Sensex trades flat, Nifty hovers around 8,100 as bank stocks tumble

The benchmark indices were trading flat on Monday, tracking muted trend seen in Asian markets after oil prices tumbled, while back home Reserve Bank of India (RBI) jacking up the cash reserve ratio (CRR) on incremental deposits also impacted the sentiment.

At 10:53 am, the S&P BSE Sensex was trading at 26,329, up 13 points, while Nifty50 was quoting 8,177, up 3 points. 

Market breadth, however, remained positive with 990 advances over 455 declines on the BSE.

"Technically, Nifty is facing a strong resistance of 8,140 levels whereas the support is placed at 8,040-8,000 mark. Today, if Nifty fails to close below 8,040-8,080 levels then selling pressure may drag the Nifty back towards 7,940-7,900 levels in coming trading session. On the other side, 8140 will act as resistance. Overall, market view is a cautious trade with a strict stoploss," said brokerage Nirmal Bang in a technical note.


Stocks and sectors

Banking stocks were the top losers with Nifty Bank shedding nearly 2%, led by losses in PNB, SBI, Bank of India and Bank of Baroda. The fall came after RBI's diktat to banks on Saturday to maintain an incremental cash reserve ratio (CRR) requirement on deposits with retrospective effect.

IT stocks such as TCS, Wipro and Infosys slipped with BSE IT index losing 0.24%. Other sectoral losers included BSE Finance and BSE Teck.

Shares of SpiceJet shed 2% even as the aviation firm reported its seventh straight quarter of profits with a profit of Rs 59 crore in the September quarter, a jump of 103% year-on-year. 

Among gainers, packaging company Uflex surged over 4% after reporting 16.76% rise in consolidated net profit to Rs 90.35 crore for the quarter ended on September 30, 2016. It had posted a net profit of Rs 77.38 crore for July-September quarter in the year-ago period. 

Aurobindo Pharma inched up after the company said its French subsidiary announced the signing of an agreement to acquire select commercial products in France from Teva.
 

RBI jacks up CRR

In order to absorb the excess liquidity in the banking system following demonetisation of high value notes, the RBI has asked banks to maintain incremental CRR of 100% on deposits received between September 16, and November 11 for the fortnight beginning Saturday. 

CRR is the portion of the deposits which banks are required to park to the RBI. Currently, it is at four per cent.

About Rs 3.5 lakh crore came into bank coffers as deposits during this period, which will now need to be maintained as cash, which means they will have to pay at least 4% savings rate on these deposits, but will not get anything in return.

Oil prices tumble

Oil prices tumbled on Monday on worries that producer countries may not agree on a deal to cut output.

Brent crude futures fell 1.9% in early Monday trade to $46.29 a barrel, after having slipped 3.6% on Friday on rising doubts over whether the Organization of the Petroleum Exporting Countries will reach an output deal.

Saudi Arabia said on Friday it will not attend talks on Monday with non-OPEC producers to discuss supply cuts.

Global markets

The fall in oil prices pressured US stocks and the dollar as traders reversed their "Trumpflation" trade as weak oil prices would reduce pressure on US interest rates to rise.

US stock futures slipped 0.2% n early trade while Japan's Nikkei fell 0.5%. China's Shanghai Composite and Hong Kong's Hang Seng index, on the other hand, added 0.5% and 0.7%, respectively.

Shares in Australia and South Korea also dropped about 0.3%, though MSCI's broadest index of Asia-Pacific shares outside Japan as flat as a weaker dollar offset losses in local share prices.