ICICI Bank crashes on reports on defaults

ICICI Bank crashes on defaults

Markets are trading weak currently. Widespread selling is seen in stocks from the banking and metals sectors. Oil & gas and pharma stocks have however bucked the trend and are witnessing buying interest. The decline to advance ratio is poised at 1.6 to 1 on the BSE.

The BSE-Sensex is trading lower by around 50 points, while NSE-Nifty is trading flat. The BSE-Midcap and BSE-Smallcap indices are trading weak, down by 0.5% and 0.6% respectively. The rupee is trading at 49.82 to the dollar.

Banking stocks are trading weak led by ICICI Bank and Axis Bank. As per a leading business daily, ICICI Bank has lost closed to Rs 115 m on credit card defaults between April and December 2008. The bank has reported 8,280 credit cards default cases during the period. It may be noted that the bank had reported gross non-performing assets (NPAs) of 4.1% at the end of 9mFY09, as against a figure of 3% during 9mFY08. We now know that some part of it came through its credit card division. Importantly, other major credit card companies operating in India, like American Express and HSBC, have reported much lesser losses (Rs 60 m and Rs 49 m respectively) than ICICI Bank. Just goes to show how aggressiveness in good times can turn painful in bad ones.

Pharma stocks are trading mixed currently. While Panacea Biotec, Dabur Pharma and Wockhardt are leading the pack of losers, gains are seen in Cipla and Sun Pharma. As per a leading business daily, Wockhardt has received the US FDA approval for marketing ‘Sumatriptan’ injections (used for treating migraine headaches) in the US. The product will be manufactured in the company’s Indian unit in Maharashtra. It may be noted that this is a niche segment and would augment the company revenues in the highly competitive US market.