Key benchmark indices further extended intraday losses and hit fresh intraday low in afternoon trade. At 13:20 IST, the barometer index, the S&P BSE Sensex, was off 222.39 points or 0.79% at 27,960.18. The Nifty 50 index was currently off 72 points or 0.83% at 8,639.35. The Sensex was currently hovering below the psychological 28,000 mark after alternately moving above and below that mark after slipping below the mark in early afternoon trade. The losses on the domestic bourses materialized in the wake of the Reserve Bank of India's (RBI) decision to keep the benchmark lending rate viz. the repo rate unchanged after a policy review in line with market expectations.
The Sensex lost 225.80 points or 0.8% at the day's low of 27,956.77 in afternoon trade, its lowest level since 5 August 2016. The barometer index rose 107.39 points or 0.38% at the day's high of 28,289.96 at onset of trading session, its highest level since 10 August 2015. The Nifty fell 73.15 points or 0.83% at the day's low of 8,638.20 in afternoon trade, its lowest level since 5 August 2016. The index rose 17 points or 0.2% at the day's high of 8,728.35 at onset of trading session, its highest level since 16 April 2015.
The market breadth indicating the overall health of the market was weak. On BSE, 1,575 shares fell and 955 shares rose. A total of 111 shares were unchanged. The BSE Mid-Cap index was currently off 0.74%. The BSE Small-Cap index was currently off 0.52%. The fall in both these indices was lower than the Sensex's decline in percentage terms.
In overseas stock markets, European stocks edged higher in early trade and most Asian shares rose as US crude oil traded near its highest price in two weeks. US stocks closed lower yesterday, 8 August 2016, after touching record highs as Wall Street caught its breath in the wake of last week's upbeat jobs data.
Metal and mining stocks declined as copper prices fell in global commodity markets. Bhushan Steel (down 0.24% to Rs 42.10), Jindal Steel & Power (down 0.42% to Rs 83.8), Vedanta (down 2.95% to Rs 164.5), Tata Steel (down 0.71% to Rs 376.85), NMDC (down 1.52% to Rs 100.65), Hindalco Industries (down 2.01% to Rs 146.1), Steel Authority of India (down 1.98% to Rs 47), JSW Steel (down 1.59% to Rs 1,702), and National Aluminium Company (down 0.91% to Rs 48.9) edged lower. Hindustan Zinc rose 0.16% to Rs 220.70.
High Grade Copper for September 2016 delivery was currently down 0.63% at $2.147 per pound on the COMEX.
The BSE Metal index had outperformed the market over the past one month till 8 August 2016, rising 13.48% compared with 3.89% rise in the Sensex. The index had also outperformed the market in past one quarter, rising 27.93% as against Sensex's 11.71% rise.
Capital goods stocks also dropped. BEML (down 1.35% to Rs 1,003), Bharat Heavy Electricals (Bhel) (down 0.43% to Rs 139.5), L&T (down 0.9% to Rs 1,493.85), Thermax (down 1.22% to Rs 897.5), Crompton Greaves (down 0.89% to Rs 83.35) and Siemens (down 1% to Rs 1,307.95) declined. Havells India rose 1.86% to Rs 411.55.
The BSE Capital goods index had underperformed the market over the past one month till 8 August 2016, rising 0.05% compared with 3.89% rise in the Sensex. The index had, however, outperformed the market in past one quarter, rising 15.32% as against Sensex's 11.71% rise.
KCP lost 8.24% to Rs 91.35 after net profit fell 90.5% to Rs 3.24 crore on 12% decline in net sales to Rs 178.77 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 8 August 2016.
Tasty Bite Eatables rose 2.18% to Rs 3,054 after net profit rose 153.88% to Rs 5.56 crore on 51.5% rise in net sales to Rs 55.69 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 8 August 2016.
Lumax Industries lost 7.21% to Rs 688 after consolidated net profit rose 0.3% to Rs 13.31 crore on 4.1% decline in net sales to Rs 302.24 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 8 August 2016.
Polaris Consulting & Services rose 5.16% to Rs 200.70 after consolidated net profit rose 8.2% to Rs 39.72 crore on 1.01% increase in total income to Rs 502.98 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 8 August 2016. Polaris said in a press release that its consolidated revenues rose 0.5% to Rs 495.50 crore in Q1 June 2016 over Q1 June 2015. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) rose 2.3% to Rs 58.72 crore in Q1 June 2016 over Q1 June 2015.
The company's Chief Financial Officer, N M Vaidyanathan, said that the company's revenue for the quarter remained relatively flat, in-spite of drop in revenue from the company's largest customer, on account of the productivity savings program which was partially offset by restatement of revenue recognised to comply with Indian Accounting Standards (IND-AS). Annual performance driven pay, bonus payments and tax payments made during the quarter impacted the company's cash position. The company anticipates its liquidity to improve in the coming months driven by internal cash accruals with no significant capital expenditure planned in the near future.
The Reserve Bank of India (RBI) kept its benchmark lending rate viz. the repo rate unchanged at 6.5% after a monetary policy review today, 9 August 2016. The RBI also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL). The central bank said it will continue to provide liquidity as required and will progressively lower the average ex ante liquidity deficit in the system from 1% of NDTL to a position closer to neutrality. The RBI announced the outcome of the monetary policy review at around 11:00 IST.
The RBI said that the recent sharper-than-anticipated increase in food prices has pushed up the projected trajectory of inflation over the rest of the year. The central bank also said that the strong improvement in sowing on the back of the monsoon's steady progress, along with supply management measures, augers well for the food inflation outlook. According to the central bank, risks to the inflation target of 5% for March 2017 continue to be on the upside.
The RBI has retained the projected GVA growth projection for 2016-17 at 7.6%. According to the central bank, the risk to this projection is evenly balanced. The central bank expects the momentum of growth to be quickened by the normal monsoon raising agricultural growth and rural demand, as well as by the stimulus to consumption spending that can be expected from the disbursement of pay, pension and arrears following the implementation of the 7th CPC's award. The passage of the Goods and Services Tax (GST) Bill augurs well for the growing political consensus for economic reforms. While timely implementation of GST will be challenging, its implementation will raise returns on investment across much of the economy and also strengthen government finances over the medium-term, according to the central bank.
The RBI said that the stance of monetary policy remains accommodative and will continue to emphasise the adequate provision of liquidity. According to the central bank, easy liquidity conditions are already prompting banks to modestly transmit past policy rate cuts through their MCLRs (Marginal Cost of Funds based Lending Rate) and pro-active liquidity management should facilitate more pass-through.
Meanwhile, the amended goods and services tax (GST) constitutional amendment bill was passed by the Lok Sabha yesterday, 8 August 2016. The bill was passed by the Rajya Sabha last week. Prime Minister Narendra Modi in Lok Sabha said that with GST, the government intends to bring uniformity in taxation. Most of the things that can impact consumer inflation have been kept out of the ambit of GST, Modi said. He was intervening during the debate in the Lok Sabha on the GST Bill yesterday, 8 August 2016. The government plans to implement the nationwide GST from 1 April 2017. The main objective of the GST is to eliminate excessive taxation. GST is a uniform indirect tax levied on goods and services across a country. The measure would harmonize 11 state and central levies into a national sales tax, reducing business transaction costs.
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