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Key Indian equity indices open lower

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Mumbai, May 18:  Taking a cue from global markets, the key Indian equity market indices on Thursday opened lower.

The Sensitive Index (Sensex) of the BSE, which had closed at 30,658.77 points on Wednesday, opened lower at 30,466.82 points.

Minutes into trading, it was quoting at 30, 529.70 points, down by 129.07 points, or 0.42 per cent.

At the National Stock Exchange (NSE), the broader 51-scrip Nifty, which had closed at 9,525.75 points, was quoting at 9.464.80 points, down by 60.95 points or 0.64 per cent.

Continuing the bull run in the Indian equity markets, the Sensex and the Nifty had closed at new highs again on Wednesday.

The benchmark indices closed in the green as healthy buying in metal and automobile stocks buoyed investors’ sentiments.

The Sensex was up by 76.17 points or 0.25 per cent at the Wednesday’s closing.

In the day’s trade, the barometer 30-scrip sensitive index had touched a high of 30,692.45 points and a low of 30,519.14 points. The Nifty too, was up by 13.50 points or 0.14 per cent.

On Thursday, Asian indices were showing a negative trend. Japan’s Nikkei 225 is trading in red, down by 1.65 per cent, Hang Seng down by 0.30 per cent while South Korea’s Kospi was also down by 0.56 per cent.

China’s Shanghai Composite index was quoting in red, down by 0.18 per cent.

Nasdaq closed in red, down by 2.64 per cent while FTSE 100 was down by 0.25 per cent at the closing on Wednesday.

IANS

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Moody’s places PNB’s ratings under review for downgrade

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New Delhi, Feb 20: Moody’s Investors Service on Tuesday placed under review for downgrade Punjab National Bank’s (PNB) local and foreign currency deposit rating of Baa3/P-3 and foreign currency issuer rating Baa3, an official statement said here.

It said “likely financial impact of the fraudulent transactions is the key driver for the review for downgrade.”

At the same time, Moody’s has placed the bank’s Baseline Credit Assessment (BCA) and adjusted BCA of ba3 and the Counterparty Risk Assessment (CRA) of Baa3(cr)/P-3(cr) under review for downgrade.

PNB, the second largest public sector bank in India, has detected a $1.8 billion fraud in one of its branches in Mumbai, which is being investigated by the Central Bureau of Investigation and the Enforcement Directorate. The amount of fraudulent transactions is equivalent to eight times the bank’s net income of about Rs 1,320 crore ($206 million).

“The primary driver for today’s rating action is the risk of weakening of the bank’s standalone credit profile, as a result of the discovery of a number of fraudulent transactions. On February 14, 2018, PNB announced to the Indian stock exchanges that the bank had discovered some fraudulent and unauthorized transactions amounting to Rs 113.9 billion ($1.8 billion),” Moody’s said.

The credit rating agency said the fraudulent transactions represent a contingent liability and the financial impact would be determined by the relevant law in India.

“Nevertheless, Moody’s expects that PNB will need to provide for at least a substantial portion of the exposure. As a result, the bank’s profitability will likely come under pressure, although the actual impact will depend on the timing and quantum of provisions that need to be made, as well as any prospects for recovery,” the statement said.

“The fraudulent transactions represent about 230 basis points of the bank’s risk-weighted assets as of 31 December 2017. As such, PNB’s capital position would deteriorate markedly, and fall below minimum regulatory requirements, if the bank is required to provide for the entire exposure. Consequently, PNB may need to raise capital externally – mainly from the government – to comply with the minimum Basel III capital requirement of an 8 per cent common equity tier 1 (CET1) ratio by March 31, 2019,” Moody’s said.

Moody’s said the review for downgrade will focus on: the timing and quantum of the financial impact of the fraudulent transactions; any management actions taken to improve the capitalisation profile of the bank, and any punitive actions taken by the regulator on the bank.

“Moody’s assumes a very high probability of government support for PNB in times of need, resulting in a three-notch uplift to its deposit and issuer ratings from its BCA. In the review for downgrade, Moody’s will also assess government support for the bank’s deposits and senior unsecured debt.”

Given the review for downgrade, Moody’s said it is unlikely to upgrade PNB’s ratings over the next 12-18 months.

“Nevertheless, Moody’s could affirm the ratings, if the financial impact of the fraudulent transactions is much smaller than what Moody’s anticipates in this rating action, and/or if the bank manages to strengthen its capital position to a level above the minimum regulatory requirements — including the capital conservation buffer — under Basel III standards, and/or the bank returns to profitability on a sustainable basis,” the statement added.

IANS

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Key Indian equity indices open flat

The barometer 30-scrip Sensitive Index (Sensex) of the BSE, which opened at 33,913.94 points, traded at 33,843.41 points (9.25 a.m.) — up 68.75 points or 0.20 per cent — from its previous session’s close.

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Mumbai, Feb 20: Key Indian equity indices traded on a flat note on Tuesday with marginal upward movement in both the indices.

The wider Nifty50 of the National Stock Exchange (NSE) traded at 10,392.90 points, up 14.50 points or 0.14 per cent from the previous close.

The barometer 30-scrip Sensitive Index (Sensex) of the BSE, which opened at 33,913.94 points, traded at 33,843.41 points (9.25 a.m.) — up 68.75 points or 0.20 per cent — from its previous session’s close.

The Sensex has so far touched a high of 33,931.90 points and a low of 33,753.50 points during the intra-day trade.

The BSE market breadth was bearish with 603 declines and 466 advances.

IANS

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Share price of Gitanjali Gems hit lower circuit, PNB slips over 7%

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Mumbai, Feb 19: Shares of Gitanjali Gems extended losses for the fourth consecutive session on Monday — plunging almost 10 percent to its lower circuit level at Rs 33.80 per scrip — while those of Punjab National Bank (PNB) slipped over 7 percent.

On a closing basis, PNB’s scrips fell by Rs 9.25 per share, or 7.36 percent, to Rs 116.40 on the BSE.

The stocks of jewellery company Geetanjali Gems continued the plunge a day after the Enforcement Directorate (ED) conducted search operations in six franchise-based outlets located in four malls in Kolkata in connection with $1.8 billion banking fraud case.

Following the unravelling of the multi-crore PNB fraud, two senior officials of Gitanjali Gems — Chandrakant Karkare and Pankhuri Warange — resigned from the company, according to a regulatory filing with the stock exchanges on Monday.

Shares of PNB, too, declined after the Central Bureau of Investigation (CBI) on Monday sealed the Brady House Branch of the bank as multiple probe agencies continued with their probe into the multi-crore fraud.

The shares of the two companies started to decline following the country’s second largest state-run bank PNB’s declaration of unearthing a fraud of Rs 11,300 crore involving diamantaire Nirav Modi.

The fraud, which included money-laundering among others, concerned the Firestar Diamonds group in which the CBI booked Modi, his wife Ami, brother Nishal Modi and uncle and business partner Mehul Choksi — who promotes the luxury jewellery brand Gitanjali Gems.

Last week, the ED launched a nationwide raid on the offices, showrooms and workshops of Nirav Modi. The CBI registered an FIR against the Gitanjali Group of companies based on a complaint registered by the PNB.

On Sunday, the ED conducted searches at over 45 more locations in 15 cities across India in connection with the scam.

IANS

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