Sensex, Nifty end rangebound session flat after RBI policy


3.30 pm Market Closing: Benchmark indices ended rangebound session on a flat note after the RBI maintained status quo and changed policy stance to neutral from accommodative.

The Sensex was down 45.24 points at 28289.92 and the Nifty gained 0.75 points at 8769.05.

The broader markets outperformed, with the BSE Midcap index rising 0.5 percent. About 1509 shares advanced against 1365 declining shares on the exchange.

HDFC Bank and SBI gained half a percent while ICICI Bank, Axis Bank and HDFC were down 0.5-0.9 percent.

3:29 pm Bank index recovered as HDFC Bank, SBI and Bank of Baroda gained 0.2 percent each.

Yes Bank jumped 1.5 percent and Federal Bank was up 0.8 percent.

3:27 pm Earnings: State-owned Punjab & Sind Bank reported a rise of 10.2 percent in net profit at Rs 77.51 crore for the third quarter ended December 2016, on lower provisioning for bad assets.

The bank had registered a net profit of Rs 70.32 crore in the corresponding October-December period of previous fiscal.

Total income of the bank, however, fell to Rs 2,158.01 crore during the quarter under review from Rs 2,260.56 crore a year ago, the bank said in a regulatory filing.

On assets front, bank’s gross non-performing assets (NPAs) were higher at 9.40 percent of the gross advances for the quarter, against 5.29 percent a year ago.

While, net NPAs increased to 6.84 percent from 3.71 percent year earlier.

3:24 pm Market Expert: Motilal Oswal, Chairman & MD, Motilal Oswal Financial Services says markets would react bit nervously to this stance and he thinks it will correct marginally, to settle around 8500-8600 levels.

From the long term perspective corporate earnings are showing some green shoots as against the weak expectation because of demonetisation. This correction should be used as an opportunity to deploy more money in the equity markets from the long term perspective, he says.

RBI Governor once again decided not to bite the bullet. This is now becoming extreme dovish stance from RBI, Oswal says.

“Cut of 25 bps was widely expected and would have uplifted the sentiments. At this juncture, post long stint of shrinking economy and then Demon, people were postponing the demand. This rate cut was necessary from the perspective of bringing that demand back in the system,” he explains.

3:21 pm Expert view: Mahendra Kumar Jajoo of Mirae Asset Global Investments (India) says  in line with expectations, RBI kept the key policy rates unchanged, emphasising the neutral stance at the moment.

Given that the main guiding factors of last policy review including global uncertainty, rising oil prices and a sticky core inflation largely remained in play since, the hold on rates is in line with broader guidance provided by RBI then, he says.

RBI also indicated its commitment to ensure an efficient and appropriate liquidity management, suggesting the short term rates may inch slightly higher and align more closely with repo rate in coming months.

After the initial knee-jerk reaction, he expects bond yields to stabilise and take clues from developments in global markets in near term.

3:17 pm Market recovers: Equity benchmarks recovered post policy losses, with the Nifty getting back above 8750.

The 30-share BSE Sensex was down 5.50 points at 28329.66 and the 50-share NSE Nifty gained 13.65 points at 8781.95.

About 1479 shares advanced against 1369 declining shares on the BSE.

3:14 pm Bond yields: India’s benchmark 10-year bond yield rose as much as 25 basis points after the central bank kept the policy rate on hold for a second meeting in a row and changed its stance from “accommodative” to “neutral.”

3:13 pm CPI inflation is expected to remain in the range of 4-4.5 percent in first half of FY18 and 4.5-5 percent in second half of FY18.

3:11 pm RBI says it is committed to ensuring efficient and appropriate liquidity management with all the instruments at its command to ensure close alignment of the WACR with the policy rate, improved transmission of policy impulses to lending rates, and adequate flow of credit to productive sectors of the economy.

Surplus liquidity should decline with progressive remonetisation. Nonetheless, the currently abundant liquidity with banks is likely to persist into the early months of 2017-18, it adds.

3:09 pm Among major banking & financial stocks, ICICI Bank, Axis Bank, HDFC, HDFC Bank, SBI, Bank of Baroda and Punjab National Bank were down 0.5-1.5 percent.

3:07 pm Next policy meeting: Six members of Monetary Policy Committee voted in favour of the monetary policy decision, the RBI says.

MPC’s next policy meeting is scheduled on April 5 and 6, 2017.

3:05 pm RBI Governor Urjit Patel says several global developments such as oil prices that could be enhanced by geopolitical tensions.

Global Food Index has risen and full rollout of macro policies are still awaited, he says.

3:03 pm RBI says weekly withdrawal limit is set at Rs 50,000 from February 20 to March 13.

2:59 pm Market Update: Benchmark indices remained under pressure, with the Sensex down 104.30 points at 28230.86 and the Nifty down 23.50 points at 8744.80.

Nifty Bank index fell nearly a percent on profit booking after RBI kept repo rate unchanged and changed monetary policy stance from accommodative to neutral.

2:56 pm The Monetary Policy Committee believes that the environment for timely transmission of policy rates to banks lending rates will be considerably improved if  the banking sector’s non-performing assets (NPAs) are resolved more quickly and efficiently; recapitalisation of the banking sector is hastened; and the formula for adjustments in the interest rates on small savings schemes to changes in yields on government securities of corresponding maturity is fully implemented, the RBI says.

2:50 pm RBI governor Urjit Patel says there will be no limit on cash withdrawal from saving accounts from March 13.

2:47 pm The Monetary Policy Committee decided to change the stance from accommodative to neutral while keeping the policy rate on hold to assess how the transitory effects of demonetisation on inflation and the output gap play out.

2:45 pm CPI inflation: The Monetary Policy Committee remains committed to bringing headline inflation closer to 4.0 percent on a durable basis and in a calibrated manner. This requires further significant decline in inflation expectations, especially since the services component of inflation that is sensitive to wage movements has been sticky, RBI says.

2:39 pm RBI says GVA growth for 2016-17 is projected at 6.9 percent with risks evenly balanced around it. Growth is expected to recover sharply in 2017-18 on account of several factors like bounce back in discretionary consumer demand; recovery in various sectors; and pick-up in both consumption & investment demand on rate transmission.

Accordingly, GVA growth for 2017-18 is projected at 7.4 per cent, with risks evenly balanced.

2:36 pm “The decision of the Monetary Policy Committee is consistent with a neutral stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 percent by Q4 of 2016-17 and the medium-term target of 4 per cent within a band of +/- 2 per cent, while supporting growth,” the RBI says.

2:32 pm Market update: Benchmark indices saw profit booking after RBI maintained status quo. The 30-share BSE Sensex was down 114.84 points at 28220.32 and the 50-share NSE Nifty fell 27.90 points to 8740.40.

The Indian rupee gained 5 paise at 67.35 against the US dollar.

2:31 pm The Reserve Bank of India has kept its repo rate unchanged at 6.25 percent.

The apex bank sees current account deficit below 1 percent of GDP in FY17.

2:29 pm Earnings estimates: Two-wheeler maker Hero Motocorp’s quarterly earnings are expected to be weak due to demonetisation. Profit is seen falling 15.8 percent year-on-year to Rs 675.2 crore and revenue may decline 13.2 percent to Rs 6,328 crore in the quarter ended December 2016, impacted by lower sales volumes.

The company saw a severe drop in retail sales during the quarter and volumes were impacted the most in its 2-wheeler segment due to demonetisation.

2:23 pm Earnings: Tata Chemicals’ third quarter profit on consolidated basis jumped to Rs 318.4 crore from Rs 241.8 crore year-on-year, driven by operational performance.

Revenue fell 12.4 percent to Rs 3,495 crore from Rs 3,991.2 crore while operating profit increased 23.9 percent to Rs 583.4 crore and margin expanded by 490 basis points to 16.7 percent YoY.

2:20 pm FDI investment zooms: With the government taking steps to improve ease of doing business and relax regulations, foreign direct investment into the country surged by 60 percent to USD 4.68 billion in November 2016.

The FDI stood at USD 2.93 billion in November 2015.

During the period, India received maximum FDI from Singapore, Mauritius, the UK, the US, the Netherlands and Japan, an official said.

Cumulatively, India attracted USD 32.49 billion foreign inflows in April-November period of the current fiscal as against USD 24.81 billion in the same period previous year.

2:10 pm Infosys’ governance woes: After some co-founders wrote a letter to the board of IT major company seeking a review of corporate governance practices, it is emerging that they are keen to install ‘value-based people’ who have a deeper understanding of the company on the board.

The founders, including Narayana Murthy, Kris Gopalakrishnan and Nandan Nilekani, had informally suggested names like former HR head Mohandas Pai and former Chief Financial Officer V Balakrishnan as possible board additions, sources close to the development have told CNBC-TV18.

However, the board of the company rejected the suggestions.

Later, Infosys founders also suggested the name of Marti G Subrahmanyam, who was part of Infosys till 2011, as a possible addition to the board.

2:05 pm Max Ventures share allotment: Max group firm Max Ventures and Industries (MAXVIL) will allot over 1.55 crore shares on a preferential basis to America’s largest life insurance firm New York Life International Holdings Ltd.

The decision was taken as per special business of the company’s Extraordinary General Meeting held yesterday.

Thus, at share close price of Rs 69.30, the estimated deal stands at around Rs 107.58 crore.

In a regulatory filing, MAXVIL said it transacted and passed the special business “to issue 1,55,23,870 equity shares on a preferential basis to New York Life International Holdings Ltd.” Besides, over 34 lakh warrants would be issued on a preferential basis to Siva Enterprises Pvt Ltd.

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2:00 pm Market Check

The market remained lacklustre in afternoon trade on caution ahead of monetary policy committee decision.

Edelweiss foresees a 25bps cut in repo rate. “The domestic macroeconomic backdrop remains one of benign inflation (with CPI likely to undershoot RBI’s indicative trajectory), continued fiscal consolidation (fiscal impulse is modestly negative) and sustained weakness in private capex,” it reasons.

The 30-share BSE Sensex was down 36.93 points at 28298.23 and the 50-share NSE Nifty fell 4 points to 8764.30. About 1461 shares advanced against 1314 declining shares on the BSE.

Bourses in Europe were higher as the earnings season continued to be the main focus for investors.