After opening the day firm, share markets in India have continued the momentum and are trading comfortably above the dotted line. Sectoral indices are trading on a mixed note with stocks in the auto sector and stocks in the IT sectorleading the gains, while stocks in the metal sector are trading in red.
The BSE Sensex is trading up by 100 points (up 0.3%), and the NSE Nifty is trading, up by 25 points (up 0.3%). Meanwhile, the BSE Mid Cap index is trading up by 0.1%, while the BSE Small Cap index is trading up by 0.1%. The rupee is trading at 65.15 to the US$.
In news from stocks in the banking sector. According to a leading financial daily, in a respite, The Reserve Bank (RBI) may provide four quarters to Punjab National Bank (PNB) for making provisions against the country’s biggest ever banking fraud of Rs 127 billion.
As there is no precedent relating to fraud through Letters of Undertakings (LOUs) the RBI is likely to allow PNB to make provision against the fraud not exceeding over four quarters.Although there is a direction of the RBI on provisioning to be made in case of loan fraud, the bank is taking pre-emptive action to deal with extraordinary situation created by unearthing of this mega fraud.
Last month, PNB had lodged an FIR with CBI stating that fraudulent LoUs worth Rs 2.8 billion were first issued on January 16 this year. At the time, PNB had said it was digging into records to examine the magnitude of the fraud.
The RBI’s move may provide some interim relief to PNB.
CAGR Returns of PSBs in the Past Decade
On 24th October, the government announced its Rs 2.11 trillion public sector bank (PSB) capitalization plan. This move is aimed at reviving the PSBs’ drowning in a bad loan mess.
The next day was a field day for investors in PSBs. Stocks went up from 30% to 49% in a day. But long- term investors might as well ignore this, since it was just one good day amongst a decade of underperformance. The top 5 stocks that went up the most on October 25th have given meager returns over the past decade.
