A rangebound movement was witnessed as key benchmark indices hovered in negative zone in afternoon trade. At 13:15 IST, the barometer index, the S&P BSE Sensex, was down 65.60 points or 0.24% at 27,213.16. The Nifty 50 index was currently down 26.20 points or 0.31% at 8,344.50. Data showing deceleration in growth in India's services sector in June 2016 and weakness in global stocks weighed on sentiment on the domestic bourses.
The Sensex lost 104.97 points or 0.38% at the day's low of 27,173.79 in mid-morning trade, its lowest level since 1 July 2016. The barometer index rose 69.90 points or 0.25% at the day's high of 27,348.66 at the onset of the trading session. The Nifty lost 35.80 points or 0.42% at the day's low of 8,334.90 in afternoon trade, its lowest level since 1 July 2016. The index rose 10.75 points or 0.12% at the day's high of 8,381.45 at the onset of the trading session.
The market breadth indicating the overall health of the market turned negative from positive in afternoon trade. On BSE, 1,262 shares rose and 1,303 shares fell. A total of 112 shares were unchanged. The BSE Mid-Cap index was currently up 0.12%. The BSE Small-Cap index was currently up 0.12%. Both these indices outperformed the Sensex.
The outcome of a monthly survey showed that growth in India's services sector decelerated in June 2016 due to a softer expansion in new work. The Nikkei India Services Business Activity Index dropped to 50.3 in June 2016 from 51 in May 2016. Anecdotal evidence suggested that strong competitive pressures restricted new business gains. A faster increase in input costs contrasted with a slowdown in charge inflation. According to respondents, activity growth over the coming year is set to be supported by aggressive marketing campaigns. Some panellists expressed concerns regarding competitive pressures.
In overseas stock markets, Asian and European stocks edged lower as investors became cautious ahead of the release the influential monthly US nonfarm payroll report. The US government will announce nonfarm payroll report for June 2016 on Friday, 8 July 2016. Shares in mainland China bucked the weak trend in Asia after the latest data showed acceleration in growth in China's services sector in June 2016. The Shanghai Composite index ended 0.6% higher. In Hong Kong, the Hang Seng was currently down 1.43%. The Caixin China services purchasing managers' index (PMI) rose to an 11-month high of 52.7 in June 2016 from 51.2 in May 2016. Readings above 50 indicate an expansion on a monthly basis, while readings below signal contraction.
Stocks of public sector banks extended gains registered during the previous trading session. Syndicate Bank (up 3.8%), Corporation Bank (up 3.36%), Punjab National Bank (up 2.26%), Bank of India (up 2.1%), Canara Bank (up 1.93%), Union Bank of India (up 0.74%), Bank of Baroda (up 0.59%) and State Bank of India (up 0.43%) edged higher.
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IDBI Bank rose 2.13% after the state-run bank announced reduction in lending rates based on marginal cost of funds for different loan tenures effective from 1 July 2016. IDBI Bank's Marginal Cost of Funds based Lending Rate (MCLR) effective from 1 July 2016 for overnight loans will be 8.60%. For one month, the rate will be 9% and for three months it will be 9.15%. The MCLR on 6-month loans will be 9.25% and for one-year loans the rate would be 9.30%. MCLR for two-year loans would be at 9.55% and loans with three-year maturity would carry an MCLR of 9.70%. The announcement was made after market hours yesterday, 4 July 2016.
All rupee loans sanctioned and credit limits renewed with effect from 1 April 2016 are priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which is the internal benchmark of the concerned bank. Actual lending rates are determined by adding the components of spread to the MCLR.
Stocks of private sector banks declined. Axis Bank (down 0.47%), Kotak Mahindra Bank (down 0.33%) and ICICI Bank (down 0.18%) edged lower. Yes Bank (up 0.48%) and IndusInd Bank (up 0.43%) edged higher.
Index heavyweight HDFC Bank was off 0.45% at Rs 1,166.20. The stock hit a high of Rs 1,172 and a low of Rs 1,162 so far during the day.
IT stocks edged lower. HCL Technologies (down 1%), Tech Mahindra (down 0.46%) and TCS (down 0.47%) declined. Wipro (up 0.03%) and Oracle Financial Services Software (up 1.58%) edged higher.
Index heavyweight and software major Infosys was down 0.57% at Rs 1,177.55. The stock hit a high of Rs 1,185.50 and a low of Rs 1,174.50 so far during the day.
Index heavyweight Reliance Industries was up 1.13% at Rs 997.75. The stock hit a high of Rs 1,002.80 and a low of Rs 980.50 so far during the day.
Modison Metals gained 0.08% at Rs 61.25 after the company signed a memorandum of understanding with Ekaterinburg Non-Ferrous Processing Plant, Russia, to float a joint venture company in India. Modison Metals said that the proposed joint venture with the Russian company will manufacture and sell technology, precious metal products for electronic and automobile industry in India. Ekaterinburg Non-Ferrous Metal Processing Plant renders full range of precious metals refining and processing services and manufactures products of industrial usage made of gold, silver and platinum-group metals. Ekaterinburg Non-Ferrous Processing Plant belongs to the Renova Group. The announcement was made after market hours yesterday, 4 July 2016.
Meanwhile, Prime Minister Narendra Modi today, 5 July 2016, carried out a major expansion of his Council of Ministers, inducting 19 new faces, including several dalit and OBC leaders from poll-bound states like Uttar Pradesh. Environment minister Prakash Javadekar has been promoted to Cabinet rank. Five ministers in Modi's council were reportedly dropped to make way for the new entrants since constitutionally the council can have only 82 ministers. According to reports, the five ministers dropped from the Cabinet are Minister of State (MoS) for Chemicals and Fertilizers Nihal Chand Meghwal, MoS HRD Ram Shankar Katheria, MoS Water Resources Sanwar Lal Jat, MoS Tribal Affairs Manuskhbhai D. Vasva and MoS Agriculture M.K. Kundariya.
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