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Indian equity markets trading flat

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After losing nearly 1.5 percent in the previous session, key Indian equity indices were trading flat on Monday, in line with global cues.

Soon after the opening bell on Tuesday, the sensitive index (Sensex) of the BSE was ruling at 24,926.48 points, with a loss of 39.92 points, or 0.16 percent, over the previous close at 24966.40 points. The index had opened at 24,957.24 points.

At the National Stock Exchange, the 50-share Nifty was ruling at 7,615.95 points, with a loss of 0.85 points, or 0.01 percent, over the previous close at 7,615.10 points. The index had opened at 7,606.55 points.

At the BSE, 16 out of 30 Sensex stocks were in the green, while 14 were trading lower, while at the NSE, 30 Nifty shares were in the red, while 20 were trading higher.

On Monday, the Sensex was down 371.16 points, or 1.46 percent over the previous close and the Nifty had shed 101.40 points, or 1.31 percent.

 

Wefornews Bureau

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Govt’s stake divestment to be credit negative for PSBs: ICRA

Furthermore, ICRA expects the deposit franchise for these banks will be monitorable as these deposits could be highly sensitive to their ownership.

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Centre proposes Disinvestment

New Delhi, Sep 17 : The proposed divestment of the Centre’s majority stake in certain PSBs will be credit negative for these lenders, ratings agency ICRA said on Thursday.

Citing recent reports which suggest a possible divestment of majority stake in few PSBs that were left out of the PSBs consolidation exercise announced last year, ICRA said that most of these PSBs have weak credit profile and their credit ratings are primarily supported by their sovereign ownership and a stable deposit base, which in turn is supported by their ownership.

“The existing ratings are also notched up from the standalone credit profile and going forward, the ratings on these PSBs would reflect their standalone credit profile depending on their new ownership of these banks,” it said in a statement.

Furthermore, ICRA expects the deposit franchise for these banks will be monitorable as these deposits could be highly sensitive to their ownership.

The ratings agency noted that the proposed divestment of these PSBs will require amendment to the Banking Companies (Acquisition And Transfer Of Undertakings) Act, 1970/1980, which mandates the Centre to hold no less than 51 per cent of the paid-up capital of these lenders.

Commenting on these developments, Karthik Srinivasan, Group Head – Financial Sector Ratings, ICRA said: “The financial profile of these PSBs is very weak and the standalone profiles of these banks could be low within investment grades rating given their weak asset quality, profitability, capital and solvency profile.”

“The liability profile for these banks will become a key monitorable in the immediate term.”

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Govt is amending Banking Regulation Act to benefit depositors: FM Sitharaman

The Finance Minister said the government is trying to bring amendments in order to protect the interest of depositors who in the last two years have been put to hardships.

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Nirmala Sitharaman

New Delhi: `The government has brought amendments to the Banking Regulation Act, 1949 in order to protect the interests of the depositors, Union Finance Minister Nirmala Sitharaman said in Parliament on Wednesday.

The Finance Minister said the government is trying to bring amendments in order to protect the interest of depositors who in the last two years have been put to hardships.

The depositors in some unfortunate situations in the banks or cooperative societies, which are also operating as banks, are put to hardship, the Minister said while moving the Banking Regulation (Amendment) Bill, 2020 to amend the Banking Regulation Act, 1949 in the Lok Sabha.

She said the government had introduced the Bill so that the depositors interests will be taken care of. But, the Minister said, unfortunately, during the Budget session the government could not have this Bill passed and had to bring in an ordinance. Sitharaman said the ordinance was brought in only because the financial health of many of these cooperatives, which were also performing as banks, was becoming very bad.

She informed the Lower House that the financial condition of 277 urban cooperative banks was very delicate and they were reporting losses, while 105 such banks were unable to fulfil their minimum regulatory capital requirement.

She said a total of 47 urban cooperative societies had a negative net worth and 328 urban cooperative banks were having more than 15 per cent gross NPA (Non Performing Assets).

Despite the Covid-19 pandemic, Sitharaman said the gross NPA ratio of urban cooperative banks increased from 7.27 in March 2019 to over 10 per cent in March 2020. Therefore, the Minister said, the government had to bring an ordinance in the interest of the depositors and now that ordinance has to be replaced.

She said her Ministry has brought in amendments in Section 3, Section 45 and Section 56. By amending Section 3 and 56, the government is making provisions applicable to banking companies applicable to cooperative banks also so that cooperative banks are equally subject to better governance and sound banking regulations through the Reserve Bank of India (RBI). Section 45 is being amended because it will enable the RBI to make a theme of reconstruction and amalgamation, she said.

Giving the example of the recent Yes Bank reconstitution scheme, she said it is to protect the interest of the public depositors without making the bank undergo a moratorium period. She also gave an example of BMC bank in which the depositors could not get a resolution till now.

The minister clarified that the Bill will not be applicable to the Primary Agricultural Credit Society and will also not be applicable to the cooperative society whose primary business is providing long term finance for agricultural development. “This will be applicable only on those who bank, banker and banking business in cooperative society.”

Mentioning that her government is not doing anything new, the Minister said Section 3 and 56 have also been amended earlier in 1965, 1984, 1987, 1989 and 2012.

On the first day of the session, Sitharaman had withdrawn the Bill saying “it is being withdrawn to add a few new things giving the Reserve Bank of India a chance to be able to restructure distressed cooperative banks, which are in serious need”. The Bill was not passed by Parliament during the Budget Session and subsequently an ordinance was issued.

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Telefonica partners with Japan’s Rakuten to develop open 5G network

The technology promises to radically cut costs for telecom operators as it uses cloud-based software and commoditized hardware instead of proprietary equipment supplied by companies such as Nokia, Ericsson and Huawei.

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Huawei Technologies

Stockholm: Spain’s Telefonica has signed a pact with Japan’s Rakuten to develop a 5G radio network system that uses an open platform and artificial intelligence, the companies said on Wednesday.

The Japanese firm has become the first mobile operator to deploy a network based on a technology called Open Radio Access Network (RAN) that uses software to run network functions on the cloud, which requires less physical equipment.

Rakuten plans to launch 5G services in Japan later this month, Rakuten Mobile’s Chief Technology Officer Tareq Amin said on a call with journalists, after it was forced to delay the introduction by months due to disruption from the coronavirus outbreak.

The technology promises to radically cut costs for telecom operators as it uses cloud-based software and commoditized hardware instead of proprietary equipment supplied by companies such as Nokia, Ericsson and Huawei.

The companies plan to develop a joint procurement scheme for Open RAN software and hardware that will increase volumes and reach economies of scale.

“We are not building a competitive tool with Open RAN. We are trying to build an ecosystem,” said Enrique Blanco, chief technology & information officer at Telefonica, adding that they are open to working with other operators.

Telefonica has been deploying Open RAN pilots in Brazil, Germany, Spain and Britain, and plans to ramp up deployments in 2021 and significant rollouts in 2022.

The Spanish group plans to phase Huawei equipment out of the sensitive core for its 5G network in order not to run the performance and data protection risks that come with relying on one sole supplier, although it has repeatedly said it has no evidence to support U.S. President Donald Trump’s accusations that the Chinese firm’s kit is unsafe.

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