The key domestic indices sharply pared gains in morning trade, tracking a broader selloff in global markets. The Nifty retraced from the 11,000 mark and briefly slipped below the crucial 10,800 support. Gains in public sector banks were negated by losses in metal stocks.
Domestic shares, however, received support from finance minister Nirmala Sitharaman's measures announced to revive the economy. Sitharaman after market hours on Friday, 23 August 2019, said the government has withdrawn the surcharge on foreign portfolio investors (FPIs), which she had unveiled in her budget for the fiscal year ending March 2020.
Meanwhile, a foreign brokerage upgraded India to 'overweight' on positive local developments amid rising global uncertainty. Reform measures and sectoral incentives could provide a much-needed booster shot, it said, adding that recovery is expected is the second half of the calendar year 2019 (H2CY19).
At 10:20 IST, the barometer index, the S&P BSE Sensex, was up 3.66 points or 0.01% at 36,704.82. The Nifty 50 index was up 0.8 points or 0.01% at 10,830.15.
The S&P BSE Mid-Cap index was up 0.23%. The S&P BSE Small-Cap index was up 0.34%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was positive. On the BSE, 1090 shares rose and 729 shares fell. A total of 91 shares were unchanged.
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Shares of public sector banks soared after the Finance Minister announced a slew of measures for the banking sector. For the banking sector, FM announced upfront release of Rs 70,000 crore, additional lending and liquidity to the tune of about Rs 5 lakh crore by providing upfront capital to public sector banks. To boost infrastructure sector, FM announced Rs 100 lakh crores for developing modern infrastructure over 5 years. The Minister added that the banks will pass on rate cuts through MCLR (Marginal Cost of Funds based Lending Rate) reduction to benefit all borrowers. EMIs for housing loans, vehicle and other retail loans will reduce by directly linking repo rate to interest rates. Working capital loans for industry will also become cheaper. To reduce harassment and bring in greater efficiency, public sector banks will ensure mandated return of loan documents within 15 days of loan closure. This will benefit borrowers who have mortgaged assets.
Central Bank of India (up 6.44%), UCO Bank (up 5.59%), Bank of Maharashtra (up 5.18%), Allahabad Bank (up 4.65%), Corporation Bank (up 4.57%), United Bank of India (up 3.21%), Andhra Bank (up 2.85%), Bank of India (up 2.41%), Punjab & Sind Bank (up 1.83%), Union Bank of India (up 1.6%), Canara Bank (up 1.36%), State Bank of India (up 1.07%), Punjab National Bank (up 0.94%) and Bank of Baroda (up 0.8%) advanced.
Metal stocks tanked. Tata Steel (down 5.51%), Vedanta (down 4.44%), Hindalco Industries (down 4%), Steel Authority of India (down 3.99%), Jindal Steel & Power (down 3.19%), NMDC (down 2.63%), Hindustan Zinc (down 1.41%), National Aluminium Company (down 1.38%) and Hindustan Copper (down 0.68%) declined.
Contraceptive manufacturer Cupid gained 3.91% after the company reported that it has received an order worth Rs 4.95 crore from United Nations Population Fund (UNFPA) to supply male condoms to Angola.
Domestic airliner, Interglobe Aviation was up 1.09% after the media reports suggested that Rakesh Gangwal, co founder of Indigo, has flagged a truce with Airline Company. Rakesh Gangwal will be supporting company's proposals at shareholders meeting. Gangwal will also support company's move to expand to the board to 10 directors at an upcoming Annual General Meeting (AGM). The company also announced the appointment Meleveetil Damodaran as an Independent Director of the Company with effect from 23 January 2019.
Pharmaceutical company Natco Pharma rose after the company announced acquisition of OMRV Hospitals. The company will complete the acquisition on or before 30 September 2019 for a sum of Rs 5 crore. With this acquisition, the company will increase its stake in OMRV Hospitals from 9.29% to 12.81%.
On derivatives front, IDBI Bank (up 1.62%) DHFL (up 4.29%) are barred from trading in F&O segment by NSE after crossing 95% of market wide position limit.
Overseas, Asian stocks were trading lower Monday following an escalation in the US-China trade war late last week. US stocks ended sharply lower Friday as the US-China trade war intensified further, after President Donald Trump said he's ordering American companies to start looking for an alternative to China, while readying additional measures after Beijing imposed retaliatory tariffs on imports of US goods.
China announced new tariffs of 5% and 10% on $75 billion in U.S. imports, set to go into effect in two tranches, on Sept. 1 and Dec. 15, respectively. The Chinese government said that the move was in response to the Trump administration's plans to institute 10% tariffs on $300 billion in Chinese imports, also in two stages and on the same dates, announced earlier in August.
Federal Reserve Chairman Jerome Powell left the door open for another interest rate cut in September in a widely anticipated speech in Jackson Hole, Wyoming.
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