A divergent trend was witnessed in morning trade as the barometer index, the S&P BSE Sensex, was trading slightly higher while the 50-unit Nifty 50 index was trading slightly lower. At 10:15 IST, the Sensex was up 9.91 points or 0.04% at 25,860.21. The Nifty was off 3.75 points or 0.05% at 7,862.20. The market breadth indicating the overall health of the market was strong. On BSE, 1,159 shares rose and 734 shares fell. A total of 127 shares were unchanged. The BSE Mid-Cap index was currently up 0.15%. The BSE Small-Cap index was currently up 0.28%. Both these indices outperformed the Sensex.
In overseas stock markets, energy shares led gains in Asian equities as global crude oil prices rebounded. US markets closed higher for the third straight session yesterday, 23 December 2015, led by outsize gains in the energy and materials sectors as crude oil futures rebounded after weekly crude oil data showed US crude inventories posted an unexpectedly large decline last week.
Metal and mining stocks rose. Vedanta (up 1.9%), National Aluminium Company (up 2.49%), JSW Steel (up 0.38%), Hindustan Zinc (up 0.06%), Jindal Steel & Power (up 0.22%), Hindalco Industries (up 0.48%), NMDC (up 0.44%) and Hindustan Copper (up 0.49%) edged higher. Tata Steel (down 0.66%) and Steel Authority of India (Sail) (down 0.52%) fell.
Shares of public sector banks (PSU banks) edged lower after the Reserve Bank of India (RBI) criticized the dividend distribution policy of PSU banks in its latest Financial Stability Report (FSR). IDBI Bank (down 1.35%), Punjab National Bank (down 0.91%), Bank of Baroda (down 0.32%), Canara Bank (down 0.48%), Bank of India (down 0.21%) and Union Bank of India (down 0.29%) dropped.
The RBI said that PSU banks pay out significant amounts as dividend to the government and other shareholders which have no relevance to their balance sheet strengths and capital planning. In addition to the improvement of governance processes through initiatives like 'Indradhanush', PSU banks may need to review their business models and examine strategic decisions like capital structure and dividend policy, the FSR said. In August 2015, government rolled out a seven pronged plan named Indradhanush aimed at improving the performance of PSU banks. It is imperative that PSU banks approach their dividend decisions as strategic business decisions which are in keeping with their objective of shareholder wealth maximisation, the FSR said.
State Bank of India (SBI) shed 0.52% to Rs 228.70. The stock hit high of Rs 231.15 and low of Rs 228.50 so far during the day. SBI before market hours today, 24 December 2015, announced that the bank has raised Rs 4000 crore on private placement of Basel III compliant, Tier-II bonds with 10 year tenure, bearing 8.33% per annum coupon and with call option after 5 years. The announcement was made before market hours today, 24 December 2015
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Stocks of private sector banks also edged lower. ICICI Bank (down 0.55%), HDFC Bank (down 0.13%), Kotak Mahindra Bank (down 0.34%), IndusInd Bank (down 0.15%) and Yes Bank (down 0.52%) declined. Axis Bank rose 0.04%.
RBI Governor Raghuram Rajan said in his foreword on the FSR that despite domestic inflation coming down significantly, India should not lose sight of the fact that the climatic conditions have tended to be more erratic and unpredictable. This will have an impact on the volatility of inflation and perhaps its level, Rajan said.
V-Mart Retail surged 13.65% after the Reserve Bank of India (RBI) yesterday, 23 December 2015, notified that foreign institutional investors (FIIs)/registered foreign portfolios investors (RFPIs) can now invest up to 49% of the paid-up capital of the company under the Portfolio Investment Scheme (PIS). The central bank said that the shareholding of FIIs/RFPIs in V-Mart Retail has gone below the revised threshold limit. Therefore, the restrictions placed on the purchase of shares of the company are withdrawn with immediate effect.
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