Interest rates are set to fall again with public sector banks today agreeing to lower deposit and lending rates next month.
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Under Indradhanush roadmap announced in 2015, the government will infuse Rs 70,000 crore in state banks over four years while they will have to raise a further Rs 1.1 lakh crore from the markets to meet their capital requirement in line with global risk norms, known as Basel-III.
A few state-owned banks such as IDBI Bank, Union Bank, Indian Overseas Bank have announced results for FY14.
Fund managers are withdrawing after a two-year long run in public sector bank (PSB) stocks. Domestic mutual funds (MFs) were net sellers of PSB stocks for the first time in nine quarters, offloading shares worth Rs 1,800 crore in the March quarter, said a report by ICICI Securities. In the previous eight quarters, fund houses had invested more than Rs 10,000 in PSBs amid deep discounts in valuation vis--vis their private sector peers.
The one-year returns for equity-oriented mutual fund (MFs) schemes have largely mirrored the gains made in the secondary market. However, schemes that invest in infrastructure (infra), small-cap, and public sector undertaking (PSU) banks have emerged standout performers, with gains in excess of 100 per cent in some cases. Of the total 484 equity schemes, 353 have managed to beat the Sensex, reveals the data provided by Value Research. Around 20 have delivered returns in excess of 90 per cent and six schemes have given returns of over 100 per cent in the past one year. The S&P BSE Sensex Total Return Index (TRI) has given returns of 51 per cent in the last one year, ended October 29.
India's ailing banks need immediate attention.
The six banks that have joined the major league are Syndicate Bank, Indian Overseas Bank, UCO Bank, Oriental Bank of Commerce, IDBI Bank and Allahabad Bank.
An increase of 10% in net profit is expected as higher provisioning would negate most of the gain on account of expansion of loan portfolios.
Less than a month after five financial institutions sold 20 per cent in the National Stock Exchange, a consortium of five stakeholders led by State Bank of India are looking to sell an 11 per cent stake in the exchange.
Punjab National Bank has the largest share.
The gap between the highs and the lows in April for the benchmark S&P BSE Sensex was just 4.1 per cent - the narrowest since July 2021 and nearly half its three-year average. The absence of major positive triggers, sectoral rotation, and cautiousness due to earnings and economic uncertainty have kept a tight leash on the markets, observe experts. Remarkably enough, during the 17 trading sessions in April, the Sensex didn't even log an advance or a decline of more than 1 per cent.
The RBI on Friday imposed a fine of Rs 6.5 crore (Rs 65 million) on six public sector banks including IDBI Bank, Dena Bank and Indian Bank, for violation of customer identification or KYC norms and anti-money laundering guidelines.
Indices across Indian equity markets have edged towards new record highs before undergoing a small correction in the past few sessions. The National Stock Exchange Nifty has gained 20 per cent in the past year; mid-caps (up 33 per cent), small-caps (up 31 per cent), and micro-caps (up 44 per cent) have done better. Several factors have precipitated this rally.
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State oil refiners, who are the biggest buyers of US dollars, agreed to implement the RBI order with immediate effect, sources with direct knowledge of the development said.
Amid strong opposition from CIL workers union to the proposed stake sale in the company, Finance Minister P Chidambaram has said the disinvestment proceeds of about Rs 20,000 crore (Rs 200 billion) from the coal behemoth will be invested in public sector banks.
In a series of tweets reacting to banks led by State Bank of India taking over management control of troubled Jet Airways, Mallya said, "...Only wish the same was done for Kingfisher".
The government on Friday approved a capital infusion of Rs 15,000 crore (Rs 150 billion) in public sector banks (PSBs) in the current fiscal, a move that will increase the lending capacity of the banks by Rs 1.85 lakh crore.
From the Sensex pack, State Bank of India, ICICI Bank, IndusInd Bank, Axis Bank, Kotak Mahindra Bank, HDFC Bank, Reliance Industries were among the major laggards. Bucking the trend, auto stocks Tata Motors and Mahindra & Mahindra closed with gains.
The All India Bank Employees Association, Bank Employees Federation of India, All India Bank Officers' Association and National Union of Bank Employees have given a call for one day country-wide strike.
The Sena faction alleged corruption cases against BJP leaders are being suppressed.
Gartner Inc, the research and advisory firm, expects mergers and acquisitions in public sector banks to gain momentum during the next couple of years, as the Indian government is "poised to increase" foreign holding in Indian banks.
There are about 87,000 branches of public sector banks across the country.
The rout in Adani Group stocks after US-based short seller Hindenburg Research released a report on January 24 has sparked a rebound in trading activity this month. The average daily trading volume (ADTV) for the cash segment (both NSE and BSE combined) so far in February stands at Rs 59,346 crore, and is around 15 per cent more than the previous month's tally of Rs 51,844 crore, which was the lowest in six months. The ADTV for the futures and options (F&O) segment rose to a record Rs 204 trillion (notional turnover) against Rs 202 trillion in January.
The government said it will provide capital support of Rs 15,888 crore (Rs 158.88 billion) to public sector banks and financial institutions during the next fiscal to strengthen their capital base.
The last year has seen public sector undertakings (PSUs) outperforming the Nifty50, albeit by a small degree. But PSU valuations are still, on average, less than half of private sector peers at price-to-equity or PE 8.7x for the Nifty PSU Index versus 20.9x for the Nifty50. There are several reasons for lower valuation.
Banks will need more funds, as they have to provide more capital.
Reserve Bank Governor D Subbarao on Tuesday favoured bifurcation of the posts of chairman and managing director in state-run banks, saying the experience of such a split in the private sector has been satisfactory.
The government may infuse about Rs 10,000 crore (Rs 100 billion) as equity capital in nationalised banks in addition to an identical amount in the country's largest lender, State Bank of India (SBI). Nationalised banks with the government holding closer to the floor of 51 per cent are likely to receive the capital infusion support.
Be wary of co-operative banks which have historically been most vulnerable.
After outperforming the broader market and their public sector peers for the better part of the post-Lehman period, private sector banks - such as HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank - are now underperforming. Last week, the Nifty Private Bank index was up just 6 per cent year-to-date in the calendar year 2021, against nearly 13 per cent rally in the Bank Nifty and a 15 per cent rise in the benchmark Nifty50. Public sector (PSU) banks, such as State bank of India, Bank of Baroda, and Punjab National Bank, are now rally leaders and outperforming the broader market. The Nifty PSU Bank index was up 42 per cent since the beginning of this calendar year. But on a longer term, the Nifty Private Bank index is up 101 per cent since March 2016, against a 118 per cent rally in the Bank Nifty and just 2 per cent rise in the Nifty PSU Bank index in the period.
Finance Minister Arun Jaitley on Saturday proposed to infuse Rs 7,940 crore funds next fiscal in the public sector banks.
Gross NPAs of public and private sector banks stood at Rs 2.41 lakh crore and 26,571 crore respectively.
All public sector bank branches will have an automated teller machine by March 31, 2014.
Bank of Baroda Q4 results: Key brokerages have raised their target prices on Bank of Baroda after the state-owned lender posted better-than-expected March quarter (Q4FY23) results. Analysts now see up to 29 per cent upside in the stock from a one-year perspective as they believe BoB is well-placed among the large public banks with nearly all key business metrics moving closer to the top-tier banks. Valuations, too, remain attractive despite steady strong quarterly performances.
IndusInd Bank was the top gainer in the Sensex pack, jumping nearly 5 per cent, followed by Bharti Airtel, HCL Tech, Reliance Industries, Titan and Asian Paints.
RBI feels that oil firms seeking a single quote for their dollar requirement, instead of present practice of floating enquiring with several pubilc and private sector banks, would help check volatility and arrest the free-fall of the rupee.
A fresh PIL was filed on Thursday in the Supreme Court seeking a probe by multiple central government agencies under the supervision of a panel or a former apex court judge against the Adani Group of companies following allegations of fraud and share price manipulation made by the US-based Hindenburg Research.
The BSE Sensex slumped 456 points on Wednesday, tracking losses in index majors Reliance Industries, Infosys and ICICI Bank as market participants continued to book profits at high levels.
