Key benchmark indices once again regained positive ground after hitting intraday low in negative zone in morning trade. At 10:24 IST, the barometer index, the S&P BSE Sensex, was up 9.96 points or 0.04% at 25873.46. The 50-unit CNX Nifty was up 1.20 points or 0.02% at 7,869.70.
A bout of volatility was witnessed in morning trade. The Sensex fell 124.96 points at the day's low of 25,738.54 in morning trade. The Nifty fell 37.15 points at the day's low of 7,831.35 in morning trade.
The market breadth indicating the overall health of the market was strong. On BSE, shares 1,156 rose and 685 shares fell. A total of 66 shares were unchanged. The BSE Mid-Cap index was up 0.68%. The BSE Small-Cap index was up 0.7%. Both these indices outperformed the Sensex.
In overseas markets, Asian markets were trading lower on concerns of deepening slowdown in China. Markets in Hong Kong, Taiwan and South Korea are closed for holiday. US markets ended on a mixed note on Friday, 25 September 2015 due to a sharp sell-off in biotech and healthcare stocks. Prospects for the US economy generally appear solid, Federal Reserve Chairwoman Janet Yellen said in her speech late Thursday, 24 September 2015 after US markets had closed. She argued in favor of hiking interest rates this year, giving more clarity to Fed watchers.
Bank stocks were in demand ahead of the Reserve Bank of India's (RBI) fourth bi-monthly monetary policy review for the year 2015-16 scheduled tomorrow, 29 September 2015.
Among private bank stocks, ICICI Bank (up 0.78%), HDFC Bank (up 0.09%), Axis Bank (up 0.78%), IndusInd Bank (up 0.78%) and Yes Bank (up 1.4%) rose. Kotak Mahindra Bank fell 0.63%.
Among PSU bank stocks, State Bank of India (SBI) (up 1.28%), Punjab National Bank (up 1.14%), Bank of Baroda (up 0.83%), Canara Bank (up 2.22%), IDBI Bank (up 6.7%), Bank of India (up 2.7%) and Union Bank of India (up 2.01%) gained.
The RBI had kept its benchmark lending rate viz. the repo rate unchanged at 7.25% after a monetary policy review on 4 August 2015. RBI Governor Dr. Raghuram G. Rajan had at that time indicated in his written monetary policy statement that going ahead RBI will monitor developments for emerging room for further reduction in the policy rate. The RBI has cut the benchmark lending rate viz. the repo rate by 75 basis points since January 2015.
Meanwhile, the Reserve Bank of India (RBI) announced measures to enhance commercial banks' ability to recover loans to borrowing entities which are under stress primarily due to operational/managerial inefficiencies of the existing promoters. The RBI has allowed banks to upgrade the credit facilities extended to the borrowing entities whose ownership has been changed to 'Standard' category, subject to certain conditions. The RBI has also allowed banks to refinance the existing debt of the borrowing entity whose ownership has been changed without treating the exercise as restructuring of loan. However, banks will have to make provisions for any diminution in fair value of the existing debt on account of the refinance. The RBI has also allowed banks to reverse the provision made against the loans to the borrowing entity whose ownership has been changed once all the outstanding loan/facilities of the borrowing entities perform satisfactorily during the specified period as defined in the extant norms on restructuring of advances.
Separately, the RBI has allowed commercial banks to provide partial credit enhancement (PCE) to bonds issued by corporates/special purpose vehicles (SPVs) for funding all types of projects, subject to certain conditions. Initially, banks will be allowed to offer PCE only in the form of a non-funded irrevocable contingent line of credit. The RBI will in due course take a call on whether to allow PCE as a funded loan facility.
Interest rate sensitive realty stocks gained ahead of the Reserve Bank of India's (RBI) fourth bi-monthly monetary policy review for the year 2015-16 scheduled tomorrow, 29 September 2015. Purchases of both residential and commercial property are largely driven by finance.
DLF (up 1.46%), Indiabulls Real Estate (up 2.45%), Housing Development and Infrastructure (up 5.1%), D B Realty (up 2.62%), Unitech (up 2.16%), Sobha (up 4.85%), and Parsvnath Developers (up 1.69%) rose. Godrej Properties (down 0.19%) and Oberoi Realty (down 3.09%) declined.
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