Nifty holds 5900; PNB slumps 6% on Q1 NPA concerns

Moneycontrol Bureau
Live Market Commentary

11:50 am Results impact: Public sector lender Punjab National Bank (PNB) disappointed the street with the non-performing asset rising further during April-June quarter, though the net profit increased higher-than-expected 2.3 percent year-on-year to Rs 1,275 crore.

Net interest income grew by 5.7 percent Y-o-Y to Rs 3,907 crore in first quarter, which too was above expectations.

Analysts on an average had expected the bank to report net profit at Rs 1,196 crore and net interest income at Rs 3,829 crore.

Gross non-performing asset (NPA) jumped 57 bps quarter-on-quarter (up 1.5 percent Y-o-Y) to 4.84 percent while net NPA increased 63 bps Q-o-Q (up 1.3 percent Y-o-Y) to 2.98 percent during June quarter. Gross NPA of the state-owned lender surged 12 percent Q-o-Q to Rs 15,090 crore and net NPA soared 25 percent Q-o-Q to Rs 9,060 crore in first quarter of FY14. The stock slumps 6%.

11:40 am Update: Oil Minister says India's dependence on imports to be 90 percent by 2013-end. He said that it is necessary to step up domestic oil and gas production.

11:30 am Opinion: Bond yields, which shot up after Reserve Bank of India announced series of measures on Tuesday to curtail liquidity in the economy are seen coming back to normalcy in around one and half months once rupee stabilises, A Balasubramanian, CEO, Birla SunLife AMC told CNBC-TV18.

Once rupee stabilises, he expects portfolios to get adjusted in a way that money would flow from longer duration to the short durations and also a larger allocation to the money market funds.

He is underweight on FMCG and cement sector but prefers private banks over publics sector banks on strong fundamentals. He said that AMC would have a larger allocation for the private banks as the fear of non-performing assets, capital adequacy ratio, return on assets and return on equity is not there.

11:25 pm Wipro AGM: Wipro is poised for double-digit growth in the coming years as the US market is recovering and consumer spending improving, Chairman Azim Premji said. Wipro can achieve growth levels in double-digits of at least 15 percent in US dollar terms in the coming years as the US market is on path to recovery and there is an uptick in consumer sentiment, he said while addressing the AGM.

11:30 pm Exclusive: The Finance Ministry is looking into Life Insurance Corporation's investment in Gitanjali Gems, reports CNBC-TV18, quoting an unnamed official in the ministry.
 According to the official, there is no formal enquiry at this stage; only the details of the investment have been sought from the financial institution. As on June 30, LIC held 4.89 percent in the jewellery firm.

LIC's investment has drawn attention most likely since the financial institution was among the handful of institutions that increased stake in the company during the June quarter, buying 4.84 lakh shares.

The insurer had started building a position in Gitanjali Gems since mid-2012. In the July-September quarter last year, LIC bought 1.95 percent, increased the stake to 2.93 percent in the December quarter and to 4.36 percent in the March quarter. It then added some more shares last quarter.

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The market kicks off the August series on a quiet note. The Nifty holds above 5900 led by capital goods and select rate sensitives. The Nifty is up 5.20 points at 5912.70 and the Sensex is up 24.59 points at 19829.35. About 771 shares have advanced, 867 shares declined, and 119 shares are unchanged.

Sun Pharma, Hero MotoCorp and M&M are supporting the indices. The midcap and small caps are also in positive territory. 

In commodities, Brent holds above USD 107/barrel and Nymex is at USD 105.5. Gold is sideways at USD 1335 an ounce

In currencies, dollar index weakens to sub 82 on weak job data. Yen strengthens to 99.2 and euro surges to 1.327.

The rupee opened higher partly because of the global dollar weakness and partly because FIIs are rumoured to have bought at yesterday's treasury bill auction. Exporters were also noted selling dollars for the third consecutive day after the RBI's second round of tightening.

Bonds leaped higher and the yield on the 1-year fell to 8.1 percent from 8.2 overnight. The market is encouraged by the continued stability in the rupee and by Raghuram Rajan's assertion that the recent moves are not intended to kill growth.