Sensex, Nifty end rangebound session flat after RBI policy
08 February 2017
3.30 pm Market Closing: Benchmark indices ended rangebound session on a flat note after the RBI maintained status quo and changed policy stance to neutral from accommodative.
The Sensex was down 45.24 points at 28289.92 and the Nifty gained 0.75 points at 8769.05.
The broader markets outperformed, with the BSE Midcap index rising 0.5 percent. About 1509 shares advanced against 1365 declining shares on the exchange.
HDFC Bank and SBI gained half a percent while ICICI Bank, Axis Bank and HDFC were down 0.5-0.9 percent.
3:29 pm Bank index recovered as HDFC Bank, SBI and Bank of Baroda gained 0.2 percent each.
Yes Bank jumped 1.5 percent and Federal Bank was up 0.8 percent.
3:27 pm Earnings: State-owned Punjab & Sind Bank reported a rise of 10.2 percent in net profit at Rs 77.51 crore for the third quarter ended December 2016, on lower provisioning for bad assets.
The bank had registered a net profit of Rs 70.32 crore in the corresponding October-December period of previous fiscal.
Total income of the bank, however, fell to Rs 2,158.01 crore during the quarter under review from Rs 2,260.56 crore a year ago, the bank said in a regulatory filing.
On assets front, bank's gross non-performing assets (NPAs) were higher at 9.40 percent of the gross advances for the quarter, against 5.29 percent a year ago.
While, net NPAs increased to 6.84 percent from 3.71 percent year earlier.
3:24 pm Market Expert: Motilal Oswal, Chairman & MD, Motilal Oswal Financial Services says markets would react bit nervously to this stance and he thinks it will correct marginally, to settle around 8500-8600 levels.
From the long term perspective corporate earnings are showing some green shoots as against the weak expectation because of demonetisation. This correction should be used as an opportunity to deploy more money in the equity markets from the long term perspective, he says.
RBI Governor once again decided not to bite the bullet. This is now becoming extreme dovish stance from RBI, Oswal says.
"Cut of 25 bps was widely expected and would have uplifted the sentiments. At this juncture, post long stint of shrinking economy and then Demon, people were postponing the demand. This rate cut was necessary from the perspective of bringing that demand back in the system," he explains.
3:21 pm Expert view: Mahendra Kumar Jajoo of Mirae Asset Global Investments (India) says in line with expectations, RBI kept the key policy rates unchanged, emphasising the neutral stance at the moment.
Given that the main guiding factors of last policy review including global uncertainty, rising oil prices and a sticky core inflation largely remained in play since, the hold on rates is in line with broader guidance provided by RBI then, he says.
RBI also indicated its commitment to ensure an efficient and appropriate liquidity management, suggesting the short term rates may inch slightly higher and align more closely with repo rate in coming months.
After the initial knee-jerk reaction, he expects bond yields to stabilise and take clues from developments in global markets in near term.
3:17 pm Market recovers: Equity benchmarks recovered post policy losses, with the Nifty getting back above 8750.
The 30-share BSE Sensex was down 5.50 points at 28329.66 and the 50-share NSE Nifty gained 13.65 points at 8781.95.
About 1479 shares advanced against 1369 declining shares on the BSE.
3:14 pm Bond yields: India's benchmark 10-year bond yield rose as much as 25 basis points after the central bank kept the policy rate on hold for a second meeting in a row and changed its stance from "accommodative" to "neutral."
3:13 pm CPI inflation is expected to remain in the range of 4-4.5 percent in first half of FY18 and 4.5-5 percent in second half of FY18.
3:11 pm RBI says it is committed to ensuring efficient and appropriate liquidity management with all the instruments at its command to ensure close alignment of the WACR with the policy rate, improved transmission of policy impulses to lending rates, and adequate flow of credit to productive sectors of the economy.
Surplus liquidity should decline with progressive remonetisation. Nonetheless, the currently abundant liquidity with banks is likely to persist into the early months of 2017-18, it adds.
3:09 pm Among major banking & financial stocks, ICICI Bank, Axis Bank, HDFC, HDFC Bank, SBI, Bank of Baroda and Punjab National Bank were down 0.5-1.5 percent.
3:07 pm Next policy meeting: Six members of Monetary Policy Committee voted in favour of the monetary policy decision, the RBI says.
MPC's next policy meeting is scheduled on April 5 and 6, 2017.
3:05 pm RBI Governor Urjit Patel says several global developments such as oil prices that could be enhanced by geopolitical tensions.
Global Food Index has risen and full rollout of macro policies are still awaited, he says.
3:03 pm RBI says weekly withdrawal limit is set at Rs 50,000 from February 20 to March 13.
2:59 pm Market Update: Benchmark indices remained under pressure, with the Sensex down 104.30 points at 28230.86 and the Nifty down 23.50 points at 8744.80.
Nifty Bank index fell nearly a percent on profit booking after RBI kept repo rate unchanged and changed monetary policy stance from accommodative to neutral.
2:56 pm The Monetary Policy Committee believes that the environment for timely transmission of policy rates to banks lending rates will be considerably improved if the banking sector's non-performing assets (NPAs) are resolved more quickly and efficiently; recapitalisation of the banking sector is hastened; and the formula for adjustments in the interest rates on small savings schemes to changes in yields on government securities of corresponding maturity is fully implemented, the RBI says.
2:50 pm RBI governor Urjit Patel says there will be no limit on cash withdrawal from saving accounts from March 13.
2:47 pm The Monetary Policy Committee decided to change the stance from accommodative to neutral while keeping the policy rate on hold to assess how the transitory effects of demonetisation on inflation and the output gap play out.
2:45 pm CPI inflation: The Monetary Policy Committee remains committed to bringing headline inflation closer to 4.0 percent on a durable basis and in a calibrated manner. This requires further significant decline in inflation expectations, especially since the services component of inflation that is sensitive to wage movements has been sticky, RBI says.
2:39 pm RBI says GVA growth for 2016-17 is projected at 6.9 percent with risks evenly balanced around it. Growth is expected to recover sharply in 2017-18 on account of several factors like bounce back in discretionary consumer demand; recovery in various sectors; and pick-up in both consumption & investment demand on rate transmission.
Accordingly, GVA growth for 2017-18 is projected at 7.4 per cent, with risks evenly balanced.
2:36 pm "The decision of the Monetary Policy Committee is consistent with a neutral stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 percent by Q4 of 2016-17 and the medium-term target of 4 per cent within a band of +/- 2 per cent, while supporting growth," the RBI says.
2:32 pm Market update: Benchmark indices saw profit booking after RBI maintained status quo. The 30-share BSE Sensex was down 114.84 points at 28220.32 and the 50-share NSE Nifty fell 27.90 points to 8740.40.
The Indian rupee gained 5 paise at 67.35 against the US dollar.
2:31 pm The Reserve Bank of India has kept its repo rate unchanged at 6.25 percent.
The apex bank sees current account deficit below 1 percent of GDP in FY17.
2:29 pm Earnings estimates: Two-wheeler maker Hero Motocorp's quarterly earnings are expected to be weak due to demonetisation. Profit is seen falling 15.8 percent year-on-year to Rs 675.2 crore and revenue may decline 13.2 percent to Rs 6,328 crore in the quarter ended December 2016, impacted by lower sales volumes.
The company saw a severe drop in retail sales during the quarter and volumes were impacted the most in its 2-wheeler segment due to demonetisation.
2:23 pm Earnings: Tata Chemicals' third quarter profit on consolidated basis jumped to Rs 318.4 crore from Rs 241.8 crore year-on-year, driven by operational performance.
Revenue fell 12.4 percent to Rs 3,495 crore from Rs 3,991.2 crore while operating profit increased 23.9 percent to Rs 583.4 crore and margin expanded by 490 basis points to 16.7 percent YoY.
2:20 pm FDI investment zooms: With the government taking steps to improve ease of doing business and relax regulations, foreign direct investment into the country surged by 60 percent to USD 4.68 billion in November 2016.
The FDI stood at USD 2.93 billion in November 2015.
During the period, India received maximum FDI from Singapore, Mauritius, the UK, the US, the Netherlands and Japan, an official said.
Cumulatively, India attracted USD 32.49 billion foreign inflows in April-November period of the current fiscal as against USD 24.81 billion in the same period previous year.
2:10 pm Infosys' governance woes: After some co-founders wrote a letter to the board of IT major company seeking a review of corporate governance practices, it is emerging that they are keen to install 'value-based people' who have a deeper understanding of the company on the board.
The founders, including Narayana Murthy, Kris Gopalakrishnan and Nandan Nilekani, had informally suggested names like former HR head Mohandas Pai and former Chief Financial Officer V Balakrishnan as possible board additions, sources close to the development have told CNBC-TV18.
However, the board of the company rejected the suggestions.
Later, Infosys founders also suggested the name of Marti G Subrahmanyam, who was part of Infosys till 2011, as a possible addition to the board.
2:05 pm Max Ventures share allotment: Max group firm Max Ventures and Industries (MAXVIL) will allot over 1.55 crore shares on a preferential basis to America's largest life insurance firm New York Life International Holdings Ltd.
The decision was taken as per special business of the company's Extraordinary General Meeting held yesterday.
Thus, at share close price of Rs 69.30, the estimated deal stands at around Rs 107.58 crore.
In a regulatory filing, MAXVIL said it transacted and passed the special business "to issue 1,55,23,870 equity shares on a preferential basis to New York Life International Holdings Ltd." Besides, over 34 lakh warrants would be issued on a preferential basis to Siva Enterprises Pvt Ltd.
2:00 pm Market Check
The market remained lacklustre in afternoon trade on caution ahead of monetary policy committee decision.
Edelweiss foresees a 25bps cut in repo rate. "The domestic macroeconomic backdrop remains one of benign inflation (with CPI likely to undershoot RBI's indicative trajectory), continued fiscal consolidation (fiscal impulse is modestly negative) and sustained weakness in private capex," it reasons.
The 30-share BSE Sensex was down 36.93 points at 28298.23 and the 50-share NSE Nifty fell 4 points to 8764.30. About 1461 shares advanced against 1314 declining shares on the BSE.
Bourses in Europe were higher as the earnings season continued to be the main focus for investors.
1:25 pm SAIL expansion: Country's largest steel maker SAIL is planning to spend up to Rs 4,000 crore on the modernisation and expansion of its plants in the coming fiscal.
"The Capex for the ongoing fiscal is nearly Rs 4,000 crore (2016-17). Next fiscal it should be similar range, somewhere between Rs 3,000 to Rs 4,000 crore," SAIL Chairman P K Singh told PTI.
The company would fund the capital expenditure through debt, he said.
"We will invest the amount throughout our plants. We are a big company and continuously we have to invest otherwise technology goes obsolete, processes go obsolete...Continoulsy there is a need of investment ... We need to invest to improve our processes," he said.
1:00 pm Market Check
Equity benchmarks moderately under pressure amid consolidation as investors eagerly awaited the rate decision of monetary policy committee. Nifty Bank index was down 0.3 percent.
"RBI is expected to cut repo rate by 0.25 percent at its policy review. This rate cut would be supported by the modest CPI inflation, which is expected to undershoot the March 2017 target set by RBI and the continued fiscal consolidation attempted in the Union Budget for FY2018," Raghu Kumar of Upstox said.
If the interest rate is cut as per earlier expectations, then he expects Nifty to touch 8900-9000 level. On the contrary, if the interest rates are not cut or if the status quo remains unchanged then he sees Nifty drifting down to 8500-8600 level.
The 30-share BSE Sensex fell 52.60 points to 28282.56 and the 50-share NSE Nifty declined 9.50 points to 8758.80.
The broader markets continued to outperform benchmarks, rising 0.2 percent each. About 1452 shares advanced against 1269 declining shares on the exchange.
ITC, Infosys, HDFC, ICICI Bank, Axis Bank and Sun Pharma were under pressure while TCS, Tata Motors, M&M and Cipla gained.
Asian markets were mixed, reversing some of the earlier losses, while oil prices remained under pressure after data overnight showed a build-up in US crude inventory.
12:40 pm Havells' expansion: Havells India, so far a maker of fans, LEDs and switches, will foray into marketing of baby care products by end of June.
As a small step, it has announced the launch of baby hair clippers. Today's announcement at a press meet follows the company's entry into the personal grooming market.
With the launch of electric shavers, beard trimmers, hair straighteners and dryers in Rs 1,000-Rs 7200 range, the company aims to garner a 25 percent market share in 3 years.
The Rs 1,500 crore/year personal grooming market is growing at 25-30 percent annually.
12:32 pm Buzzing: Shares of Tata Elxsi, a global design and technology service leader in the broadcast industry, surged 3 percent on a global partnership with M-Star Semiconductor Inc for display and digital home solutions.
The company will provide a comprehensive suite of software for MStar's
System-on-a-Chip (SoC) targeted at set-top boxes (STB).
Communication service providers, MSOs and OEMs are expected to gain from the partnership, the company said.
12:20 pm Earnings estimates: World's largest forging company Bharat Forge's earnings may be subdued in the quarter ended December 2016, following weak performance in previous quarter.
Consolidated profit during the quarter is seen falling 19 percent year-on-year to Rs 137 crore and revenue may decline 9.5 percent to Rs 951.7 crore, according to average of estimates of analysts polled by CNBC-TV18.
Weak performance in export markets is expected hit revenue. Even the company had indicated last quarter that export revenues especially in autos will continue to be sluggish.
Headwinds are also expected to continue in domestic commercial vehicle market. Freight demand in commercial vehicle was very weak in the initial phase of demonetisation.
12:00 pm Market Check
Benchmark indices continued to be listless in noon as investors awaited cues from the RBI monetary policy later in the day. Corporate earnings will also be closed watched.
The 30-share BSE Sensex was down 29.96 points at 28305.20 and the 50-share NSE Nifty gained 0.15 points at 8768.45. About 1446 shares advanced against 1112 declining shares on the BSE.
Earnings growth this quarter might remain soft, but investors are in the mood to invest and there is palpable optimism around India, said Rashesh Shah of Edelweiss Financial.
Corporate India has managed to limit the impact of demonetisation by trimming discretionary expenditure, he said.
HDFC Bank, Tata Motors, TCS, M&M, Wipro and Cipla gained 0.5-1.5 percent while ITC, Infosys, Axis Bank, ICICI Bank, HDFC and L&T were under pressure.
Crude oil prices declined as a massive increase in US fuel inventories and a slump in Chinese demand implied that global crude markets remain oversupplied despite OPEC-led efforts to cut output. Brent crude futures, the international benchmark for oil prices, were trading at USD 54.77 per barrel, down 0.44 percent, from their previous close.
The market remained directionless in morning, with the Nifty gyrating in a 20 points range. Investors maintained cautious stance ahead of RBI monetary policy committee's decision.
Motilal Oswal believes a favorable inflation trajectory and a brave Union Budget that resisted calls for consumption stimulus give sufficient room to the RBI to cut policy rates by 25 basis points to 6 percent.
The 30-share BSE Sensex declined 11.75 points to 28323.41 and the 50-share NSE Nifty rose 1.75 points to 8770.05 but the broader markets continued to outperform on positive breadth.
Infosys shares fell around 1 percent after sources told CNBC-TV18 that founders NR Narayana Murthy, Kris Gopalakrishnan, and Nandan Nilekani among others are learnt to have raised concerns over the governance of the company.
Tata Steel gained half a percent after better-than-expected earnings in Q3.
Titan Company shares surged nearly 8 percent on the back of healthy growth in third quarter despite demonetisation. CLSA has upgraded the stock to buy from underperform and also increased target price to Rs 500 from Rs 372 after raising EPS forecasts by 9-24 percent.
ICICI Bank, Axis Bank and HDFC were losers while HDFC Bank, TCS, Tata Motors, Asian Paints and Mahindra & Mahindra gained.
10:40 am Infosys falls: In a letter to Infosys board in January, the founders had raised fresh concerns over governance, had suggested bringing in value-based people into the firm.
More importantly, they had questioned the compensation given to Chief Executive Vishal Sikka, sources told CNBC-TV18. They also raised question marks over the severance packages given to former Chief Financial Officer Rajiv Bansal and General Counsel David Kennedy.
10:20 am Buzzing: Shares of Titan Company gained 9.5 percent intraday on the back of strong numbers declared by the company for the quarter ended December 2016.
The company has reported 13 percent jump in its Q3 (Oct-Dec) net profit at Rs 255.7 crore against Rs 226.2 crore, posted in in the same quarter last fiscal.
Total income of the company was up 14.4 percent at Rs 3,926 crore and EBITDA rose 20.9 percent at Rs 373.5 crore. Margin was up at 9.51 percent versus 9 percent.
CLSA has upgraded Titan Company to buy from underperform and also increased target price to Rs 500 from Rs 372 after raising EPS forecasts by 9-24 percent.
Results displayed that concerns post demonetisation were unfounded, the brokerage house says.
10:00 am Market Check
Equity benchmarks remained rangebound as investors awaited outcome of two-day monetary policy committee meeting due in afternoon.
Jayant Manglik of Religare Securities says chance of status quo seems high, considering the present liquidity situation in the economy and rise in the crude oil prices.
Amidst all, he is bullish on markets and suggests maintaining buy on dips approach in stocks.
The 30-share BSE Sensex fell 9.61 points to 28325.55 and the 50-share NSE Nifty gained 0.35 points at 8768.65.
The broader markets outperformed benchmarks, with the BSE Midcap and Smallcap indices rising 0.5 percent and 0.3 percent, respectively. About 1328 shares advanced against 745 declining shares on the exchange.
Tata Motors, HDFC Bank, TCS, Asian Paints, M&M, Cipla and Tata Steel gained 0.5-1.6 percent while ITC, Infosys, Axis Bank, ICICI Bank, Reliance Industries and Dr Reddy's Labs were under pressure.
9:35 am FII View: Sakthi Siva of Credit Suisse says with India up strongly in recent weeks, a key question from investors is whether the 'Cheapest 4' continues to outperform the 'Expensive 4'. The answer is still Yes.
The 'Expensive 4' basket - India, Indonesia, Australia and the Philippines has underperformed MSCI Asia Pacific ex-Japan by 1.4 percent in 2017 so far, she adds.
While India's return on equity bottomed at 11.6 percent and has risen to 12.4 percent, she estimates implied return on equity to be as high as 17.7 percent.
9:15 am Market Check
Equity benchmarks started off Wednesday's trade on a cautious note ahead of outcome of two-day monetary policy committee meeting due later in the day.
The 30-share BSE Sensex was up 20.75 points at 28355.91 and the 50-share NSE Nifty gained 0.80 points at 8769.10.
Infosys, Wipro, BHEL, Hero Motocorp, TCS, ITC, Axis Bank, Hero Motocorp and UltraTech Cement were early losers while Tata Steel, Tata Motors, HUL, Sun Pharma, NTPC, Hindalco, Tech Mahindra and Cipla were gainers.
The Indian rupee has opened marginally higher at 67.38 per dollar today versus previous close of 67.41.
NS Venkatesh of Lakshmi Vilas Bank says the appreciation of the rupee over last two weeks was halted yesterday.
The currency will take cues from the monetary policy and the movement of the equity market, he feels.
He expects the USD-INR pair to trade in a range of 67.30-67.60/dollar today.
Dollar index gained bolstered by technical buying after recent losses, as well as political uncertainty in Europe with a slew of elections this year.