Pared gains

The apprehensiveness amongst investors re-surfaced as they resorted to profit booking at higher levels during the previous hour of trade. The sectors putting pressure on the markets are software, automobiles, telecom and metals. However, banking, cement, engineering and FMCG stocks have largely held ground.

The BSE Sensex is trading at 6,487 (up 23 points) and the Nifty is trading at 2,029 (up 4 points). The rupee is trading at Rs 43.74 per US Dollar.

RBI has issued draft guidelines on the sale and purchase of bad loans, the objective of which is to prevent the malpractice of window dressing of banks financials. As per the guidelines, the bank purchasing bad loans will have to keep the same in its books for a period of 15 months. Further the risk weightage to be assigned to the same will be 100%. The guidelines also state that if the purchase is made as an investment, then the charge to profit will be as a capital charge. It should be noted that as per the guidelines, if the transaction is above net book value i.e. book value less provisions, the excess cannot be credited to the profit and loss statement but should be held separately to meet the provisioning norms on sale of other bad assets. However, incase the transaction is below the net book value, the difference has to be charged to profits of the year. The transaction will be on non-recourse basis meaning that the bad loans so acquired cannot be sold back to the entity from which it was acquired.

On the bourses, except for PNB (marginally down), banking stocks are in the positive and leading the pack is HDFC Bank (HDBK.BO, news) (up 2%)

As per a leading business daily, Essel Propack, the largest manufacturer of laminated tubes, with an installed capacity of more than 5 billion laminated tubes, has acquired UK based Telecon packaging, a laminated tube supplier in Europe with a installed capacity of 200 million tubes. Though the size of the company acquired is not that significant, the acquisition augurs well with the company's plan to enter in the European markets. The Essel Propack stock is, however, trading lower by 1%.

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