After seeing high volatility in the aftermath of 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, key benchmark indices extended intraday losses in early afternoon trade. At 12:16 IST, the barometer index, the S&P BSE Sensex, was down 332.84 points or 1.31% at 25,066.81. The Nifty 50 index was currently down 97.55 points or 1.26% at 7,661.25. The weakness on the domestic bourses was a part of weakness in Asian stocks triggered by uncertainty regarding the quantum and timing of interest rate hikes in the United States.
The Sensex hit one-week low when it fell 383.71 points or 1.51% at the day's low of 25,015.94 in early afternoon trade. The barometer index lost 27.21 points or 0.1% at the day's high of 25,372.44 in early trade. The Nifty hit its lowest level in almost a week when it fell 115.20 points or 1.48% at the day's low of 7,643.60 in early afternoon trade. The index lost 22.50 points or 0.28% at the day's high of 7,736.30 in early trade.
The broad market depicted weakness. There were almost two losers against every gainer on BSE. 1,455 shares fell and 744 shares rose. A total of 107 shares were unchanged. The BSE Mid-Cap index was currently off 0.71%. The BSE Small-Cap index was currently off 0.77%. The losses for both these indices were lower in percentage terms than those for the Sensex.
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 closed 2.42% lower. 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.
Auto 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. Eicher Motors (down 1.66%), Tata Motors (down 1.58%), Bajaj Auto (down 1.44%), TVS Motor Company (down 1.46%), Maruti Suzuki India (down 0.5%) and Ashok Leyland (down 0.18%) declined. Hero MotoCorp (up 0.52%) edged higher. Lower interest rate may help lifts demand for automobiles. Purchases of cars, utility vehicles and commercial vehicles are largely driven by finance.
Mahindra & Mahindra (M&M) was off 0.57% at Rs 1,238.70. 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.
Realty stocks declined 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. Indiabulls Real Estate (down 3.08%), Housing Development and Infrastructure (down 2.76%), Unitech (down 2.32%), Oberoi Realty (down 2.05%), DLF (down 1.9%), Sobha (down 1.72%), Prestige Estates Projects (down 0.72%) and D B Realty (down 0.44%) edged lower. Godrej Properties (up 0.54%) edged higher. Lower interest rate may help boost housing demand. Purchases of both residential and commercial property are largely driven by finance.
NTPC was off 1.45% at Rs 129.15. The stock hit a high of Rs 131.95 and a low of Rs 128.60 so far during the day. The company during market hours today, 5 April 2016, announced that its board of directors at a meeting held on 30 March 2016 approved two proposals involving an outlay of Rs 3104.04 crore.
Jammu & Kashmir Bank rose 0.16% at Rs 61.10 after a bulk deal of 16.14 lakh shares was executed on the scrip at Rs 60.90 per share at the onset of trading session on BSE.
The RBI announced reduction in repo rate by 25 basis points (bps) to 6.5% from 6.75% after a scheduled monetary policy review today, 5 April 2016. 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.
RBI expects inflation based on the consumer price index (CPI) to decelerate modestly and remain around 5% during 2016-17 with small inter-quarter variations. According to the central bank, a normal southwest monsoon in 2016 would work as a favourable supply shock. The central bank expects inflation to trend towards the 5% target in March 2017 under reasonable assumptions.
The uneven recovery in India's economic growth in 2015-16 is likely to strengthen gradually in 2016-17 assuming a normal monsoon, the likely boost to consumption demand from the implementation of the 7th Pay Commission recommendations, the effects of the one-rank-one-pension (OROP) award and continuing monetary policy accommodation. The RBI has pegged GVA growth projection for 2016-17 at 7.6%. While retaining the accommodative stance of the monetary policy, RBI Governor Raghuram Rajan indicated in his monetary policy that the RBI may cut the repo rate further if macroeconomic and financial developments provide room for further rate cut.
Powered by Capital Market - Live News
