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Indian stock market and companies daily report (September 06, 2012, Wednesday)

Contributed by Angel Broking

Indian markets are expected to open flat with a negative bias tracking SGX Nifty which is marginally trading in the red currently. Most of the Asian markets are currently trading in the positive zone.

The US markets closed mixed for a second straight session on Wednesday. While the Dow Jones inched up by a marginal 0.1%, the Nasdaq fell by 0.2%. The markets remained directionless throughout the day ahead of the European Central Bank's meeting scheduled on Thursday. The markets largely shrugged off a report which showed that US labor productivity increased much more than estimates in the second quarter. Most of the European markets ended higher on Wednesday.

Meanwhile the Indian markets fell on Wednesday tracking the slide in most of the Asian markets amidst concerns over weak domestic economy and absence of major policy announcements on the reforms front.

Markets Today

The trend deciding level for the day is 17,325 / 5,234 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,400 - 17,486 / 5,252 - 5,277 levels. However, if NIFTY trades below 17,325 / 5,234 levels for the first half-an-l 17,239 - 17,164 / 5,208 - 5,190 levels.

Public sector banks start reducing retail lending rates

Public sector banks following on the footsteps of State bank of India have started reducing their lending rates on retail loans. Punjab National Bank, Union Bank, Central Bank, Corporation Bank, Oriental Bank, Vijaya Bank and Dena Bank have all reduced their lending rates across home, auto, personal, educational and gold loan segments. The clamor for shoring up retail assets has intensified lately as currently retail lending is offering higher risk adjusted yields compared to other segments. Most banks have also waived off or reduced their processing charges on these loans to attract more customers. The reduction in retail loan rates is expected to lead to higher retail market share for PSU banks while further intensifying the competition within the retail loan segment.

SBI cuts retail term deposit rates by 100 bps across maturities

State bank of India (SBI) has cut its retail term deposit rates by 50-100bp across all maturities except 5 years and above. The new rates will be effective from September 07, 2012. The downward revision is expected to push up the margins of the bank which witnessed significant decline in 1QFY2013 on account of asset quality pressures. We expect the calculated NIMs of the bank to sustain at 3.5% levels for both FY2013 and FY2014. At the CMP, the stock is trading at 1.2x (including subsidiaries) FY2014E ABV and we recommend a buy on the stock with a target price of ?2270

Economic and Political News

- CBI widens coal probe, six more firms on radar

- Aug services PMI rises to 55, highest in 6 months

- RBI to buy bonds if liquidity deficit stays above comfort level

Corporate News

- Jindal Steel arm acquires Canada's CIC Energy for US $ 115mn

- Suzlon inks 332 MW offshore contract with RWE Innogy

- BHEL signs preliminary deal with Tajikistan for 100-MW project