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Reports India

Indian stock market and companies daily report (July 16, 2014, Wednesday)

July 16, 2014, Wednesday, 05:16 GMT | 00:16 EST | 09:46 IST | 12:16 SGT
Contributed by Angel Broking

Indian markets are expected to open on a positive note with tracking marginally positive opening on SGX Nifty along with marginal gains in Asian markets.

U.S. stock indices managed to end flat after opening in a negative teritory, driven by speech of Fed Chair Janet Yellen stating the economy continues to improve but the recovery is not complete.

European markets ended in the negative teritory mainly on the concern of German confidence data which was lowest in 19 months

Back home, Indian markets rose sharply due to good CPI data which came at 7.3% Vs 7.7% m-o-m backed by global market that traded in positive teritory

Markets Today

The trend deciding level for the day is 25,168 / 7,507 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 25,315 - 25,402 / 7,555 - 7,583 levels. However, if NIFTY trades below 25,168 / 7,507 levels for the first half-an-hour of trade then it may correct 25,081 - 24,934 / 7,479 - 7,431 levels.

Issue of Long Term Bonds by Banks - Financing of Infrastructure and Affordable Housing

In recent budget, Banks were permitted to raise long term funds for lending to infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and Priority Sector Lending (PSL). This according to our calculation will reduce the burden by 150-200 bps, which might be passed on borrowers. Now RBI has released norms to provide more details of raising of long term funds by banks which will not be considered under NDTL and also exempted it from priority sector norms.

RBI has also specified that along with infrastructure loans, affordable housing loans are also eligible for the above mentioned exemption. Housing loans to individuals of up to Rs.50 lakh, for houses valued at up to Rs.65 lakh in six metropolitan centres and a Rs.40 lakh loan for houses valued at as much as Rs.50 lakh in other centres will be considered as affordable housing.

The minimum tenure of long term bonds shall be 7 years. The appetite for such long tenure bonds has so far been low in India and it remains to be seen how much appetite will come forward for bonds issued under these new norms.

The budget also lacked clarity on whether new or existing infrastructure loans will be eligible for CRR and SLR exemption. However RBI has come up with the formula that mentions that upto 16% of existing loans outstanding will be eligible in FY15, 30% in FY16 and so on increasing to 1 00% by FY20.

In order to overcome the issue of ALM in infrastructure projects, RBI has allowed to fix longer amortisation period for loans to projects in infrastructure and core industries sectors based on the economic life or concession period of the project, with periodic refinancing every 5 years. As a result, restructuring of these loans would be reduced and banks can refinance project loans.

Economic and Political News

- Stalled highways projects worth Rs.180,000cr to be launched by Aug 15:

- FDI in railways likely in high speed lines, freight corridors

- Per capita external debt up 17.5% at Rs 21,493

Corporate News

- DLF plans to raise Rs.3,500cr via securities backed by IT SEZs

- Onmobile sells French arm for around Rs 156 cr

- Hewlett-Packard (HP) is likely to sell its 61% stake in Mphasis

Stock Market Forum