Key benchmark indices recovered after falling into the red from positive terrain amid initial volatility as weakness in Asian stocks weighed on sentiment. At 9:30 IST, the barometer index, the S&P BSE Sensex was down 7.07 points or 0.03% at 27,820.46. The Nifty 50 index was down 7.65 points or 0.09% at 8,583.60.
In overseas stock markets, Asian stocks fell tracking lower finish in US stocks yesterday, 29 September 2016 as Deutsche Bank shares slumped to a record low after a report that trading clients had withdrawn excess cash and positions held in the largest German lender. The cause of Deutsche's crisis is a fine, disputed by Deutsche, of up to $14 billion by the US Department of Justice over its sale of mortgage-backed securities.
Meanwhile, revised data suggest that the US economy's performance in the spring was slightly better than expected, as business investment wasn't nearly as weak as previously reported. The gross domestic product grew a 1.4% pace in the second quarter. Philadelphia Federal Reserve President Patrick Harker said he backs a December rate increase if the economy continues to grow as expected, while Atlanta Fed President Dennis Lockhart said he expects the Fed to be in a position to raise rates soon. Fed Gov. Jerome Powell on the other hand said the Fed can afford to be patient in gradually raising rates as the economy slowly improves.
Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 797 shares rose and 698 shares fell. A total of 63 shares were unchanged. The BSE Mid-Cap index was currently down 0.02%. The decline in this index was lower than the Sensex's fall in percentage terms. The BSE Small-Cap index was currently up 0.03%, outperforming the Sensex.
Infosys (up 0.98%), GAIL (India) (up 0.91%) and Reliance Industries (RIL) (up 0.89%) were the major gainers from the Sensex pack. Asian Paints (down 0.95%), ICICI Bank (down 0.6%) and Dr Reddy's Laboratories (down 0.27%) were the major losers from the Sensex pack.
HCL Technologies rose 0.09% after the company and IBM entered a 15-year partnership for automation and development & operations (DevOps) solutions. The announcement was made after market hours yesterday, 29 September 2016.
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Tata Steel rose 0.04% after the company said that the committee of directors approved raising Rs 1000 crore by issuing 10,000 non-convertible debentures (NCDs) on private placement basis. Each NCD carries a face value of Rs 10 lakh. NCD hold a tenure of 10 years. The announcement was made after market hours yesterday, 29 September 2016.
Meanwhile, the Reserve Bank of India Act, 1934 (RBI Act) has been amended by the Finance Act, 2016, to provide for a statutory and institutionalized framework for a Monetary Policy Committee, for maintaining price stability, while keeping in mind the objective of growth and notified yesterday, 29 September 2016. The Monetary Policy Committee would be entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level. A Committee-based approach for determining the Monetary Policy will add lot of value and transparency to monetary policy decisions. The meetings of the Monetary Policy Committee shall be held at least 4 times a year and it shall publish its decisions after each such meeting. The factors constituting failure to meet inflation target under the Monetary Policy Committee Framework have also been notified. The Government, in consultation with RBI, has notified the inflation target in the Gazette of India Extraordinary dated 5 August 2016 for the period beginning from the date of publication of this notification and ending on the 31 March 2021, with inflation target of 4% with upper and lower tolerance level of 2%.
As per the provisions of the RBI Act, out of the six members of Monetary Policy Committee, three members will be from the RBI and the other three members of MPC will be appointed by the Central Government. The members of the Monetary Policy Committee appointed by the Central Government shall hold office for a period of four years, with immediate effect or until further orders, whichever is earlier.
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