Gold loan finance companies tumble

Key benchmark indices edged lower in early trade as most Asian stocks declined triggered after data showed weaker-than-expected ‘flash' China manufacturing purchasing managers index (PMI). The market breadth was positive. Index heavyweight Reliance Industries (RIL) edged lower. The barometer index, BSE Sensex, was down 32.54 points or 0.19%. Non banking financial companies (NBFCs) offering loan against gold slumped as the Reserve Bank of India (RBI) directed all NBFCs not to sanction loan beyond 60% of the value of gold jewellery.

At 09:30 IST, the BSE Sensex was down 32.54 points or 0.19% to 17,568.17. The index fell 4.77 points at the day's high of 17,596.94 in early trade. The index declined 51.93 points at the day's low of 17,549.78 in early trade.



The S&P CNX Nifty was down 9.20 points or 0.17% to 5,355.75. The index hit a high of 5,361.20 and a low of 5,347.15 in intraday trade.

The market breadth, indicating the overall health of the market, was positive. On BSE, 569 shares rose and 413 shares fell. A total of 41 shares were unchanged.

From the 30-share Sensex pack, 16 stocks rose and the rest fell. Jindal Steel & Power, Maruti Suzuki India and Tata Steel fell by between 0.73% to 4.34%. Sun Pharmaceutical Industries, Hero MotoCorp and M&M rose by between 0.44% to 0.94%.

Index heavyweight Reliance Industries (RIL) fell 0.26%. RIL's unit Infotel Broadband Services reportedly plans to launch voice and data services by September 2012. Initially, the services will be launched in a few cities.

RIL's largest gas fields in its flagging KG-D6 block have reportedly hit an all-time low production of about 28 million standard cubic meters per day as the firm shut six wells due to water and sand ingress. Dhirubhai-1 and 3 gas fields in the eastern offshore KG-DWN-98/3 or KG-D6 block, which started production in April 2009 at the rate of 30 mmscmd, saw output plummet to 28.16 mmscmd in the week ended March 4.

Non banking financial companies (NBFCs) offering loan against gold slumped as the Reserve Bank of India (RBI) directed all NBFCs not to sanction loan beyond 60% of the value of gold jewellery. Manappuram Finance and Muthoot Finance tumbled by between 13.91% to 19.08%.

The RBI further said that the NBFCs whose financial assets consist of loans against gold jewellery to the tune of 50% or more, will have to maintain 12% tier-I capital by April 1, 2014. RBI said NBFCs should not grant any advance against bullion / primary gold and gold coins and they have to disclose the percentage of gold loans to their total assets in balance sheet. Incidentally the directive follows government proposing a hike in import duty on the precious metal and imposition of excise duty on unbranded-jewellery. Finance Minister Pranab Mukherjee in the Budget proposed raising custom duty on gold from 2% to 4%.

Foreign institutional investors (FIIs) bought shares worth a net Rs 622.64 crore on Wednesday, 21 March 2012, as per provisional data from the stock exchanges. FIIs have made substantial purchases of Indian stocks recently. Their inflow totaled Rs 7049.46 crore in nine trading sessions from 9 to 21 March 2012, as per provisional data from the stock exchanges.

Asian stocks were mostly lower after private survey showed China's manufacturing sector activity shrank in March. Key benchmark indices in China, Hong Kong, South Korea and Singapore fell by between 0.02% to 0.42%. Key benchmark indices in Indonesia, Japan and Taiwan rose by between 0.11% to 0.8%.

China's manufacturing sector activity shrank in March for a fifth successive month, with the overall rate of contraction accelerating and new orders sinking to a four-month low, the HSBC flash purchasing managers index showed on Thursday. The PMI, the earliest indicator of China's industrial activity, fell back from February's four month high, slipping to 48.1, within a whisker of the level that economists at HSBC consider a crucial level dividing decline from growth.

Trading in US index futures indicated that the Dow could fall 18 points at the opening bell on Thursday, 22 March 2012. U.S. stocks closed mostly lower Wednesday with energy shares hit by Baker Hughes Inc.'s weak forecast and Hewlett-Packard Co.'s restructuring plans dragging on the Dow Junes Industrial average. National Association of Realtors' (NAR) report said that home sales fell 0.9% in February to 4.59 million versus an upwardly revised 4.6 million in January. The NAR said the January and February levels were the best in five years. Economic reports in the days ahead include a housing-price index later today in the global day and data on single-family homes on Friday.