No New Gyan at the Sangam | HDFC Sec

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The PSU Bank heads, the Reserve Bank of India (RBI) and the North Block mandarins were in a two-day huddle to chalk out the roadmap for the PSU Banks. They then presented key takeaways of these discussions to the Prime Minister, in which both short-term and long-term action plans were laid out.

The PM assured the Public Sector Bankers at the Pune conclave that his government would stay away from ?political interference?.

He called upon them  to take steps to strengthen their operations, achieve scale, boost financial literacy and inclusion and help in augmenting economic growth in the country.There were some broad thoughts, but no earth shattering announcements.

This is the broad picture:

1.   Re-orient strategies to enable small ones to focus on niche capabilities,
2.   Implement steps to shore up talent,
3.   Use technology in a greater way,
4.   Strengthen risk management
5.   Work more closely with non-bank channels such as payment management systems or bank correspondents.

Banks urged the government to provide them greater leeway by considering transferring its stake to an independent bank investment committee run by professionals. In the long run, it is looking to reducing its stake below 51 per cent ? key recommendations of the PJ Nayak committee.

On its part, the government stayed away from announcing any immediate major decision, either with respect to government control on banks, recapitalisation or, importantly, consolidation ? on which analysts were expecting something.

The RBI governor Raghuram Rajan stressed upon the need to clean up the non-performing assets (NPAs) and then restructure other stressed loans so as to put the economy back on the track.

No major announcements that the markets wanted to hear, have been made. That should make the markets open on a weak note in the morning. But the decisions could come later in the build up to the budget.
 
The crux

Bad loans at state-run banks account for more than 70% of the nation?s outstanding loans of about $1 trillion. State-owned banks have a net non-performing asset (NPA) ratio of 2.6% compared with a net NPA ratio of 0.7% for private sector banks, according to a presentation made by consulting firm McKinsey and Co. at the two-day conference.

The PSU Banks are inefficient. They have more NPAs and if these are properly accounted the banks will wipe out their capital. So capital adequacy is the core issue. The selection procedure of choosing Bank Senior management will have to be overhauled. Banks will have to be adequately staffed and then leave the decision of giving loans to them.
 
Dec HSBC mfg PMI at 2-yr high at 54.5

HSBC India Purchasing Managers Index (PMI) climbed to a two-year high of 54.5 in December, up from 53.3 a month ago. Accelerated growth of the manufacturing sector was reflected by faster expansions in output, new business and foreign orders. Consumer Goods emerged as the best performing sector.

Govt likely to approve mining ordinance today

The government is likely to approve an ordinance incorporating the pending Mines and Minerals (Development and Regulation) Amendment Bill, 2014, today.

The proposal is for a new process of "auction by competitive bidding" for all mineral mines.
However, there is going to be a practical difficulty of judging the mineral content at the time of auction.

The government has proposed a District Mineral Foundation (DMF) in every district affected by mining, "to earmark funds for the benefit of persons affected by mining and for the rebuilding of infrastructure in affected areas".

Giving major relief to companies already holding mining leases, the draft says that companies which already have an RP or prospecting licence for an area will have the first right to refuse a lease. Any change in the rules in the ordinance regarding this issue can have serious consequences on companies holding these licenses.

Haryana govt signals may act on Vadra-DLF

The Bharatiya Janata Party government in Haryana is showing clear signs that it will act on the land dealings between Robert Vadra and real estate firm DLF.

Chief Minister Manohar Lal Khattar made his first categorical remarks in this direction on microblogging site Twitter, saying: ?State government is proceeding in the Vadra-DLF land deal case administratively as well as under the law.?  His Tweet, put out on January 1, is significant because he has been rather non-committal on the issue so far.
 
Fedders Lloyd bags orders Worth Rs. 107 crore from Odisha Power Transmission Corporation Limited

Fedders Lloyd has been awarded contracts aggregating to Rs. 107 crore by Odisha Power Transmission Corporation Limited, Bhubaneshwar for Design, Engineering, Supply, Erection, Testing and Commissioning of Construction of 2X20 MVA, 132/33 KV Sub stations and associated transmission lines on turnkey basis, in various districts of Odisha in JV with M/s. Jagbankdhu Enterprise Private Limited, Bhubaneshwar.
 
Economic Data this week

This is a week of key global economic data.The most important data that will be out this week, that will have  a profound impact on the global markets is the Non-Farm Pay Roll data of the U.S. which will be the last data to be released this week.

November jobs report had come in much higher than expected for the biggest monthly gain in nearly three years. Given the strong November report, economists expect an addition of 215,000 jobs to the economy for December. Unemployment, which held at 5.8% in November, is expected to decline to 5.7%.

This data will arrive on Friday.  But this data will have an impact on the markets only on Monday next, i.e. 12th of January.

HSBC India Service PMI and the Composite PMI will be out on Tuesday.  For November the PMIs had come  at 52.6 and 53.6 respectively. On the same day, the Institute for Supply Management will release its services-sector index . ISM?s manufacturing index, released Friday, had indicated  a slowing in U.S. activity. The markets would like to see whether the growth in the services has been damned or not.

On Wednesday, three important pieces of datum are expected. The first is the minutes of the last FOMC will be released. The second is the ADP data on employment and the third piece  of economic data is the International Trade balance.

On Thursday, the Bank of England and ECB will hold their meeting and make an announcement of their monetary policy. On Friday, the official Consumer Price Index  and the Producer Price Index will be released in China.
 
Wall Street Fritters Away Opening Gains, closes mixed

Key U.S. indices rose began the first trading session of the new year on a buoyant note, but those gains soon evaporated following disappointing reports on U.S. manufacturing and construction. The fall continued to mire the indices in deep red, before some spirited buying in the last hour of trade restored some semblance of order.

The key indices ended down for the holiday-shortened week and snapped two-week winning streaks. The Dow Jones Industrial Average managed to close with a paltry gain of 10 points or 0.06% at 17,833. The Dow, which was up 131points at one time, saw the index plunging 221 points from the day?s high before recover set in The S&P 500 fell a solitary point to close at 2,058. The Nasdaq fell 9 points or 0.19% to 4,727. The small-cap-focused Russell 2000 tanked more than 1%.
 
The Dow fell 1.2% for the week, the S&P 500 lost 1.5% and the Nasdaq Composite fell 1.7%.
Trading was relatively light on Friday in the wake of the New Year?s Day holiday, as many investors opted for a long weekend. Composite volumes for the New York Stock Exchange and Nasdaq came in below their 30-day average, according to FactSet.

For the year, the S&P climbed 11.4% and the Dow tacked on 7.5%, while the Nasdaq advanced 13.4%.
Profit taking set in after growth in the manufacturing sector slowed to a six-month low of 55.5 in December, down from 58.7 a month earlier, according to the Institute for Supply Management. Economists had expected a reading of 57.6. Construction spending fell 0.3% month on month, below forecasts for an increase of 0.6%.
 
West Texas Intermediate crude fell 1% to $52.76. Oil has seen a volatile session so far, jumping as much as 3.5% before plunging 2.3%. Major European markets were lower after eurozone manufacturing PMI showed continued weakness in December. A final reading of 50.6 was a touch lower than the flash estimate, but improved upon November's 50.1 reading.

Apple fell 1.1%. The stock slumped further below its 50-day moving average, a chart level that many technical analysts watch. A well-known Silicon Valley investor has said the Apple Watch won?t be a ?home run? product, and iPad shipments are estimated to have declined in 2014 for the first time since the tablet?s launch in 2010.

Casino stocks were selling off after Macau casino revenue fell 2.6% over 2014, its first-ever drop since records began in 2002. MGM Resorts, Las Vegas Sands and Wynn Resorts were all trading lower.

Rite Aid shares were climbing 1.3% after the drugstore chain reported a 5.3% jump in same-store sales in December, while pharmacy sales gained 7.3%. Brainstorm Cell Therapeutics continued to rally, up more than 51%, after Wednesday's news of positive clinical trial results for its ALS treatment. Shares spiked 22.7% on Wednesday.

European equities closed mainly in the red after eurozone manufacturing data for December didn?t match up to estimates. Earlier, stocks in Europe had risen after European Central Bank President Mario Draghi hinted the bank is moving closer to launching a full-scale quantitative-easing program.

But Draghi?s comments dented the euro EURUSD, which traded near the lowest level in more than four years, while the dollar jumped against most major currencies, touching a nearly-nine-year high.

Germanys DAX closed 0.42% lower, France's CAC 40 fell 0.48%, and London's FTSE dropped 0.28%. Gold futures settled slightly higher, and Asian bourses closed mostly higher.