Noon: Markets regain some losses; banks down

Noon: Markets regain some losses; banks down

Mumbai: Indian shares were down 0.4 % on Wednesday morning, with banks sliding the most, after central bank raised the provision ratio for bad debts in its credit policy review.

Leading lenders State Bank of India and ICICI Bank continued falling, on concerns their profit would be hit after the Reserve Bank of India on Tuesday asked banks to increase the minimum provision ratio for bad debts to 70% by September 2010.

“While the market may not have seen it, the RBI appears to be unwinding its accommodative stance through the banks first, and monetary policy will probably follow," Citigroup said in a note.

“While this is fairly logical, it will likely hurt the banks in the near-to medium-term, especially as the market appears not to have seen it coming," Citigroup added.

Analysts expect leading lenders State Bank of India and ICICI Bank to be among the worst affected.

State Bank shed nearly 3% to Rs2,138.55 while ICICI Bank was down 4% at Rs803.

By 11:29am, the 30-share BSE Index was trading down 0.37% at 16,293.05, with two-thirds of its components declining. The 50-share NSE index was down 0.4% at 4,827.40.

“I do believe that some kind of upswing can come in , now that we have been battered a lot," said Gajendra Nagpal, CEO of Unicon Financial.

“After the sell-off we saw yesterday, I don’t think we can fall more for now," added Nagpal.

Energy giant Reliance Industries rose 2.1% to Rs2,032, after government allocated an additional 50 million cubic metres a day (mmscmd) of gas from the company’s east coast block D6.

Software services firms were trading higher after Wipro’s robust outlook fuelled optimism a recovery is well underway as overseas clients boost orders.

Sector leader Tata Consultancy was up 0.8% at Rs646.25.

Infosys climbed 0.3%, while Wipro gained 2.4%.

The world’s eighth-largest steel maker Tata Steel was down 3.3% at Rs484.80 rupees, after it posted a bigger-than-expected fall in its quarterly net profit.

In the broader market, losers were nearly double the number of gainers in a volume of 131 million shares.