A range bound movement was witnessed as key benchmark indices hovered near the flat line in afternoon trade. At 13:32 IST, the barometer index, the S&P BSE Sensex, was up 11.25 points or 0.04% at 25,707.69. The 50-unit CNX Nifty was up 2.60 points or 0.03% at 7,788.45. The market breadth indicating the overall health of the market was positive.
Shares of top automobile companies were in red. Shares of big private and public sector banks dropped after the Reserve Bank of India issued draft guidelines on computation of banks' base rate based on marginal cost of funds. IT stocks edged higher on renewed buying. Index heavyweights ITC, Infosys and Reliance Industries were in demand.
Index heavyweight and cigarette major ITC was up 1.79% at Rs 321.20. The stock hit high of Rs 323 and low of Rs 316 so far during the trading session.
Shares of IT major and index heavyweight Infosys were up 1.6% at Rs 1,107.05. The stock hit high of Rs 1,114.60 and low of Rs 1,090.10 so far during the trading session.
Another index heavyweight Reliance Industries was up 1.5% at Rs 853. The stock hit high of Rs 856.95 and low of Rs 843.30 so far during the trading session.
Shares of top automobile companies were in red. Mahindra & Mahindra was down 2.6% at Rs 1,145.90. Car major Maruti Suzuki India was off 0.12% at Rs 4,053.15.
Tata Motors edged lower after reporting decline in sales volume for August 2015. The stock was off 1.3% at Rs 325.10. Tata Motors' domestic sales declined 3% to 35,478 units in August 2015 over August 2014. Exports rose 16% to 5,202 units in August 2015 over August 2014. Sales of passenger cars rose 19% to 9,814 units in August 2015 over August 2014. In commercial vehicles segment, medium and heavy commercial vehicles (M&HCV) sales jumped 31% to 12,017 units in August 2015 over August 2014. Sales of light and small commercial vehicles dropped 25% to 12,267 units in August 2015 over August 2014. This monthly sales data pertains to the standalone operations of Tata Motors. Tata Motors' standalone business mainly comprises of its commercial vehicles and passenger vehicles business in India.
Hero MotoCorp (HMCL) edged lower after reporting weak sales for the month just gone by. The stock was off 0.98% at Rs 2,362. HMCL's total two-wheeler sales fell 13.98% to 4.80 lakh units in August 2015 over August 2014. Hero MotoCorp (HMCL) attributed the decline in sales in August 2015 to late onset of the festive season this year compared to last year. The company announced the monthly sales data after market hours yesterday, 1 September 2015. HMCL has decided to launch a slew of new products leading up to the festive season this year. It will initially launch two new scooters which will be followed by introduction of new bikes.
Bajaj Auto edged higher in volatile trade after the company reported marginal rise in its sales last month. The stock was up 0.47% at Rs 2,261. The stock hit a high of Rs 2,281.95 and a low of Rs 2,217.25 so far during the day. Bajaj Auto's total sales rose 2% to 3.41 lakh units in August 2015 over August 2014. Motorcycles sales rose 2% to 2.90 lakh units in August 2015 over August 2014. Sales of commercial vehicles dropped 2% to 51,529 units in August 2015 over August 2014. Exports rose 4% to 1.81 lakh units in August 2015 over August 2014. The company announced the monthly sales volume data during market hours today, 2 September 2015.
Shares of big private and public sector banks dropped after the Reserve Bank of India issued draft guidelines on computation of banks' base rate based on marginal cost of funds. Among PSU banks, State Bank of India was off 2.2% at Rs 233.70. Punjab National Bank was off 2.7% at Rs 131.05. Bank of Baroda was off 0.55% at Rs 171.65. Union Bank of India was off 3.8% at Rs 161.15. Bank of India shed 1.4% to 132.70.
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As per RBI's draft guidelines, the components of a bank's base rate will include cost of funds, negative carry on CRR/SLR, un-allocable overhead costs and average return on net worth. Negative carry on the mandatory CRR arises because the return on CRR balances is nil. Negative carry on SLR balances may arise if the actual return thereon is less than the cost of funds. The marginal cost of funds will be arrived at by taking into consideration all sources of fund other than equity. The actual lending rates on the loans will be determined by adding the components of spread to the base rate. The base rate is the minimum lending rate charged by a bank. The RBI has sought comments on the draft guidelines by 15 September 2015 and it intends to implement the revised methodology for calculation of base rate from 1 April 2016.
Meanwhile, the government has announced that it has accepted the recommendation of the Justice A.P. Shah Committee not to levy minimum alternative tax (MAT) on stock market transactions of foreign institutional investors (FIIs) for the period prior to 1 April 2015. The latest announcement comes after the government in its February 2015 Budget announced that MAT will not be applicable for FIIs from 1 April 2015.
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