Market edges higher in early trade

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Key benchmark indices edged higher in early trade. At 9:16 IST, the barometer index, the S&P was up 78.51 points or 0.28% at 27,914.42. The 50 index was currently up 19.95 points or 0.23% at 8,612.15.

The India Meteorological Department (IMD) in its monsoon update issued yesterday, 25 August 2016, said that for the country as a whole, cumulative rainfall during this year’s monsoon so far (till 24 August 2016) was 2% below the long period average (LPA).

In overseas stock markets, Asian stocks witnessed a mixed trend with most of the markets remained relatively flat throughout the week ahead of Federal Reserve Chairwoman Janet Yellen’s speech today, 26 August 2016, which could provide hints about the timing of the next rate hike from the Fed. US stocks registered small losses yesterday, 25 August 2016, with healthcare stocks extending previous trading session’s decline.

Globally, investors are awaiting Yellen’s speech today, 26 August 2016, which could provide hints about the timing of the next rate hike from the Fed. High US interest rates would pull money out of emerging markets and redirect it to the US. Yellen is due to speak at the Kansas City Fed’s annual Monetary Policy Symposium in Jackson Hole, Wyoming. Minutes from the Federal Open Market Committee’s (FOMC) July meeting showed officials were split on whether an increase in interest rate was needed soon.

Closer home, the market breadth indicating the overall health of the market was strong. On BSE, 728 shares rose and 255 shares declined. A total of 54 shares were unchanged. The BSE Mid-Cap index was currently up 0.38%. The BSE Small-Cap index was currently up 0.37%. Both these indices outperformed the Sensex.

Cement stocks were mixed. Shree Cement (down 0.46%) and Ambuja Cements (down 0.15%) edged lower. ACC (up 0.32%) and UltraTech Cement (up 0.75%) edged higher.

Grasim Industries was off 0.04%. Grasim has exposure to cement sector through its holding in UltraTech Cement.

State Bank of India (SBI) was down 0.26% at Rs 249.40. ICICI Bank was up 0.22% at Rs 247.70. The Reserve Bank of India (RBI) continued to classify these two banks as domestic systemically important banks (D-SIBs). The additional Common Equity Tier 1 (CET1) requirement for D-SIBs has already been phased-in from 1 April 2016 and would become fully effective from 1 April 2019. The additional CET1 requirement will be in addition to the capital conservation buffer. On account of being classified as D-SIB, there is additional CET1 requirement of 0.6% of Risk Weighted Assets (RWAs) for SBI and 0.2% of RWAs for ICICI Bank.

TCS rose 0.27% at Rs 2,556.90 after the company announced new software that enables retailers to leverage insightful data either from in-store sensors or other Internet of Things (IoT) devices to deepen relationships with customers through more personalized customer engagement strategies. The software helps established retailers compete more effectively for the loyalty of consumers. It is designed to counter the bombardment of consumers with random, irrelevant and untimely offers. Retailers are increasingly using IoT technologies to boost customer loyalty through customized marketing campaigns and to close sales – when, where and however the customer chooses. The new software enables retailers to build trusted consumer relationships over time by delivering valued, personalized experiences in the right context and driven by insights from a variety of real world and online data sources. The announcement was made after market hours yesterday, 25 August 2016.

National Aluminium Company (Nalco) was up 0.53% at Rs 47.40 after the manager to the company’s buyback offer made the public announcement for the buyback of equity shares. Nalco proposes to buyback upto 64.43 crore equity shares at Rs 44 per share on proportionate basis through the tender offer route. The buyback offer aggregates to Rs 2834.96 crore. The buyback offer size represents 22.15% of the aggregate of the fully paid-up share capital and free reserves, as per the audited accounts of the company for the financial year ended 31 March 2015. The buyback offer opens on 30 August 2016 and closes on 14 September 2016. The promoter of the company viz. the Government of India (GoI) intends to participate in the buyback offer. As on 30 June 2016, GoI held 80.93% stake in Nalco. The company’s board of directors had approved buyback on 25 May 2016.