High volatility was witnessed on the bourses as the Reserve Bank of India's (RBI) announcement of a reduction in its benchmark lending rate viz. the repo rate by 25 basis points (bps) after a monetary policy review came in line with market expectations. At 11:16 IST, the barometer index, the S&P BSE Sensex was down 155.38 points or 0.61% at 25,244.27. The Nifty 50 index was currently down 48.65 points or 0.63% at 7,710.15. Bank stocks led losses for the two key benchmark indices.
The Sensex trimmed losses after hitting its lowest level in almost a week. The Sensex fell 286.12 points or 1.12% at the day's low of 25,113.53 in mid-morning trade, its lowest level since 30 March 2016. The barometer index lost 27.21 points or 0.1% at the day's high of 25,372.44 in early trade. The Nifty fell 89.80 points or 1.15% at the day's low of 7,669 in mid-morning trade, its lowest level since 1 April 2016. The index lost 22.50 points or 0.28% at the day's high of 7,736.30 in early trade.
The RBI announced reduction in repo rate by 25 basis points (bps) to 6.5% from 6.75%. With a view to ensuring finer alignment of the weighted average call rate (WACR) with the repo rate, the central bank raised the reverse repo rate by 25 basis points to 6% and cut the marginal standing facility (MSF) rate by 75 basis points to 7%. The central bank reduced the minimum daily maintenance of the cash reserve ratio (CRR) to 90% from 95% with effect from the fortnight beginning 16 April 2016 while keeping the CRR unchanged at 4% of net demand and time liabilities (NDTL). The RBI said it would continue to provide liquidity to the banking system as required. The RBI will progressively lower the average ex ante liquidity deficit in the system from one per cent of NDTL to a position closer to neutrality.
In overseas stock markets, Japanese stocks led decline in Asian markets on uncertainty regarding the quantum and timing of interest rate hikes in the United States. The Nikkei 225 Average was currently off 2.57%. US stocks closed lower yesterday, 4 April 2016, as pressure from a decline in oil prices mostly offset gains in health care stocks. Contradictory comments from Federal Reserve policy makers have added to uncertainty about the quantum and timing of interest rate hikes in the United States. During speech at a conference on cybersecurity, Boston Fed President Eric Rosengren yesterday, 4 April 2016, said rate-hikes may come sooner than the market is expecting. Rosengren is a voting member of the Fed policy committee this year. On 1 April 2016, Federal Reserve Bank of Cleveland President Loretta Mester cautioned that waiting too long to raise rates could be a risk to the economy. She is a voting member of the Fed's rate-setting policy committee. In a speech in New York on 29 March 2016, Federal Reserve Chairwoman Janet Yellen stressed a need for a cautious stance on interest-rate increases in the backdrop of global economic slowdown.
Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 1,173 shares fell and 843 shares rose. A total of 116 shares were unchanged. The BSE Mid-Cap index was currently off 0.28%. The BSE Small-Cap index was currently off 0.27%. The losses for both these indices were lower in percentage terms than those for the Sensex.
Bank stocks edged lower as RBI's announcement of a reduction in its benchmark lending rate viz. the repo rate by 25 basis points (bps) came in line with market expectations. Among public sector banks, Indian Overseas Bank (down 1.29%), Union Bank of India (down 0.91%), State Bank of India (down 1.13%), Canara Bank (down 0.98%), Bank of India (down 0.4%), IDBI Bank (down 0.28%) and Bank of Baroda (down 0.17%) declined. Punjab National Bank (up 0.06%) edged higher.
Among private sector banks, ICICI Bank (down 1.61%), Kotak Mahindra Bank (down 0.9%), Yes Bank (down 0.74%) and IndusInd Bank (down 0.09%) declined. Axis Bank (up 0.65%) and HDFC Bank (up 0.1%) rose.
Telecom stocks edged lower. Bharti Airtel (down 1.78%), Reliance Communications (down 1.27%), Idea Cellular (down 1.02%), Tata Teleservices (Maharashtra) (down 1.73%) and Mahanagar Telephone Nigam (down 1.11%) declined.
Index heayweight L&T was off 0.93% at Rs 1,224.25. The stock hit a high of Rs 1,234.95 and a low of Rs 1,220 so far during the day. L&T during market hours today, 5 April 2016, announced that its construction division has secured orders worth Rs 2125 crore across its various businesses.
Mahindra & Mahindra (M&M) was off 0.65% at Rs 1,237.70. The stock hit a high of Rs 1,253 and a low of Rs 1,228 so far during the day. The company during market hours today, 5 April 2016, announced the launch of the Mahindra YUVO, a new age, superior technology range of tractors in the 30-45 HP category which will be added to the company's existing range of 15-57 HP tractors. The YUVO range comes in five models. It will be available in 15 states and the base variant is priced at Rs 4.99 lakh ex-showroom Hyderabad.
Aurobindo Pharma was off 0.49% at Rs 749.45. The stock hit a high of Rs 757 and a low of Rs 742.15 so far during the day. The company during market hours today, 5 April 2016, announced that it has received final approval from the US Food & Drug Administration (USFDA) to manufacture and market Polymyxin B for Injection USP, 5 lakh units/vial. This product is expected to be launched in Q2 September 2016. The approved abbreviated new drug application (ANDA) is bioequivalent and therapeutically equivalent to the reference listed drug product (RLD) Polymyxin B for Injection USP, 5 lakh units/vial of Eurohealth International Sarl.
Polymyxin B for Injection is an anti-infective used in the treatment of infections of the urinary tract, meninges, bloodstream and eye caused by susceptible strains of Pseudomonas aeruginosa. The approved product has an estimated market size of $7.6 million in the United States for the twelve months ended February 2016 according to IMS.
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