The government's decision not to levy minimum alternative tax (MAT) on stock market transactions of foreign institutional investors (FIIs) failed to buoy sentiment on the bourses. The barometer index, the S&P BSE Sensex, lost 209.31 points or 0.81% at 25,487.13, as per provisional closing data. The 50-unit CNX Nifty lost 68.85 points or 0.88% at 7,717, as per provisional closing data. The Sensex and CNX Nifty, both, hit their lowest level in more than a year.
Shares of state-run power and coal sector firms and banking stocks led losses for key benchmark indices. Bank stocks edged lower after the Reserve Bank of India issued draft guidelines on computation of banks' base rate based on marginal cost of funds.
The market breadth indicating the overall health of the market was negative.
As per provisional closing, the S&P BSE Sensex was down 209.31 points or 0.81% at 25,487.13. The index fell 301.35 points at the day's low of 25,395.09 in late trade, its lowest level since 8 August 2014. The index jumped 242.93 points at the day's high of 25,939.37 in early trade.
The CNX Nifty was down 68.85 points or 0.88% at 7,717, as per provisional closing. The index hit a low of 7,699.25 in intraday trade, its lowest level since 13 August 2014. The index hit a high of 7,862.55 in intraday trade.
The BSE Mid-Cap index was down 86.76 points or 0.82% at 10,437.07. The decline in the index was higher than Sensex's decline in percentage terms. The BSE Small-Cap index was up 16.25 points or 0.15% at 10,749.63, outperforming the Sensex.
The market breadth indicating the overall health of the market was negative. On BSE, 1,392 shares declined and 1,227 shares rose. A total of 134 shares were unchanged.
The total turnover on BSE amounted to Rs 2590 crore, higher than turnover of Rs 2525.57 crore registered during the previous trading session.
Bank stocks edged lower after the Reserve Bank of India issued draft guidelines on computation of banks' base rate based on marginal cost of funds. Among PSU banks, Union Bank of India (down 5.55%), Punjab National Bank (down 3.3%), State Bank of India (down 3.7%), Canara Bank (down 2.93%), Bank of India (down 2.67%), Bank of Baroda (down 1.04%), Andhra Bank (down 1.32%), IDBI Bank (down 0.96%), Syndicate Bank (down 0.79%) and United Bank of India (down 0.47%) edged lower. Corporation Bank (up 1.18%) and Oriental Bank of Commerce (up 0.04%) edged higher.
Among private sector banks, Axis Bank (down 2.3%), ICICI Bank (down 2.54%), Kotak Mahindra Bank (down 1.11%), Yes Bank (down 0.92%), HDFC Bank (down 0.46%) and IndusInd Bank (down 1.19%) edged lower.
As per RBI's draft guidelines, the components of a bank's base rate will include cost of funds, negative carry on CRR/SLR, un-allocable overhead costs and average return on net worth. Negative carry on the mandatory CRR arises because the return on CRR balances is nil. Negative carry on SLR balances may arise if the actual return thereon is less than the cost of funds. The marginal cost of funds will be arrived at by taking into consideration all sources of fund other than equity. The actual lending rates on the loans will be determined by adding the components of spread to the base rate. The base rate is the minimum lending rate charged by a bank.
The RBI has sought comments on the draft guidelines by 15 September 2015 and it intends to implement the revised methodology for calculation of base rate from 1 April 2016.
Shares of state-run power sector firms dropped. Bharat Heavy Electricals (down 4.89%), NTPC (down 3.12%) and Power Grid Corporation of India (down 2.87%) edged lower. NHPC was up 0.31%).
Shares of state-run coal mining giant Coal India lost 2.93% at Rs 345.
The Sensex and the Nifty edged lower for the third straight trading session.
Meanwhile, the government after trading hours yesterday, 1 September 2015, announced that it has accepted the recommendation of the Justice A.P. Shah Committee not to levy minimum alternative tax (MAT) on stock market transactions of foreign institutional investors (FIIs) for the period prior to 1 April 2015. The latest announcement comes after the government in its February 2015 Budget announced that MAT will not be applicable for FIIs from 1 April 2015.
In overseas markets, Asian stocks dropped on deepening worries about China's economic slowdown. European stocks edged higher in volatile trade.
Powered by Capital Market - Live News
