Sensex, Nifty end higher after RBI policy; banks lead, IT stocks drag
07 Jun 2017
3:30 pm Market Closing: Equity benchmarks closed higher and Nifty Bank ended at record closing high after RBI policy announcement.
The 30-share BSE Sensex was up 80.72 points at 31,271.28 and the 50-share NSE Nifty rose 26.75 points to 9,663.90.
3:27 pm Rate cut likely?: Ajay Srivastava of Dimensions Consulting said interest rate cut is likely soon as there has been pressure from north block.
He feels accommodative policy is on the horizon. Interim policy move is likely, may be in July and not in August, he said.
3:22 pm Nifty Bank hit a record high on a cut in statutory liquidity ratio and ahead of weekly expiry of futures & options contracts.
3:18 pm: Housing Finance companies like Can Fin Homes, GIC Housing and DHFL gained 1.5-5 percent.
The fall in risk weighted average is a good idea for housing companies. Real impact of it is substantial for these companies, Ajay Srivastava of Dimensions Consulting said.
3:15 pm Rupee rebounds: The rupee rebounded to 64.31 against the US dollar, up 11 paise from previous closing level, especially after RBI policy announcement.
It opened 7 paise lower at 64.49 a dollar in early trade today.
3:12 pm Market Update: Equity benchmarks gained momentum after Reserve Bank of India lowered inflation target for the year.
The 30-share BSE Sensex was up 71.05 points at 31,261.61 and the 50-share NSE Nifty rose 24.90 points to 9,662.05, backed by banks and recovery in technology stocks.
Even the market breadth also improved as about 1455 shares advanced against 1148 declining shares on the BSE.
3:05 pm Reaction on RBI policy: Abheek Barua, Chief Economist at HDFC Bank said rate cut is unlikely in August after reading RBI policy announced today.
2:58 pm RBI said noting that inflation has fallen below 4 percent only since November 2016, the MPC remains focused on its commitment to keeping headline inflation close to 4 percent on a durable basis keeping in mind the output gap.
2:52 pm PSU Bank index gained nearly a percent after RBI policy. Oriental Bank of Commerce, PNB, Bank of Baroda, Bank of India, Union Bank, Canara Bank and SBI rallied 1-3 percent.
2:50 pm Loser among sectoral indices: The Nifty IT index was only loser among sectoral indices, down 2.5 percent on pricing pressure.
Pravin Rao, COO of Infosys told Moneycontrol about IT industry being asked to take price cuts of 20-30 percent.
2:48 pm GST impact: The implementation of the GST is not expected to have a material impact on overall inflation, RBI feels.
The Goods and Services Tax is scheduled to be launched on July 1, 2017.
2:47 pm Risks: The risk of fiscal slippages, which, by and large, can entail inflationary spillovers, has risen with the announcements of large farm loan waivers, RBI said.
At the current juncture, global political and financial risks materialising into imported inflation and the disbursement of allowances under the 7th central pay commission's award are upside risks, it feels.
2:45 pm Market Update: Equity benchmarks turned flat after investors digested RBI policy.
The 30-share BSE Sensex was up 5.74 points at 31,196.30 and the 50-share NSE Nifty rose 1 point to 9,638.15.
2:44 pm Inflation: The April reading has imparted considerable uncertainty to the evolving inflation trajectory, especially for the near months. If the configurations evident in April are sustained, then absent policy interventions, headline inflation is projected in the range of 2.0-3.5 per cent in the first half of the year and 3.5-4.5 per cent in the second half, RBI said.
2:42 pm Five members of Monetary Policy Committee were in favour of the monetary policy decision, while Dr Ravindra H Dholakia was not in favour.
The minutes of the MPC's meeting will be published by June 21, 2017 while the next meeting of the MPC is scheduled on August 1 and 2, 2017.
2:37 pm Stressed assets: Reserve Bank said it would continue to work in partnership with the government to address the stress in banks' balance sheets.
Better alignment of administered interest rates on small savings with market rates and stepped-up recapitalisation of banks to facilitate adequate flow of credit to productive sectors are important steps to follow through, it added.
2:34 pm Economic growth: With the CSO's provisional estimates for 2016-17, the projection of real GVA growth for 2017-18 has accordingly been revised 10 bps downwards from the April 2017 projection to 7.3 percent, with risks evenly balanced, RBI said.
2:30 pm Reserve Bank of India kept repo rate unchanged at 6.25 percent but cut statutory liquidity ratio by 50 basis points to 20 percent.
2:25 pm PSU Banks rally: PSU banks stocks gained momentum ahead of rate decision of the Reserve Bank of India due shortly.
PSU Bank index gained 1 percent.
2:20 pm Fundraising: Yes Bank said shareholders approved through special resolution the proposal to borrow/raise funds in Indian/foreign currency by issue of debt securities including but not limited to non-convertible debentures, medium term notes and bonds up to a total amount of Rs 20,000 crore.
The shareholders also approved through special resolutions to raise the total borrowing limit of the bank to Rs 70,000 crore, it added.
2:10 pm Market Check: Cautiousness on the Street continued ahead of the RBI's MPC meeting's outcome, with the Nifty breaching 9650-mark.
The Sensex was up 21.82 points at 31212.38, while the Nifty was up 6.95 points at 9644.10. The market breadth was narrow as 1,393 shares have advanced, 1154 shares declined, while 154 shares were unchanged.
M&M, ICICI Bank and Aurobindo Pharma gained the most on both indices, while TCS and Wipro lost the most.
1:40 pm Buzzing: Adani Enterprises shares gained more than 5 percent intraday after its stake in Adani Green Energy diluted below 50 percent.
The Adani Group firm informed exchanges that pursuant to allotment of further equity shares by Adani Green Energy (AGEL), its stake in AGEL has been diluted below 50 percent.
Consequently, Adani Green has ceased to be a subsidiary of Adani Enterprises with effect from June 6, 2017, it said in a statement.
1:26 pm Q4 earnings review: "Earnings season concluded with aggregate MOSL Universe headline numbers meeting our expectations and Nifty earnings beating expectations by 6 percent," Motilal Oswal said.
Nifty has rounded off FY17 with 8 percent earnings growth, while the broader MOSL Universe posted 15 percent earnings growth, it added.
It further said the Q4FY17 beat at Nifty PAT level is accounted for by just four companies - Tata Motors, Tata Steel, L&T and Reliance.
In its Universe, Motilal Oswal downgraded ratings for 17 stocks and upgraded ratings for five stocks in Q4FY17.
1:08 pm Market Check: Equity benchmarks erased some gains in afternoon trade, dragged by technology stocks after Infosys, COO, Pravin Rao told Moneycontrol about IT industry being asked to take price cuts of 20-30 percent. TCS, Infosys and Wipro fell 3 percent each.
The 30-share BSE Sensex gained 28.90 points at 31,219.46 and the 50-share NSE Nifty rose 7.40 points to 9,644.55. About 1392 shares advanced against 1077 declining shares on the BSE.
All eyes are on the outcome of monetary policy committee meeting due later today. Experts don't expect any rate cut from the Reserve Bank of India but the commentary would be closely watched out for.
With good possibility of the inflation rate being anchored at 4 percent, the Reserve Bank of India is likely to take a 'prolonged pause' on key policy rates, according to a report by HSBC Global Research.
However, inflation forecast for FY18 could be lowered at the June 7 monetary policy meet. Risks also remain for a rate cut in August if certain conditions change HSBC said in the note.
12:48 pm Iran attacks: At least one gunman opened fire inside the Iranian parliament today, wounding several people, state media reported.
There were mixed reports, with some local news agencies reporting there was a single shooter inside the Tehran parliamentary complex and others saying there were three men armed with rifles and a pistol.
News agencies ISNA and Fars said three people had been shot, including at least one security guard.
12:30 pm Interview: In an interview to CNBC-TV18, Akhilesh Maru, CFO, Shakti Pumps (India) said that solar pump is getting interest from all state governments.
According to him, total tender size for solar projects is around Rs 5,000-7,000 crore. In FY17, solar contribution stood at 55 percent, he said.
On exports front, he said that they are not reducing their exposure to exports.
"The problem was as we exited from a few of our Gulf markets and diversified to other areas, it is taking time to establish ourselves because Gulf was a 20 year old market and other new markets are just two years old market. It will also pick up," added Maru.
Last year export and domestic contribution was 25:75 percent, he mentioned.
12.13 pm Market Check: Benchmark indices continued to be rangebound as investors maintained cautious stance ahead of outcome of monetary policy committee meeting due later today.
The 30-share BSE Sensex was up 104.71 points at 31,295.27 and the 50-share NSE Nifty gained 28.20 points at 9,665.35. About 1463 shares advanced against 921 declining shares on the BSE.
Experts feel the rate cut is unlikely in today's policy meeting despite lower inflation and subdued global commodity prices, saying the commentary would be important to watch out for.
Nifty IT index fell 2 percent after Infosys' chief operating officer Pravin Rao said clients asked companies to cut prices by 20-30 percent.
11:05 am Market Check: Benchmark indices were trading strong ahead of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) meeting outcome.
The Sensex was up 131.73 points at 31322.29, while the Nifty was up 36.55 points or 0.38% at 9673.70. The market breadth was healthy as 1,426 shares advanced against a decline of 772 shares, while 136 shares were unchanged.
M&M, GAIL and Vedanta were the top gainers, while Wipro, TCS and BPCL lost the most.
10:59 am Sical Logistics gains: Shares of Sical Logistics were higher by 6 percent intraday on Wednesday as investors cheered an order win.
The company received a letter of acceptance by Mahanadi Coal Fields for extraction, order value Rs 289 crore for 3 years
''The activity may be carried out by deploying surface miners on a hiring basis, mechanical transfer of the same by pay loaders into tipping trucks and transportation from surface miner face to different destinations at Bharatpur,'' the company told the exchanges.
10:55 am Buzzing Stock: Unichem Laboratories shares surged 7 percent intraday Wednesday after its Ghaziabad facility received establishment inspection report from the US health regulator.
This receipt indicates the successful closure of the inspection and the queries raised during the audit (Form 483), the company said in its filing to exchanges.
The inspection of formulations manufacturing facility by US Food and Drug Administration was carried out between February 24 and March 3, 2017.
10:45 am FII View: The Indian market is rallying on optimism, which makes finding value stocks with reasonable valuations is a little difficult, but the long-term trend still remains to be on the upside, Arvind Sanger, Managing Partner, Geosphere Capital said in an interview with CNBC-TV18 on the sidelines of Morgan Stanley Investor Summit.
The Nifty which made a fresh record high this week is on track to hit 11,000 in the next 12-18 months backed by the earnings growth of 15 percent in FY18 and stable macro fundamentals, said Sanger.
Another factor which supports the optimism is a stable political environment. Although India will go to polls in the year 2019, investors are comfortable that political uncertainty looks much less.
10:30 am Pharma check: Here's a look at the performance of the Nifty Pharma index.
10:15 am Goldman on ICICI: Goldman Sachs maintains a buy rating on ICICI Bank but raised its 12-month target price from Rs 320 earlier to Rs 372, which translates into an upside of 17 percent from current levels.
Since March quarter earnings, ICICI Bank has outpaced Bank Nifty by 13 ppt on lower NPL creation and a healthy operating performance.
''We believe ICICI Bank still trades at undemanding valuations and could rerate higher on: (1) moderating asset quality concerns; (2) strengthening of retail liability and asset franchise; and (3) improving returns ratio in FY19E-20E,'' said the Goldman Sachs note.
The largest private sector bank will also benefit from a secular story of shifting household savings from deposits to insurance and mutual funds through its subs.
10.01 am Market Check: Equity benchmarks extended gains in morning trade, with the Nifty trading above 9650 level ahead of outcome of monetary policy committee meeting due later today.
The 30-share BSE Sensex was up 109.21 points at 31,299.77 and the 50-share NSE Nifty rose 27 points to 9664.15.
Majority of experts expect the RBI to maintain status quo. RBI's commentary would be closely watched.
According to LKP, the central bank is likely to hold key rates even as the government is making a case for a lower interest regime citing low inflation.
The broader markets outperformed benchmarks, with the BSE Midcap and Smallcap indices rising over half a percent. About two shares advanced for every share falling on the BSE.
Also read - Buy, Sell, Hold: 9 stocks that are analysts are tracking today
9:42 am Market Outlook: Dhirendra Tiwari of Antique Stock Broking said smooth implementation of GST will be a key trigger.
While inventory adjustments could lead to some near-term volatility in earnings, market will look through such transitory phenomena and focus on the benefits of GST, he feels.
FY18 EPS estimates for the Nifty are at Rs 505; FY19 at Rs 606, implying a 18 percent CAGR earnings growth between FY17-19, he said.
Tiwari said the brokerage house has assigned a year-end target of 10,200 for the Nifty.
9:30 am Buzzing: GMR Infrastructure shares rallied nearly 4 percent in morning trade as its subsidiary won a airport in Greece, a major International tourist destination.
"GMR Airports, a subsidiary of GMR Infrastructure, has been selected to develop, operate and manage the new international Airport of Heraklion at Crete in partnership with Greek infrastructure major TERNA S A (100 percent subsidiary of GEK TERNA Group)," the infrastructure company said in its filing.
GMR Airports will be the designated Airport Operator in the consortium for this project, it added.
The company said the concession period for the Greenfield project would be 35 years including Phase 1 construction of 5 years.
9:15 am Market Check: Equity benchmarks opened moderately higher amid consolidation on Wednesday as investors awaited outcome of two-day Monetary Policy Committee due later today.
The 30-share BSE Sensex was up 47 points at 31,237.56 and the 50-share NSE Nifty gained 20.25 pointsa at 9,657.
GAIL, Bharti Airtel, ICICI Bank, M&M, Hero Motocorp, Vedanta and Bharti Infratel were early gainers while Dr Reddy's Labs, Wipro, TCS, Cipla, Tata Motors, BPCL and Tata Power were under pressure.
The Indian rupee extended losses on Wendesday. It opened at 64.49 against the US dollar, down 7 paise compared with Tuesday's closing level of 64.42 a dollar.
Pramit Brahmbhatt of Veracity said in the absence of any directional clarity, the spot USD-INR pair will trade in a tight range of 64.20 to 64.50 today.
Asia was mixed as markets cautiously awaited the UK election, a European Central bank review and former FBI Director James Comey's testimony to the Senate stateside.