Key benchmark indices were trading slightly lower after see-sawing between the positive and negative terrain near the flat line in morning trade. At 10:20 IST, the barometer index, the S&P BSE Sensex was down 30.03 points or 0.13% at 27,790.71. The Nifty 50 index was down 4.20 points or 0.05% at 8,587.05. Weakness in Asian stocks weighed on sentiment.
In overseas stock markets, Asian stocks fell tracking lower finish for 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yesterday, 29 September 2016 as Deutsche Bank shares slumped to a record low after a report that trading clients had withdrawn excess cash and positions held in the largest German lender.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 broad market depicted strength. There were more than two gainers against every loser on BSE. 1,431 shares rose and 557 shares fell. A total of 109 shares were unchanged. The BSE Mid-Cap index was currently up 0.75%. The BSE Small-Cap index was currently up 0.96%. Both the indices outperformed the Sensex.
Realty stocks rose on bargain hunting after witnessing a sharp drop yesterday, 29 September 2016. DLF (up 2.78%), Sobha (up 0.47%), Indiabulls Real Estate (up 3.47%), Unitech (up 1.91%), Godrej Properties (up 0.31%), Housing Development & Infrastructure (HDIL) (up 1.88%), and Oberoi Realty (up 0.22%) edged higher.
Auto stocks also gained. Mahindra & Mahindra (M&M) (up 0.82%), Ashok Leyland (up 1.5%), Maruti Suzuki India (up 0.48%), Eicher Motors (up 1.37%), Bajaj Auto (up 0.38%), Hero MotoCorp (up 0.09%), Tata Motors (up 0.81%) and TVS Motor Company (up 1.28%) gained.
Sintex Industries rose 6.92% after the company said that its board approved demerger of custom moulding business and prefab business from the company. The announcement was made after market hours yesterday, 29 September 2016. Sintex Industries said that its board approved the composite scheme of arrangement for the demerger of the 'custom moulding business' and the 'prefab business' from Sintex Industries to Sintex-BAPL and Sintex Infra Projects, respectively, each a wholly owned subsidiary of Sintex Plastics Technology. The proposed arrangement will streamline various businesses developed by the group, thereby creating focused leadership and management attention. The scheme also involves issuance of equity shares of Sintex Plastics Technology to the equity shareholders of Sintex Industries such that shareholders of Sintex Industries will effectively get one equity share of Sintex Plastics Technology upon demergers against one equity share held in Sintex Industries and listing of these equity shares of Sintex Plastics Technology on the BSE and the NSE. The transaction is expected to unlock value of shareholders by separating various businesses in different entities.
Alkem Laboratories fell 3.85% after the company said it has received 13 observations from the US drug regulator for the manufacturing facility at Daman. The announcement was made after market hours yesterday, 29 September 2016. The company said that US Food and Drug Administration (USFDA) had conducted an inspection at the company's manufacturing facility located at Daman, India from 20 September 2016 to 29 September 2016. In this regard, the company has received the inspection report which contains thirteen 483 observations. The company said it will put together a detailed response with adequate corrective and preventive measures to address the USFDA observations and the same is proposed to be filed within the timeline stipulated by USFDA.
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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