or 38.05 per cent to Rs 437.90. A healthy inflow of foreign funds and a strengthening of the rupee’s position against the US dollar kept the market trajectory northwards throughout the session. In terms of investments, provisional data with the exchanges showed that foreign institutional investors (FIIs) bought scrip worth Rs 3,582.50 crore, whereas domestic institutional investors (DIIs) sold stocks worth Rs 155.71 crore. On the currency front, the rupee strengthened by 16 paise to close at 64.89-90 against the US dollar from its previous close at 65.06. Sector-wise, the S&P BSE capital goods index surged by 581.28 points, followed by the automobile index higher by 156.80 points and the oil and gas index augmented by 76.56 points. On the other hand, the S&P BSE consumer durables index plunged by 239.38 points and the healthcare index receded by 154.64 points. Major Sensex gainers on Wednesday were: ICICI Bank, up 14.69 per cent at Rs 305.60; Axis Bank, up 4.61 per cent at Rs 472.70; Bharti Airtel, up 2.76 per cent at Rs 515.50; Adani Ports, up 2.18 per cent at Rs 414.95; and Tata Motors DVR, up 1.62 per cent at Rs 234.65. Major Sensex losers were: Kotak Mahindra Bank, down 5.43 per cent at Rs 1,009.70; HDFC Bank, down 3.76 per cent at Rs 1,794.50; HDFC, down 2.60 per cent at Rs 1,677.90; Lupin, down 2.22 per cent at Rs 1,003.75; and Sun Pharma, down 2.10 per cent at Rs 523.25. (IANS) // ]]>

₹ 2.11 lakh cr boost for state-run banks

“Shoddy attempt of a desperate finance minister to defend the decimation of economy has failed to impress either the Indian industry or common people… Time has come to travel from empty jumlas to meaningful governance.”
“Borrowing money (Rs 1.35 lakh crore bonds + part of Rs 76,000 crore from the market) to recapitalise banks would obviously mean breaching the fiscal deficit target. This is a desperate move by a Finance Minister groping in the dark as demonetisation and GST failed to bring in the promised Rs 4-5 lakh crore.”
Congress spokesperson Randeep Singh Surjewala on the government’s move to infuse capital into banks
The Finance Minister said the banks would get Rs 18,000 crore under the Indradhanush plan. Under the Indradhanush roadmap introduced in 2015, the government had announced infusion of Rs 70,000 crore in state-run banks over four years to meet their capital requirement in line with global banking risk norms, known as Basel-III. In line with the plan, public sector banks were given Rs 25,000 crore in 2015-16, and a similar amount has been earmarked for the following years. Besides, Rs 10,000 crore each would be infused in 2017-18 and 2018-19. This stimulus package comes after data from various sources showed India’s GDP growth flagging under the twin impact of demonetisation and GST.
“They can definitely observe it (November 8) as black day, it proves their devotion to a cash dominated economy. The government feels the economy should be a less cash economy, the opposition believes the economy should be cash dominated.”
Finance Minister Arun Jaitley on the Opposition plan to observe November 8, the first anniversary of demonetisation of Rs 500 and Rs 1000 notes, as a black day
The IMF said in its latest World Economic Outlook that India’s economic growth for 2017 and 2018 will be slower than earlier projections. The report cited the “lingering impact” of demonetisation and the Goods and Services Tax (GST) for the expected slowdown during the current and the next year. The IMF projected India to grow at 6.7 per cent in 2017 and 7.4 per cent in 2018, which are 0.5 and 0.3 percentage points less than the projections earlier this year, respectively.

Jaitley Takes on Rahul’s Gabbar 

Finance Minister Arun Jaitley hit back at Congress Vice President Rahul Gandhi for mocking the Goods and Services Tax (GST) as “Gabbar Singh Tax”, saying those “habituated” to scams would object to legitimate tax. “Those habitual of 2G and coal block scams, will have objections to legitimate tax,” Jaitley said in response to a question on Rahul Gandhi’s jibe at GST. At a public rally in Gujarat, Gandhi had described GST as Gabbar Singh Tax and again took a dig at the government on Tuesday over the pan-India tax regime, saying it was designed to grab peoples’ earnings. “Congress GST = Genuine Simple Tax. Modiji’s GST = Gabbar Singh Tax = Ye kamai mujhe de do (Give me these earnings),” Gandhi mocked in a tweet.

India Inc. Welcomes Move

The government decision to infuse Rs 2.11 lakh crore in public sector banks and spend Rs 14 lakh crore on infrastructure projects has received the thumbs up from India Inc. “The decision to invest in PSU (public sector undertaking) bank recapitalisation should result in increased lending, especially to the MSME (micro small and medium enterprises) sector,” said Pankaj Patel, President, Federation of Indian Chamber of Commerce and Industry (Ficci). He said Ficci hoped that the Reserve Bank of India will also pro-actively seek to boost investment and consumer demand through an easing of the repo rate. Bank recapitalisation should also encourage banks to pass on the benefits of a lower rate of interest to investors and consumers. Welcoming the emphasis placed by the Finance Minister on increasing public spending, Patel said the government can afford to ease the fiscal deficit to GDP ratio from the stated 3.2 per cent to 3.5 per cent without any serious negative macro-economic consequences. Announcement of recapitalisation of public sector banks (PSBs) to the tune of Rs 2.11 lakh crore along with a booster dose of Rs 14 lakh crore expenditure will prove to be a mega turnaround point for Indian economy which was tackling issues out of GST and demonetisation, said D.S. Rawat, Secretary General, Assocham. “The bank recapitalisation would lead to a massive sentiment turnaround as the decision by the Union Cabinet … is a great enabler for PSBs to resume lending, especially to small and medium enterprises (SMEs) which are in immediate need for funding,” he said. A whole lot of infra industries like cement and steel would get a boost. Besides, it would also generate jobs at informal levels of the economy and generate demand at the bottom of the pyramid. “These measures would surely set the stage for revival of the private sector investment,” said Rawat.

Govt Predicts Construction Boost

Also on Tuesday, the government said  that a universal affordable housing scheme will give a big boost to the construction industry as 1.2 crore dwellings will be built in three years under PMAY’s urban component and another 1.02 crore units under its rural component by March 2019.

“The universal affordable housing for all will give a big boost to the construction industry,” Finance Secretary Ashok Lavasa told the media in the presence of Finance Minister Arun Jaitley after a Union Cabinet meeting here. Lavasa said 1.2 crore units under the Pradhan Mantri Awas Yojana or PMAY (Urban) would entail an expenditure of Rs 1,85,069 crore in three years. He said under PMAY (Gramin) 1.02 crore units would be built at a cost of Rs 1,26,795 crore by the Centre and states by March 2019. Lavasa said 51 lakh units will be built this year. The government last month announced a new PPP (Private Public Partnership) Policy for Affordable Housing that allows extending central assistance of up to Rs 2.50 lakh per house to be built by private builders even on private land, besides opening up immense potential for private investments in affordable housing projects on government land in urban areas. The government had launched “Housing for All” in rural areas in November 2016 under which the government proposes to provide an environment friendly and secure house to every rural household by 2022. The government had in June 2015 given its approval for “Housing for All by 2022” for urban areas which provided for rehabilitation of slum dwellers, promotion of affordable housing for weaker sections through credit-linked subsidy and subsidy for beneficiary-led individual house construction or enhancement.
(IANS) // ]]>