Key indices further trim losses

Key benchmark indices further trimmed intraday losses in mid-afternoon trade, with gains in European stocks aiding intraday recovery on the domestic bourses. At 14:15 IST, the barometer index, the S&P BSE Sensex, was down 60.69 points or 0.22% at 28,016.31. The Nifty 50 index was currently down 24.95 points or 0.29% at 8,641.95. The Sensex was currently trading above the psychologically important 28,000 level. The Sensex has alternately swung above and below that level in intraday trade so far after falling below that mark in morning trade.

Meanwhile, the government on Saturday, 20 August 2016, named Reserve Bank of India (RBI) deputy governor Urjit Patel as new RBI governor. Patel is known for his hawkish view on inflation just like Raghuram Rajan whose term as the RBI governor ends on 4 September 2016. Patel will take charge as RBI governor for a 3 year term from 4 September 2016. Patel handles the monetary policy department as the RBI deputy governor. By naming Patel who is a deputy governor at the central bank as the new RBI governor, the government is sending signal to markets that there will be continuity of central bank's policies.

The government early this month notified consumer price inflation target of 4% with upper tolerance level of 6% and lower tolerance level of 2% to be achieved by RBI. This target is valid until 31 March 2021.

In overseas stock markets, European stocks edged higher albeit with caution ahead of the US Federal Reserve's Jackson Hole meeting later this week which could produce some hints about the timing of a further interest rate hike. Most Asian stocks edged lower amid uncertainty whether the US Federal Reserve is readying an interest rate hike next month. US stocks registered small losses on Friday, 19 August 2016, with traders holding their horses ahead of a speech from Federal Reserve chair Janet Yellen at Jackson Hole later this week. Yellen's speech at the Kansas City Fed's annual Monetary Policy Symposium in Jackson Hole, Wyoming is scheduled on Friday, 26 August 2016. 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 negative. On BSE, 1,345 shares declined and 1,243 shares rose. A total of 191 shares were unchanged. The BSE Mid-Cap index was currently down 0.21%. The decline in this index was lower than the Sensex's decline in percentage terms. The BSE Small-Cap index was currently unchanged.

Realty stocks witnessed a mixed trend. DLF (down 1.58%), Housing Development & Infrastructure (down 1.73%), Unitech (down 0.96%), Sobha (down 0.42%) and Prestige Estates Projects (down 0.08%) edged lower. D B Realty (up 3.11%), Indiabulls Real Estate (up 1.2%) and Godrej Properties (up 0.72%) edged higher.

Oberoi Realty surged 5.49% at Rs 314.25 after consolidated net profit rose 32.89% to Rs 108.88 crore on 50.56% growth in total income to Rs 330.26 crore in Q1 June 2016 over Q1 June 2015. The result was announced on Saturday, 20 August 2016. Oberoi Realty said that total area booked was 1.47 lakh square feet in Q1 June 2016 as against 0.81 lakh square feet in Q1 June 2015. The order book stands at Rs 3993 crore at the end of Q1 June 2016 as against Rs 2705 crore at the end of Q1 June 2015.

Commenting on the results, Vikas Oberoi, Chairman & Managing Director, Oberoi Realty said that major policy and process changes along with the government's ease-of-doing-business initiative and focus on fast-tracking of the approval process, have brought in fresh optimism to the markets and have been major enablers for the realty sector.

Power generation and distribution stocks were mostly lower. Torrent Power (down 1.29%), GMR Infrastructure (down 0.84%), CESC (down 0.77%), Reliance Power (down 0.1%), Tata Power Company (down 0.19%), JSW Energy (down 0.76%) and Jaiprakash Power Ventures (down 0.2%) edged lower. Power Grid Corporation of India (up 0.44%), Adani Power (up 1.07%) and Reliance Infrastructure (up 0.29%) edged higher. NHPC was unchanged at Rs 27.40.

NTPC was down 1.74% at Rs 163.85 ahead of its Q1 June 2016 results today, 22 August 2016. The stock hit a high of Rs 168.80 and a low of Rs 163.05 so far during the day.

Jindal Steel & Power (JSPL) was down 1.25% at Rs 86.70. The company during market hours today, 22 August 2016, announced that it has secured a long-term coal linkage of 1.18 million tonne per annum (MTPA) for its captive power generation plants in Dongamahua and Raigarh in Chhattisgarh. The long-term coal linkage for a period of 5 years has been secured during the recent coal linkage auctions, JSPL said. The long-term linkage will ensure steady and assured supply of coal for the captive power plants, thereby enhancing the fuel security for the power plants, the company said.

JSPL's MD & Group CEO Ravi Uppal said that the 1.18 MTPA coal linkage to captive power generation facility significantly enhances the operational efficiencies of the company's power plant. He further said that the company is looking forward to the next round of coal linkage auctions to fill the gap, and would selectively participate to further enhance long-term fuel security requirements of steel and power businesses.

Meanwhile, global credit rating agency Moody's Investors Service said in a report that India's credit profile is supported by the strong growth potential of its large economy and the high private savings rate which underpins the government's access to domestic financing at relatively favorable terms. These credit strengths are balanced against a high government debt burden (67.4% of GDP in 2015), regulatory and infrastructure constraints on its competitiveness, slow pace of policy reform, and the contingent liability risk to the sovereign from public sector banks' high and rising non-performing loans, the rating agency said. Moody's expect Indian corporate sector's profitability to remain muted which will continue to dampen its ability and willingness to invest in the next few quarters. Moody's expects India's real GDP growth at around 7.5% in the next two years.

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