Mark Focus Market Support

The central government has sought Parliament's nod for $12.6 billion Bank Recap Bonds. This is a follow up of a mega recapitalisation plan that was announced by the government in October 2017 to counter the rising bad loans of public sector banks. The plan is worth Rs2.11 lakh cr out of which Rs1,35,00cr will be in the form of recapitalisation bonds. The ratification for recapitalization bonds would act significantly positive for the PSU Banks and the stocks would remain positive on this news. The capital infusion is much needed as it would aid these banks to improve their capital adequacy. As a consequence, it would also improve their loan book growth for the coming years, besides giving room to provide for bad loans. Nifty PSU Bank Index has climbed over 1.5% after recap bond news. At the time of filing, IDBI Bank was up 6%, BoB, PNB were up by 3% each, Bank of India, Canara Bank were up 2% each, and SBI was up 1.5%.

The Indian manufacturing sector ended the year on a strong note, with operating conditions improving at the strongest rate in five years. The overall upturn was supported by the sharpest increase in output and new orders since December 2012 and October 2016, respectively. At 54.7 in December, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) rose from 52.6 in November. This was consistent with the strongest improvement in the health of the sector since December 2012. Notably, the PMI reading was slightly stronger than the average 54 recorded since the inception of the survey in March 2005. At the broad market group level, growth was recorded across all three monitored categories (consumer, intermediate and investment). The upward movement in the headline index was driven by a sharp increase in output. Furthermore, the rate of expansion quickened to the strongest since December 2012. Higher order book volumes and improved underlying demand conditions reportedly contribu...