Key benchmark indices traded in negative zone in morning trade tracking weakness in Asian stocks and lackluster trading on Wall Street overnight. At 10:17 IST, the barometer index, the S&P BSE Sensex was down 151.55 points or 0.6% at 25,110.66. The Nifty 50 index was currently down 43.30 points or 0.56% at 7,692.20.
The Sensex hit its lowest level in more than three weeks, when it lost 204.28 points or 0.8% at the day's low of 25,057.93 in early trade. The barometer index lost 33.90 points or 0.13% at the day's high of 25,228.31 at the onset of trading session. The Nifty, too, hit its lowest level in more than three weeks when it lost 57.15 points or 0.73% at the day's low of 7,678.35 in early trade. The index lost 17.85 points or 0.23% at the day's high of 7,717.65 in opening trade.
In overseas stock markets, Chinese stocks led decline in Asian stocks on data showing slowdown in growth in China's services sector last month. In China, the Shanghai Composite was currently down 1.85%. In Hong Kong, the Hang Seng index was currently down 1.3%. The China Caixin services purchasing managers' index (PMI) dropped to 51.8 in April from 52.2 in March. China's official non-manufacturing PMI, a competing gauge, fell to 53.5 in April from 53.8 in March, according to data released on 1 May 2016. China's economy is the world's second biggest economy. US stocks closed slightly lower yesterday, 5 May 2016, as oil failed to hold much of its intraday gains and investors awaited the key nonfarm-payrolls data due later in the global day today, 6 May 2016. The nonfarm-payrolls data has implications for the US monetary policy. The US central bank's mandate centers on maximizing employment and keeping inflation at a 2% target level. The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 14-15 June 2016.
Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 1,039 shares declined and 746 shares rose. A total of 109 shares were unchanged. The BSE Mid-Cap index was currently off 0.03%. The BSE Small-Cap index was currently down 0.22%. The losses for both these indices were lower than the Sensex's decline in percentage terms.
Stocks of public sector banks were mixed. IDBI Bank (up 0.23%), Union Bank of India (up 0.51%), Punjab National Bank (up 0.25%), State Bank of India (up 0.44%), Corporation Bank (up 0.68%) and Bank of Baroda (up 1.28%) edged higher. Indian Bank (down 1.57%), Indian Overseas Bank (down 0.17%), United Bank of India (down 0.53%) and Canara Bank (down 0.08%) edged lower.
Syndicate Bank rose 2.28% at Rs 67.35 after the bank said it has allotted 9.51 crore equity shares of face value of Rs 10 each for cash at an issue price of Rs 77.79 each, aggregating to Rs 740 crore on preferential basis to Government of India. The announcement was made after trading hours yesterday, 5 May 2016.
Stocks of private sector banks edged lower. IndusInd Bank (down 0.9%), HDFC Bank (down 0.97%), Kotak Mahindra Bank (down 0.98%), Yes Bank (down 0.2%) and Axis Bank (down 0.12%) declined. ICICI Bank (up 0.35%) edged higher.
The Reserve Bank of India (RBI) issued draft guidelines on granting licences on a continuous basis for setting up of universal banks in the private sector. The bank can be promoted by a non-banking finance company (NBFC) controlled by residents with a successful track record for at least 10 years and individuals/professionals who are residents and have 10 years of experience in banking and finance. The RBI has also allowed entities/groups in the private sector owned and controlled by residents to promote a universal bank subject to the condition that the non-financial business of the group does not account for 40% or more in terms of total assets/gross income. The initial minimum paid-up voting equity capital for a universal bank has been set at Rs 500 crore. Thereafter, the bank will be required to have a minimum net worth of Rs 500 crore at all times. The bank will have to open at least 25% of its branches in unbanked rural centres (population up to 9,999 as per the latest census). The bank will have to comply with the priority sector lending targets and sub-targets as applicable to the existing domestic scheduled commercial banks. The board of the bank should have a majority of independent directors, as per the draft guidelines.
The promoter group of the bank will be required to hold a minimum of 40% of the paid-up voting equity capital of the bank with a lock-in period of five years from the date of commencement of the business of the bank. The promoter group has to reduce its holding in the bank to 15% within a period of 12 years from the date of commencement of business of the bank. The bank will be required to get its shares listed on the stock exchanges within six years of the commencement of business. The RBI has invited feedback from the public on the draft guidelines by 30 June 2016.
Cement stocks were mostly higher. Ambuja Cements (up 0.42%), ACC (up 0.97%) and Shree Cement (up 0.21%) rose. UltraTech Cement (down 0.62%) edged lower.
Grasim Industries was off 0.11%. Grasim has exposure to cement sector through its holding in UltraTech Cement.
Hero MotoCorp dropped in volatile trade after announcing good March quarter earnings. The stock was down 0.56% at Rs 2,877.80. The stock hit a high of Rs 2,913 and a low of Rs 2,829 so far during the day. The company's net profit rose 70.85% to Rs 814.16 crore on 10.57% increase in total income to Rs 7614.61 crore in Q4 March 2016 over Q4 March 2015. Earnings before interest, taxation, depreciation and amortization (EBITDA) margin edged higher to 15.65% in Q4 March 2016, from 12.34% in Q4 March 2015. The improved profit margins were the combined result of the highest-ever quarterly sales of 17.21 lakh units and several margin improvement initiatives taken during the period, the company said in a statement. The result was announced after trading hours yesterday, 5 May 2016.
Hero MotoCorp's Chairman, Managing Director and CEO Pawan Munjal said that the company continues to remain cautiously optimistic for the year ending 31 March 2017 (FY 2017). The industry hopes for a good monsoon, which may help market sentiments to improve towards the second half of this fiscal, Pawan Munjal said.
Hero MotoCorp's board of directors recommended a final dividend of Rs 32 per share for the financial year ended 31 March 2016 (FY 2016).
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