Market extends recent gains on firm global stocks
Key benchmark indices logged gains on first trading day of the week as positive cues from global stocks aided the latest upmove on the domestic bourses. The barometer index, the S&P BSE Sensex, rose 104.22 points or 0.37% to settle at 28,182.57. The Nifty 50 index gained 28.20 points or 0.32% to settle at 8,711.35. The Sensex hit highest closing level in almost two-weeks. The Nifty hit highest closing level in almost sixteen months. Key indices remained in positive zone throughout the day. Key indices gained for the third day in a row today, 8 August 2016. Global stocks rose after upbeat US job data for July 2016.
The Sensex rose 104.22 points or 0.37% to settle at 28,182.57, its highest closing level since 28 July 2016. The index rose 148.03 points or 0.53% at the day's high of 28,226.38. The index rose 49.71 points or 0.18% at the day's low of 28,128.06.
The Nifty gained 28.20 points or 0.32% to settle at 8,711.35, its highest closing level since 15 April 2015. The index rose 40.35 points or 0.46% at the day's high of 8,723.50. The index rose 14.45 points or 0.17% at the day's low of 8,697.60.
The market breadth indicating the overall health of the market was positive. On BSE, 1,545 shares rose and 1,210 shares fell. A total of 154 shares were unchanged. The BSE Mid-Cap index rose 0.99%. The BSE Small-Cap index was gained 0.71%. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 3731 crore, higher than turnover of Rs 3687.67 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE Telecom index (down 2.3%), the S&P BSE Bankex (up 0.06%), the S&P BSE Basic Materials index (up 0.33%), the S&P BSE Teck index (up 0.24%), the S&P BSE Capital Goods index (up 0.07%), and the S&P BSE Healthcare index (up 0.14%) underperformed the Sensex.
The S&P BSE Finance index (up 0.52%), the S&P BSE Auto index (up 0.68%), the S&P BSE Industrials index (up 0.39%), the S&P BSE Metal index (up 0.64%), the S&P BSE Consumer Discretionary Goods & Services index (up 0.71%), the S&P BSE IT index (up 0.65%), the S&P BSE Power index (up 0.92%), the S&P BSE Utilities index (up 0.58%), the S&P BSE Realty index (up 0.88%), the S&P BSE Consumer Durables index (up 0.75%), the S&P BSE Energy index (up 1.4%), the S&P BSE FMCG index (up 0.54%) and the S&P BSE Oil & Gas index (up 1.54%) outperformed the Sensex.
In overseas stock markets, Asian and European stocks rose with sentiment underpinned by a stronger-than-expected US jobs report released on Friday, 5 August 2016. The US economy is the world's largest economy. Japanese stocks edged higher as the yen weakened against the dollar amid the dollar's broad strength driven up upbeat job data. The Nikkei 225 index closed 2.44% higher. Chinese shares shrugged off weak trade data. In mainland China, the Shanghai Composite settled 0.9% higher. In Hong Kong, the Hang Seng index ended 1.57% higher. China's exports continued to fall in dollar terms in July 2016 from a year earlier, as global demand for goods from the world's second-largest economy remained sluggish. Exports slid 4.4% in July 2016 from a year earlier, following a decline of 4.8% in June 2016.
Imports fell 12.5% in July 2016, compared with an 8.4% decrease in June 2016.
US stocks edged higher during the previous trading session on Friday, 5 August 2016, with the S&P 500 index and the Nasdaq Composite index settling at all-time closing highs, after a stronger-than-expected jobs report. The US economy added 255,000 jobs in July 2016, which follows a stellar gain in June, demonstrating that the economy is still healthy, despite relatively muted gross domestic product. The unemployment rate was unchanged at 4.9% even as the labor-force participation rate edged up to 62.8%, suggesting the labor market is tightening.
Auto stocks gained. Mahindra & Mahindra (M&M) (up 1.04%), Maruti Suzuki India (up 0.54%), TVS Motor Company (up 0.28%), Eicher Motors (up 0.31%) and Ashok Leyland (up 1.14%) gained. Tata Motors fell 0.34%.
Bajaj Auto edged higher in volatile trade. The stock rose marginally by 0.01% to Rs 2,860.05. The stock hit a high of Rs 2,917.40 in intraday trade, which is record for the counter. The stock hit a low of Rs 2,860.05 in intraday trade.
Hero MotoCorp rose in volatile trade after reporting good Q1 result. The stock rose 0.17% to Rs 3,440. The stock hit high of Rs 3,553.55 and low of Rs 3,410 in intraday trade. The company's net profit rose 18.13% to Rs 883.10 crore on 7.84% rise in total income to Rs 8131.04 crore in Q1 June 2016 over Q1 June 2015. The result was announced during market hours today, 8 August 2016. Hero MotoCorp said that the company reported its highest ever quarterly net profit in Q1 June 2016. EBIDTA (earnings before interest, depreciation, tax & amortization) margin rose to 16.63% in Q1 June 2016 from 15.09% in Q1 June 2015.
The company's chairman, managing director and chief executive officer, Pawan Munjal, said that the first quarter of this fiscal carried forward the growth trajectory from the previous quarter. With above-average monsoon so far and the implementation of the 7th Pay Commission recommendations, the management remains cautiously optimistic about the remaining months of the current financial year.
Infosys rose 0.62% to Rs 1,074 after a bulk deal of 8.99 lakh shares was executed on the scrip at Rs 1,067.35 per share at 09:42 IST on BSE.
Telecom stocks fell. Bharti Airtel (down 3.11%), MTNL (down 0.99%) and Tata Teleservices (Maharashtra) (down 0.46%) fell. Reliance Communications (RCom) rose 1.28%.
Idea Cellular lost 2.64%. The company's consolidated net profit slumped 74.21% to Rs 220.41 crore on 7.22% rise in total income to Rs 9552.44 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours today, 8 August 2016.
Hindalco Industries rose 3.69% to Rs 149.10 after the company's US subsidiary Novelis reported strong Q1 June 2016 earnings on Friday, 5 August 2016. The stock hit a high of Rs 151.90 in intraday trade, which is a 52-week high for the counter. The stock hit a low of Rs 145.70 in intraday trade. Novelis' adjusted net profit rose 37.5% to $33 million in Q1 June 2016 over Q1 June 2015. Net sales declined 13% to $2.3 billion in Q1 June 2016 over Q1 June 2015, due to lower average aluminum prices and local market premiums, as well as lower total shipments, which was partially offset by increased shipments of higher conversion premium products.
Novelis' adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) rose 26% to $268 million in Q1 June 2016 over Q1 June 2015, driven by higher productivity and lower costs associated with the start-up of new automotive finishing and recycling capacity in the prior year.
Most Private bank stocks rose. HDFC Bank (up 0.07%), Axis Bank (up 0.67%), IndusInd Bank (up 0.43%) and Yes Bank (up 0.49%) rose. Kotak Mahindra Bank fell 0.32%.
ICICI Bank fell 0.35%. S&P Global Ratings on 5 August 2016 said that it had affirmed its 'BBB-' long-term and 'A-3' short-term foreign currency issuer credit ratings on ICICI Bank. The outlook on the long-term rating is stable. S&P Global Ratings also affirmed its issue ratings on the bank's outstanding senior unsecured notes and Basel II compliant tier 2 hybrid notes. The ratings were affirmed because S&P expects ICICI Bank to maintain its strong business position supported by its good business diversity, and its satisfactory capitalization and funding, despite weakening asset quality, S&P Global Ratings said.
S&P Global Ratings has lowered ICICI Bank's stand-alone credit profile (SACP) to 'bbb-' from 'bbb'. This reflects S&P's view that the bank's asset quality will remain under pressure over the next 12 months. S&P has revised its assessment of ICICI Bank's risk position to moderate from adequate.
PSU bank stocks fell. Andhra Bank (down 4.98%), Allahabad Bank (down 2.15%), Punjab National Bank (down 0.45%), Bank of Baroda (down 0.22%), Canara Bank (down 0.48%), IDBI Bank (down 1.44%), Bank of India (down 1.12%) and Vijaya Bank (down 0.89%) dropped. State Bank of India (SBI) rose 0.11%.
Union Bank of India lost 6.49% after net profit fell 67.9% to Rs 166.32 crore on 1.4% decline in total income to Rs 8916.51 crore in Q1 June 2016 over Q1 June 2015. The result was announced on Saturday, 6 August 2016. Union Bank of India's domestic net interest margin (NIM) stood at 2.36% in Q1 June 2016 compared with 2.46% in Q1 June 2015. Global NIM stood at 2.28% in Q1 June 2016 as against 2.39% in Q1 June 2015.
The bank's average current and savings account (CASA) ratio improved to 29.5% in Q1 June 2016 from 27% in Q1 June 2015 and 29.2% in Q4 March 2016. Union Bank of India's gross non-performing assets (NPA) stood at Rs 27280.90 crore as on 30 June 2016 compared with Rs 24170.89 crore as on 31 March 2016 and Rs 14143.62 crore as on 30 June 2015. The ratio of gross NPA to gross advances stood at 10.16% as on 30 June 2016 as against 8.7% as on 31 March 2016 and 5.53% as on 30 June 2015. The ratio of net NPA to net advances stood at 6.16% as on 30 June 2016 compared with 5.25% as on 31 March 2016 and 3.08% as on 30 June 2015.
The bank's provisions and contingencies jumped 110.6% to Rs 1352.96 crore in Q1 June 2016 over Q1 June 2015. Provision coverage ratio stood at 50% as on 30 June 2016 as against 51% as on 31 March 2016 and 58% as on 30 June 2015.
Index heavyweight Reliance Industries (RIL) gained 1.49%.
Max Financial Services declined 1.53%. HDFC rose 1.7%. Max Financial Services (MFSL) announced that its board will consider the proposed scheme of arrangement amongst Max Financial Services, Max Life Insurance Company (MLIC) and HDFC Life Insurance Company and consequently, including Max India Limited (formerly Taurus Ventures Limited) as a party to such scheme for certain commercial reasons. The board will discuss it along with Q1 June 2016 results. It may be recalled that MFSL's board in its meeting held on 17 June 2016 approved entering into a confidentiality, exclusivity and standstill agreement to evaluate a potential combination through a merger of MLIC and MFSL into HDFC Life by way of a scheme of arrangement.
HDFC Life is a partnership between HDFC, India's leading housing finance institution and Standard Life, a global long term investment savings player. Currently HDFC holds 62% and Standard Life (Mauritius Holdings) 2006 holds 35% of equity in HDFC Life, while the rest is held by others.
MLIC is a joint venture between MFSL and Mitsui Sumitomo Insurance (MSI), a Japan headquartered global leader in insurance. MFSL holds 68% equity in MLIC, while MSI holds 26%.
PSU OMCs gained. BPCL (up 3.06%) and Indian Oil Corporation (up 1.22%) gained.
HPCL gained after the Reserve Bank of India (RBI) raise the ceiling on investment in the company's equity capital by foreign institutional investors (FIIs) to 40% from 24%. The stock was up 4.54% at Rs 1,314.10. The stock hit a high of Rs 1,320.50 in intraday trade, which is a record high for the counter. The stock hit a low of Rs 1,270.90 in intraday trade. The RBI raised the ceiling on investment by FIIs in HPCL after approval for the proposal from the company's board of directors and shareholders.
The Sensex and the Nifty gained for the third day in a row today, 8 August 2016. The Sensex rose 485.06 points or 1.75% in three sessions, from a closing of 27,697.51 on 3 August 2016. The Sensex has risen 130.71 points or 0.46% in August 2016 so far (till 8 August 2016). The Sensex has risen 2,065.03 points or 7.9% in calendar year 2016 so far (till 8 August 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 5,687.96 points or 25.28%. The Sensex is off 235.02 points or 0.82% from a 52-week high of 28,417.59 hit on 10 August 2015. The Sensex is off 1,842.17 points or 6.13% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, the amendments made by Rajya Sabha in the constitutional amendment bill on Goods and Services Tax (GST) will be taken up for its passage by the Lok Sabha this week. The amended GST constitutional amendment bill was passed by the Rajya Sabha last week. The passage of the constitutional amendment bill in the Rajya Sabha kicks off a legislative marathon in which the Parliament and state assemblies will need to pass further laws setting the rate and scope of the GST. 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.
On the macro front, the government in consultation with the Reserve Bank of India (RBI) has notified consumer price inflation target of 4% with upper tolerance level of 6% and lower tolerance level of 2% to be achieved by the Reserve Bank of India (RBI). The government notified the inflation target range of 2% to 6% in the Official Gazette on Friday, 5 August 2016 and it will be valid until 31 March 2021. The inflation target is to be fixed by the central government in consultation with the RBI once in every five years. According a statement from to the finance ministry, the key advantage of a range around a target is that it allows the Monetary Policy Committee (MPC) to recognise the short run trade-offs between inflation and growth but enables it to pursue the inflation target in long run over the course of business cycle. The range also accommodates data limitations, projection errors, short-run supply gaps and instability in the agriculture production, an important factor for CPI inflation, as food articles have a major weight in the CPI indices. It also allows to accommodate unanticipated short-term shocks even while nudging public inflation expectations on the centre of the range, to which the monetary policy will return the economy over the medium term, leading to transparency and predictability.
If the average inflation is more than the upper tolerance level of 4% + 2%, that is, 6%, or less than the lower tolerance level of 4% – 2%, that is 2%, for any three consecutive quarters, it would mean a failure to achieve the inflation target. Where RBI fails to meet the inflation target, in terms of the provisions of RBI Act, it shall set out a report to the Central Government stating the reasons for failure to achieve the inflation target, remedial actions proposed to be taken by RBI and an estimate of the time-period within which the inflation target shall be achieved pursuant to timely implementation of proposed remedial actions.
The government has initiated the process of shifting to a framework of Monetary Policy Committee (MPC) for deciding interest rates. RBI currently sets the rates. The RBI is set to announce monetary policy decision at 11:00 IST tomorrow, 9 August 2016, after a policy review.
The Sensex rose 104.22 points or 0.37% to settle at 28,182.57, its highest closing level since 28 July 2016. The index rose 148.03 points or 0.53% at the day's high of 28,226.38. The index rose 49.71 points or 0.18% at the day's low of 28,128.06.
The Nifty gained 28.20 points or 0.32% to settle at 8,711.35, its highest closing level since 15 April 2015. The index rose 40.35 points or 0.46% at the day's high of 8,723.50. The index rose 14.45 points or 0.17% at the day's low of 8,697.60.
The market breadth indicating the overall health of the market was positive. On BSE, 1,545 shares rose and 1,210 shares fell. A total of 154 shares were unchanged. The BSE Mid-Cap index rose 0.99%. The BSE Small-Cap index was gained 0.71%. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 3731 crore, higher than turnover of Rs 3687.67 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE Telecom index (down 2.3%), the S&P BSE Bankex (up 0.06%), the S&P BSE Basic Materials index (up 0.33%), the S&P BSE Teck index (up 0.24%), the S&P BSE Capital Goods index (up 0.07%), and the S&P BSE Healthcare index (up 0.14%) underperformed the Sensex.
The S&P BSE Finance index (up 0.52%), the S&P BSE Auto index (up 0.68%), the S&P BSE Industrials index (up 0.39%), the S&P BSE Metal index (up 0.64%), the S&P BSE Consumer Discretionary Goods & Services index (up 0.71%), the S&P BSE IT index (up 0.65%), the S&P BSE Power index (up 0.92%), the S&P BSE Utilities index (up 0.58%), the S&P BSE Realty index (up 0.88%), the S&P BSE Consumer Durables index (up 0.75%), the S&P BSE Energy index (up 1.4%), the S&P BSE FMCG index (up 0.54%) and the S&P BSE Oil & Gas index (up 1.54%) outperformed the Sensex.
In overseas stock markets, Asian and European stocks rose with sentiment underpinned by a stronger-than-expected US jobs report released on Friday, 5 August 2016. The US economy is the world's largest economy. Japanese stocks edged higher as the yen weakened against the dollar amid the dollar's broad strength driven up upbeat job data. The Nikkei 225 index closed 2.44% higher. Chinese shares shrugged off weak trade data. In mainland China, the Shanghai Composite settled 0.9% higher. In Hong Kong, the Hang Seng index ended 1.57% higher. China's exports continued to fall in dollar terms in July 2016 from a year earlier, as global demand for goods from the world's second-largest economy remained sluggish. Exports slid 4.4% in July 2016 from a year earlier, following a decline of 4.8% in June 2016.
Imports fell 12.5% in July 2016, compared with an 8.4% decrease in June 2016.
US stocks edged higher during the previous trading session on Friday, 5 August 2016, with the S&P 500 index and the Nasdaq Composite index settling at all-time closing highs, after a stronger-than-expected jobs report. The US economy added 255,000 jobs in July 2016, which follows a stellar gain in June, demonstrating that the economy is still healthy, despite relatively muted gross domestic product. The unemployment rate was unchanged at 4.9% even as the labor-force participation rate edged up to 62.8%, suggesting the labor market is tightening.
Auto stocks gained. Mahindra & Mahindra (M&M) (up 1.04%), Maruti Suzuki India (up 0.54%), TVS Motor Company (up 0.28%), Eicher Motors (up 0.31%) and Ashok Leyland (up 1.14%) gained. Tata Motors fell 0.34%.
Bajaj Auto edged higher in volatile trade. The stock rose marginally by 0.01% to Rs 2,860.05. The stock hit a high of Rs 2,917.40 in intraday trade, which is record for the counter. The stock hit a low of Rs 2,860.05 in intraday trade.
Hero MotoCorp rose in volatile trade after reporting good Q1 result. The stock rose 0.17% to Rs 3,440. The stock hit high of Rs 3,553.55 and low of Rs 3,410 in intraday trade. The company's net profit rose 18.13% to Rs 883.10 crore on 7.84% rise in total income to Rs 8131.04 crore in Q1 June 2016 over Q1 June 2015. The result was announced during market hours today, 8 August 2016. Hero MotoCorp said that the company reported its highest ever quarterly net profit in Q1 June 2016. EBIDTA (earnings before interest, depreciation, tax & amortization) margin rose to 16.63% in Q1 June 2016 from 15.09% in Q1 June 2015.
The company's chairman, managing director and chief executive officer, Pawan Munjal, said that the first quarter of this fiscal carried forward the growth trajectory from the previous quarter. With above-average monsoon so far and the implementation of the 7th Pay Commission recommendations, the management remains cautiously optimistic about the remaining months of the current financial year.
Infosys rose 0.62% to Rs 1,074 after a bulk deal of 8.99 lakh shares was executed on the scrip at Rs 1,067.35 per share at 09:42 IST on BSE.
Telecom stocks fell. Bharti Airtel (down 3.11%), MTNL (down 0.99%) and Tata Teleservices (Maharashtra) (down 0.46%) fell. Reliance Communications (RCom) rose 1.28%.
Idea Cellular lost 2.64%. The company's consolidated net profit slumped 74.21% to Rs 220.41 crore on 7.22% rise in total income to Rs 9552.44 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours today, 8 August 2016.
Hindalco Industries rose 3.69% to Rs 149.10 after the company's US subsidiary Novelis reported strong Q1 June 2016 earnings on Friday, 5 August 2016. The stock hit a high of Rs 151.90 in intraday trade, which is a 52-week high for the counter. The stock hit a low of Rs 145.70 in intraday trade. Novelis' adjusted net profit rose 37.5% to $33 million in Q1 June 2016 over Q1 June 2015. Net sales declined 13% to $2.3 billion in Q1 June 2016 over Q1 June 2015, due to lower average aluminum prices and local market premiums, as well as lower total shipments, which was partially offset by increased shipments of higher conversion premium products.
Novelis' adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) rose 26% to $268 million in Q1 June 2016 over Q1 June 2015, driven by higher productivity and lower costs associated with the start-up of new automotive finishing and recycling capacity in the prior year.
Most Private bank stocks rose. HDFC Bank (up 0.07%), Axis Bank (up 0.67%), IndusInd Bank (up 0.43%) and Yes Bank (up 0.49%) rose. Kotak Mahindra Bank fell 0.32%.
ICICI Bank fell 0.35%. S&P Global Ratings on 5 August 2016 said that it had affirmed its 'BBB-' long-term and 'A-3' short-term foreign currency issuer credit ratings on ICICI Bank. The outlook on the long-term rating is stable. S&P Global Ratings also affirmed its issue ratings on the bank's outstanding senior unsecured notes and Basel II compliant tier 2 hybrid notes. The ratings were affirmed because S&P expects ICICI Bank to maintain its strong business position supported by its good business diversity, and its satisfactory capitalization and funding, despite weakening asset quality, S&P Global Ratings said.
S&P Global Ratings has lowered ICICI Bank's stand-alone credit profile (SACP) to 'bbb-' from 'bbb'. This reflects S&P's view that the bank's asset quality will remain under pressure over the next 12 months. S&P has revised its assessment of ICICI Bank's risk position to moderate from adequate.
PSU bank stocks fell. Andhra Bank (down 4.98%), Allahabad Bank (down 2.15%), Punjab National Bank (down 0.45%), Bank of Baroda (down 0.22%), Canara Bank (down 0.48%), IDBI Bank (down 1.44%), Bank of India (down 1.12%) and Vijaya Bank (down 0.89%) dropped. State Bank of India (SBI) rose 0.11%.
Union Bank of India lost 6.49% after net profit fell 67.9% to Rs 166.32 crore on 1.4% decline in total income to Rs 8916.51 crore in Q1 June 2016 over Q1 June 2015. The result was announced on Saturday, 6 August 2016. Union Bank of India's domestic net interest margin (NIM) stood at 2.36% in Q1 June 2016 compared with 2.46% in Q1 June 2015. Global NIM stood at 2.28% in Q1 June 2016 as against 2.39% in Q1 June 2015.
The bank's average current and savings account (CASA) ratio improved to 29.5% in Q1 June 2016 from 27% in Q1 June 2015 and 29.2% in Q4 March 2016. Union Bank of India's gross non-performing assets (NPA) stood at Rs 27280.90 crore as on 30 June 2016 compared with Rs 24170.89 crore as on 31 March 2016 and Rs 14143.62 crore as on 30 June 2015. The ratio of gross NPA to gross advances stood at 10.16% as on 30 June 2016 as against 8.7% as on 31 March 2016 and 5.53% as on 30 June 2015. The ratio of net NPA to net advances stood at 6.16% as on 30 June 2016 compared with 5.25% as on 31 March 2016 and 3.08% as on 30 June 2015.
The bank's provisions and contingencies jumped 110.6% to Rs 1352.96 crore in Q1 June 2016 over Q1 June 2015. Provision coverage ratio stood at 50% as on 30 June 2016 as against 51% as on 31 March 2016 and 58% as on 30 June 2015.
Index heavyweight Reliance Industries (RIL) gained 1.49%.
Max Financial Services declined 1.53%. HDFC rose 1.7%. Max Financial Services (MFSL) announced that its board will consider the proposed scheme of arrangement amongst Max Financial Services, Max Life Insurance Company (MLIC) and HDFC Life Insurance Company and consequently, including Max India Limited (formerly Taurus Ventures Limited) as a party to such scheme for certain commercial reasons. The board will discuss it along with Q1 June 2016 results. It may be recalled that MFSL's board in its meeting held on 17 June 2016 approved entering into a confidentiality, exclusivity and standstill agreement to evaluate a potential combination through a merger of MLIC and MFSL into HDFC Life by way of a scheme of arrangement.
HDFC Life is a partnership between HDFC, India's leading housing finance institution and Standard Life, a global long term investment savings player. Currently HDFC holds 62% and Standard Life (Mauritius Holdings) 2006 holds 35% of equity in HDFC Life, while the rest is held by others.
MLIC is a joint venture between MFSL and Mitsui Sumitomo Insurance (MSI), a Japan headquartered global leader in insurance. MFSL holds 68% equity in MLIC, while MSI holds 26%.
PSU OMCs gained. BPCL (up 3.06%) and Indian Oil Corporation (up 1.22%) gained.
HPCL gained after the Reserve Bank of India (RBI) raise the ceiling on investment in the company's equity capital by foreign institutional investors (FIIs) to 40% from 24%. The stock was up 4.54% at Rs 1,314.10. The stock hit a high of Rs 1,320.50 in intraday trade, which is a record high for the counter. The stock hit a low of Rs 1,270.90 in intraday trade. The RBI raised the ceiling on investment by FIIs in HPCL after approval for the proposal from the company's board of directors and shareholders.
The Sensex and the Nifty gained for the third day in a row today, 8 August 2016. The Sensex rose 485.06 points or 1.75% in three sessions, from a closing of 27,697.51 on 3 August 2016. The Sensex has risen 130.71 points or 0.46% in August 2016 so far (till 8 August 2016). The Sensex has risen 2,065.03 points or 7.9% in calendar year 2016 so far (till 8 August 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 5,687.96 points or 25.28%. The Sensex is off 235.02 points or 0.82% from a 52-week high of 28,417.59 hit on 10 August 2015. The Sensex is off 1,842.17 points or 6.13% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, the amendments made by Rajya Sabha in the constitutional amendment bill on Goods and Services Tax (GST) will be taken up for its passage by the Lok Sabha this week. The amended GST constitutional amendment bill was passed by the Rajya Sabha last week. The passage of the constitutional amendment bill in the Rajya Sabha kicks off a legislative marathon in which the Parliament and state assemblies will need to pass further laws setting the rate and scope of the GST. 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.
On the macro front, the government in consultation with the Reserve Bank of India (RBI) has notified consumer price inflation target of 4% with upper tolerance level of 6% and lower tolerance level of 2% to be achieved by the Reserve Bank of India (RBI). The government notified the inflation target range of 2% to 6% in the Official Gazette on Friday, 5 August 2016 and it will be valid until 31 March 2021. The inflation target is to be fixed by the central government in consultation with the RBI once in every five years. According a statement from to the finance ministry, the key advantage of a range around a target is that it allows the Monetary Policy Committee (MPC) to recognise the short run trade-offs between inflation and growth but enables it to pursue the inflation target in long run over the course of business cycle. The range also accommodates data limitations, projection errors, short-run supply gaps and instability in the agriculture production, an important factor for CPI inflation, as food articles have a major weight in the CPI indices. It also allows to accommodate unanticipated short-term shocks even while nudging public inflation expectations on the centre of the range, to which the monetary policy will return the economy over the medium term, leading to transparency and predictability.
If the average inflation is more than the upper tolerance level of 4% + 2%, that is, 6%, or less than the lower tolerance level of 4% – 2%, that is 2%, for any three consecutive quarters, it would mean a failure to achieve the inflation target. Where RBI fails to meet the inflation target, in terms of the provisions of RBI Act, it shall set out a report to the Central Government stating the reasons for failure to achieve the inflation target, remedial actions proposed to be taken by RBI and an estimate of the time-period within which the inflation target shall be achieved pursuant to timely implementation of proposed remedial actions.
The government has initiated the process of shifting to a framework of Monetary Policy Committee (MPC) for deciding interest rates. RBI currently sets the rates. The RBI is set to announce monetary policy decision at 11:00 IST tomorrow, 9 August 2016, after a policy review.
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