Market gains on hopes of bigger rate cut by RBI
Key benchmark indices gained in a truncated trading week which ended on Wednesday, 23 March 2016 on expectations of a bigger rate cut of 50 basis points from the Reserve Bank of India (RBI) at its monetary policy review early next month. Key indices gained in all the three sessions of the week. The stock market remains shut on Thursday, 24 March 2016, on account of Holi and again on Friday, 25 March 2016, on account of Good Friday.
The barometer index, the S&P BSE Sensex, rose 384.82 points or 1.54% to settle at 25,337.56. The 50-unit Nifty 50 index gained 112.15 points or 1.47% to settle at 7,716.50. The BSE Mid-Cap index rose 2,17%. The BSE Small-Cap index gained 1.87%. Both these indices outperformed the Sensex.
Trading for the week started on a strong note. Expectations of a bigger rate cut of 50 basis points from the Reserve Bank of India (RBI) at its monetary policy review early next month triggered a strong upmove on the domestic bourses on Monday, 21 March 2016. The Sensex rose 332.63 points or 1.33% to settle at 25,285.37.
Amid a divergent trend among various index constituents, key benchmark indices eked out small gains on Tuesday, 22 March 2016. The Sensex rose 45.12 points or 0.18% to settle at 25,330.49.
Key benchmark indices closed with small gains after what was a volatile trading session. The Sensex gained 7.07 points or 0.03% to settle at 25,337.56.
From the 30-share Sensex pack, 21 stocks rose, eight fell and one remained unchanged.
Index heavyweight Reliance Industries (RIL) rose 0.4%.
Dr Reddy's Laboratories dropped 3.88%. The stock was the biggest loser from the Sensex pack.
Asian Paints (down 2.85%), GAIL (India) (down 2.85%) and Lupin (down 2.21%) were the other major losers from the Sensex pack.
Sun Pharmaceutical Industries rose 3.76%. Sun Pharmaceutical Industries and AstraZeneca Pharma India on 23 March 2016, announced a partnership for the distribution of dapagliflozin, an innovative Type 2 diabetes medicine, in India.
Dapagliflozin is AstraZeneca India's leading diabetes medicine. Under the agreement, Sun Pharma will promote and distribute dapagliflozin under the brand name Oxra.
AstraZeneca India markets dapagliflozin under the brand name Forxiga and under the terms of the agreement, both companies will promote, market and distribute dapagliflozin in India under different brand names, as per the joint press release.
AstraZeneca will retain the intellectual property rights to dapagliflozin. Sun Pharma will also gain the rights to promote and distribute the combination of dapagliflozin with metformin under the brand name Oxramet after regulatory approval.
Index heavyweight and engineering and construction major L&T advanced 3.54%. The company announced winning orders worth Rs 3205 crore across its various businesses. The announcement was made on 23 March 2016.
Bharat Heavy Electricals (Bhel) rose 2.82%.
The BSE Capital goods index rose 3.7%, outperforming the Sensex.
IT stocks gained. TCS (up 1.95%), Infosys (up 1.47%), and Wipro (up 1.68%) edged higher.
The BSE IT index rose 1.07%, underperforming the Sensex.
Index heavyweight and housing finance major HDFC gained 3.14%.
NTPC shed 0.04%. The company announced on 21 March 2016 that unit-I of 250 megawatts (MW) of Nabinagar Thermal Power Station of Bhartiya Rail Bijlee Company, a subsidiary of the company, was commissioned on 20 March 2016. With this, the total installed capacity of Nabinagar Thermal Power Station has become 250 MW and the total installed capacity of NTPC group has become 45,798 MW. .
State-run coal-mining giant Coal India fell 0.02%.
FMCG major Hindustan Unilever (HUL) advanced 3.14%.
Bank stocks edged higher on expectations of a bigger rate cut of 50 basis points from the Reserve Bank of India (RBI) at its monetary policy review early next month after the government announced reduction in interest rates on various small savings schemes for Q1 June 2016 based on the prevailing G-Sec (government securities) yields. State Bank of India (SBI) (up 3.01%), HDFC Bank (up 1.96%), ICICI Bank (up 1.71%), and Axis Bank (up 0.37%) rose.
The BSE Bankex rose 1.44%, underperforming the Sensex.
Before the government's announcement of reduction in interest rates on small savings schemes, market participants were expecting a 25 basis points cut in policy rate from the RBI at its monetary policy review on 5 April 2016. After trading hours on Friday, 18 March 2016, the government announced that the interest rate on Public Provident Fund (PPF) has been slashed to 8.1% from 8.7%. The interest rate on Sukanya Samriddhi Account Scheme has been reduced to 8.6% from 9.2%. The interest rate on 5 Year Senior Citizens Savings Scheme has been cut to 8.6% from 9.3%. The quarterly revision of interest rates will ensure that interest rates under small savings schemes are more dynamically related to the current market rates, thereby enabling commercial banks to move their interest rates in line with current money market rates, the finance ministry said in a statement. The government had recently announced that it would revise interest rates on small saving schemes on quarterly basis against the earlier practice of annual revision.
The additional interest rate spreads ranging from 25 basis points to 100 basis points over the G-Sec yields which the Government allows on PPF, Senior Citizen Savings Scheme, Sukanya Samridhi Scheme, National Savings Certificate, five year time deposit and Monthly Income Scheme have been continued.
Auto stocks rose on hopes of a policy rate cut by the Reserve Bank of India at its monetary policy meeting early next month. Hero MotoCorp (up 1.32%), Bajaj Auto (up 2.4%), Mahindra & Mahindra (M&M) (up 1.7%), and Tata Motors (up 3.02%) gained.
Lower interest rates may help revive demand for vehicles. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
The BSE Auto index rose 2.85%, outperforming the Sensex.
Maruti Suzuki India gained 2.92%. The company on 22 March 2016 announced that it would start deliveries of its newly launched compact SUV Vitara Brezza to customers from 25 March 2016. The vehicles will be retailed from the company's over 1,800 sales outlets spread across India, Maruti Suzuki India said. Within the first fortnight of its launch, the new vehicle from the company has received around 70,000 customer enquiries and 20,000 bookings, it said.
Steel manufacturer Tata Steel gained 4.83%. The stock was the biggest gainer from the Sensex pack.
Index heavyweight and cigarette maker ITC declined 0.18%.
On the macro front, data released by the Reserve Bank of India (RBI) on 21 March 2016, showed that India's current account deficit (CAD) narrowed to 1.3% of GDP in Q3 December 2015 from 1.7% of GDP in Q2 September 2015 and 1.5% of GDP in Q3 December 2014. The contraction in CAD was primarily on account of a lower trade deficit. After moderating in Q2 September 2015, net foreign direct investment (FDI) again picked up and stood at $10.8 billion in Q3 December 2015. Net FDI inflows during April-December 2015 jumped 24.8% over the level during the corresponding period of the previous year.
The barometer index, the S&P BSE Sensex, rose 384.82 points or 1.54% to settle at 25,337.56. The 50-unit Nifty 50 index gained 112.15 points or 1.47% to settle at 7,716.50. The BSE Mid-Cap index rose 2,17%. The BSE Small-Cap index gained 1.87%. Both these indices outperformed the Sensex.
Trading for the week started on a strong note. Expectations of a bigger rate cut of 50 basis points from the Reserve Bank of India (RBI) at its monetary policy review early next month triggered a strong upmove on the domestic bourses on Monday, 21 March 2016. The Sensex rose 332.63 points or 1.33% to settle at 25,285.37.
Amid a divergent trend among various index constituents, key benchmark indices eked out small gains on Tuesday, 22 March 2016. The Sensex rose 45.12 points or 0.18% to settle at 25,330.49.
Key benchmark indices closed with small gains after what was a volatile trading session. The Sensex gained 7.07 points or 0.03% to settle at 25,337.56.
From the 30-share Sensex pack, 21 stocks rose, eight fell and one remained unchanged.
Index heavyweight Reliance Industries (RIL) rose 0.4%.
Dr Reddy's Laboratories dropped 3.88%. The stock was the biggest loser from the Sensex pack.
Asian Paints (down 2.85%), GAIL (India) (down 2.85%) and Lupin (down 2.21%) were the other major losers from the Sensex pack.
Sun Pharmaceutical Industries rose 3.76%. Sun Pharmaceutical Industries and AstraZeneca Pharma India on 23 March 2016, announced a partnership for the distribution of dapagliflozin, an innovative Type 2 diabetes medicine, in India.
Dapagliflozin is AstraZeneca India's leading diabetes medicine. Under the agreement, Sun Pharma will promote and distribute dapagliflozin under the brand name Oxra.
AstraZeneca India markets dapagliflozin under the brand name Forxiga and under the terms of the agreement, both companies will promote, market and distribute dapagliflozin in India under different brand names, as per the joint press release.
AstraZeneca will retain the intellectual property rights to dapagliflozin. Sun Pharma will also gain the rights to promote and distribute the combination of dapagliflozin with metformin under the brand name Oxramet after regulatory approval.
Index heavyweight and engineering and construction major L&T advanced 3.54%. The company announced winning orders worth Rs 3205 crore across its various businesses. The announcement was made on 23 March 2016.
Bharat Heavy Electricals (Bhel) rose 2.82%.
The BSE Capital goods index rose 3.7%, outperforming the Sensex.
IT stocks gained. TCS (up 1.95%), Infosys (up 1.47%), and Wipro (up 1.68%) edged higher.
The BSE IT index rose 1.07%, underperforming the Sensex.
Index heavyweight and housing finance major HDFC gained 3.14%.
NTPC shed 0.04%. The company announced on 21 March 2016 that unit-I of 250 megawatts (MW) of Nabinagar Thermal Power Station of Bhartiya Rail Bijlee Company, a subsidiary of the company, was commissioned on 20 March 2016. With this, the total installed capacity of Nabinagar Thermal Power Station has become 250 MW and the total installed capacity of NTPC group has become 45,798 MW. .
State-run coal-mining giant Coal India fell 0.02%.
FMCG major Hindustan Unilever (HUL) advanced 3.14%.
Bank stocks edged higher on expectations of a bigger rate cut of 50 basis points from the Reserve Bank of India (RBI) at its monetary policy review early next month after the government announced reduction in interest rates on various small savings schemes for Q1 June 2016 based on the prevailing G-Sec (government securities) yields. State Bank of India (SBI) (up 3.01%), HDFC Bank (up 1.96%), ICICI Bank (up 1.71%), and Axis Bank (up 0.37%) rose.
The BSE Bankex rose 1.44%, underperforming the Sensex.
Before the government's announcement of reduction in interest rates on small savings schemes, market participants were expecting a 25 basis points cut in policy rate from the RBI at its monetary policy review on 5 April 2016. After trading hours on Friday, 18 March 2016, the government announced that the interest rate on Public Provident Fund (PPF) has been slashed to 8.1% from 8.7%. The interest rate on Sukanya Samriddhi Account Scheme has been reduced to 8.6% from 9.2%. The interest rate on 5 Year Senior Citizens Savings Scheme has been cut to 8.6% from 9.3%. The quarterly revision of interest rates will ensure that interest rates under small savings schemes are more dynamically related to the current market rates, thereby enabling commercial banks to move their interest rates in line with current money market rates, the finance ministry said in a statement. The government had recently announced that it would revise interest rates on small saving schemes on quarterly basis against the earlier practice of annual revision.
The additional interest rate spreads ranging from 25 basis points to 100 basis points over the G-Sec yields which the Government allows on PPF, Senior Citizen Savings Scheme, Sukanya Samridhi Scheme, National Savings Certificate, five year time deposit and Monthly Income Scheme have been continued.
Auto stocks rose on hopes of a policy rate cut by the Reserve Bank of India at its monetary policy meeting early next month. Hero MotoCorp (up 1.32%), Bajaj Auto (up 2.4%), Mahindra & Mahindra (M&M) (up 1.7%), and Tata Motors (up 3.02%) gained.
Lower interest rates may help revive demand for vehicles. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
The BSE Auto index rose 2.85%, outperforming the Sensex.
Maruti Suzuki India gained 2.92%. The company on 22 March 2016 announced that it would start deliveries of its newly launched compact SUV Vitara Brezza to customers from 25 March 2016. The vehicles will be retailed from the company's over 1,800 sales outlets spread across India, Maruti Suzuki India said. Within the first fortnight of its launch, the new vehicle from the company has received around 70,000 customer enquiries and 20,000 bookings, it said.
Steel manufacturer Tata Steel gained 4.83%. The stock was the biggest gainer from the Sensex pack.
Index heavyweight and cigarette maker ITC declined 0.18%.
On the macro front, data released by the Reserve Bank of India (RBI) on 21 March 2016, showed that India's current account deficit (CAD) narrowed to 1.3% of GDP in Q3 December 2015 from 1.7% of GDP in Q2 September 2015 and 1.5% of GDP in Q3 December 2014. The contraction in CAD was primarily on account of a lower trade deficit. After moderating in Q2 September 2015, net foreign direct investment (FDI) again picked up and stood at $10.8 billion in Q3 December 2015. Net FDI inflows during April-December 2015 jumped 24.8% over the level during the corresponding period of the previous year.
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