Indian share markets finished the trading week on a flat note after hitting record highs earlier during the day. At the closing bell, the BSE Sensex closed higher by 10 points and the NSE Nifty finished down by 21 points. The S&P BSE Mid Cap finished up by 0.3% while S&P BSE Small Cap finished up by 0.2%. Gains were largely seen in pharma stocks and automobile stocks. PSU stocks, energy stocks and bank stocks witnessed majority of the selling pressure.
Yes, Bank share price fell 7.4% after the bank reported a sharp rise in bad loans following the Reserve Bank of India’s supervisory assessment. The central bank’s assessment of Yes Bank’s gross bad loans was Rs 63.55 billion more than what the lender had reported at the end of March.
Including divergence impact, gross bad loans rose to Rs 27.20 billion as the end of September, up from Rs 9.16 billion a year ago and Rs 13.64 billion a quarter ago. As a percentage of total loans, gross NPAs were at 1.82% as the end of September compared to 0.97% three months earlier.
PSB stocks plunged in today’s trade. PNB share price fell 8%, IDBI Bank share price slumped 7.9% and SBI share price closed 3% in red.
The Government recently unveiled the Rs 2.11 trillion public sector bank (PSB) capitalization plan. This will be carried out over the next two years with maximum allocation in the current year. And implemented through the budgetary provisions of Rs 181.39 billion, recapitalization bonds to the tune of Rs 1.35 trillion.
Recapitalisation of PSBs Over the Years
PSBs are burdened by bad loans that have doubled in the past five years. This has led to a slowdown in the loan growth segment. Due to this, PSBs lost their market share from 70.9% in FY16 to 64% in FY17.
Asian stock markets finished broadly higher today with shares in Japan leading the region. The Nikkei 225 is up 1.24% while Hong Kong’s Hang Seng is up 0.84% and China’s Shanghai Composite is up 0.27%. European markets are higher today with shares in France leading the region. The CAC 40 is up 0.95% while Germany’s DAX is up 0.77% and London’s FTSE 100 is up 0.23%.
