The Nikkei is down 0.2% while the Hang Seng is up 0.3%. The Shanghai Composite is trading up 0.8%.
In US stock markets, Wall Street indices closed at all-time highs on Wednesday thanks to a boost from retailers like Walgreens and Nike, as investors ignored concerns about the Omicron variant spreading.
The Dow Jones Industrial Average gained 0.3% while the Nasdaq fell 0.1%. The S&P 500 hit new highs again, gaining 0.1%.
With that, the Dow Jones has now risen six consecutive trading days, marking the longest streak of gains since a streak of seven sessions from March 5 to March 15 of this year.
Back home, Indian stock markets are trading on a flat note.
The ESB Sensex trades 69 points. Meanwhile, the NSE Nifty is trading up 17 points.
Wipro and HCL Tech are among the top winners today. Bajaj Finserv, meanwhile, is one of the big losers today.
The BSE Mid Cap Index and the BSE Small Cap Index are trading up 0.1% and 0.4% respectively.
Sector indices trade in a blended fashion with stocks from the telecommunications sector and the IT sector showing long interest.
Real estate and energy stocks, on the other hand, are trading in the red.
Shares of Suzlon Energy and ESAB India hit their 52-week highs today.
The rupee is trading at 74.53 against the US dollar.
Gold prices are trading down 0.2% at ??47 749 for 10 grams.
Meanwhile, silver prices are trading down 0.4% to ??61,593 per kg.
In global markets, gold prices have stabilized above the key level of US $ 1,800 per ounce as the weak US dollar, making the bullion attractive to holders of other currencies, a balanced pressure from firm Treasury yields eroding the metal’s appeal.
Crude oil prices rose today to extend several consecutive days of gains, supported by data showing fuel demand in the United States is holding up well despite the surge in Omicron coronavirus infections.
In the news of the PSU space, State-owned power producer SJVN said on Wednesday it would invest ??600 billion to exploit 5,097 megawatts (MW) of hydropower in Arunachal Pradesh.
Company President and CEO Nand Lal Sharma met with the Chief Deputy Minister in New Delhi to discuss a roadmap for developing hydropower projects.
Sharma said that the development of these projects involving an interim investment of ??600 billion and will be commissioned by SJVN in the next 8 to 10 years.
He added that at the time of commissioning, these projects are expected to generate around 20 billion units of clean energy per year on a cumulative basis.
Note that SJVN has set itself an ambitious goal of achieving an installed capacity of 5,000 MW by 2023, 12,000 MW by 2030 and 25,000 MW by 2040.
It remains to be seen how that will play out.
In addition, the share price of Bharat Petroleum Corporation (BPCL) is at the center of concerns today.
The country’s largest insurance company, LIC, has acquired a 2.02% stake in the state-owned petroleum refineries company through open market transactions.
This increased LIC’s stake in BPCL from 5.01% to 7.03% today.
At the same time, as uncertainty hangs over the privatization of BPCL, the government’s disinvestment objective of ??It is unlikely that 1.75 tonnes for fiscal year 2022 will be reached.
The Center could lower its divestment revenue target in the revised estimates, even if it is on track to launch LIC’s initial public offering (IPO).
Reports indicate that While LIC’s IPO is expected to be completed before March 2021, the planned privatization of BPCL could extend into the next fiscal year.
This implies that when Finance Minister Nirmala Sitharaman presents the Union budget for 2022-2023, revised divestment estimates could be around ??500 billion less than the 2021-22 budget forecasts.
Due diligence for the sale of BPCL took longer than expected. Interested bidders were given access to the refiner’s financial data in April, but found delays in performing due diligence due to disruption from the pandemic.
Speaking of PSU, take a look at the chart below which shows how the BSE PSU Index has performed against BSE Sensex over the past few years.
As the graph above shows, over the past decade, ??100 invested in the BSE PSU index would have eroded to ??80, compared to nearly 3 times more gains for the Sensex.
Here’s what Richa Agarwal, chief small-cap analyst at Equitymaster, wrote about PSU stocks in one of the editions of Profit Hunter:
However, it would be folly to paint all the power supplies with the same brush. There are a few exceptions in this space, which put their private peers to shame.
In a recent editorial, I shared an opportunity in a rising PSU stock that enables an irreversible megatrend – digitization.
Let’s move on to news from the banking sector, The gross non-performing asset ratio (GNPA) of scheduled commercial banks is expected to rise to 9.5% in September 2022, from 6.9% in September 2021 in a severe crisis scenario, the Reserve Bank of India announced on Wednesday ( RBI).
In its 24th issue of the Financial Stability Report (FSR), the RBI said programmed commercial banks would, however, have sufficient capital, both at the aggregate and individual level, even under stressful conditions.
Listed commercial banks’ risk-weighted assets (CRAR) ratio hit a new high of 16.6% and their provisioning coverage ratio (PCR) stood at 68.1% in September 2021.
In the report, the central bank noted that the global recovery had lost momentum in the second half of 2021, impacted by the resurgence of infections in several parts of the world and supply disruptions.
Inflationary pressures add to the pressure.
Here is an excerpt from the report,
Bank credit growth is showing signs of a gradual recovery, led by the personal segment, although credit flows to lower-rated companies remain hesitant. Micro, small and medium enterprises (MSMEs) as well as the microfinance segment are showing signs of stress.
We will keep you posted on the latest developments in this space. Stay tuned.
This article is syndicated from Equitymaster.com
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