Market holds firm after dovish comments from Fed's Yellen

A range bound movement was witnessed as key benchmark indices held firm at higher levels in morning trade. At 10:16 IST, the barometer index, the S&P BSE Sensex, was up 201.99 points or 0.81% at 25,102.45. The Nifty 50 index was up currently up 61.15 points or 0.8% at 7,658.15. The Sensex crossed the psychologically important 25,000 mark. Strong global cues boosted investors' sentiment. World stocks rose as investors welcomed the latest signal from the US Federal Reserve that it would move slowly to raise interest rates.

The Sensex rose 221.23 points, or 0.89% at the day's high of 25,121.69 in early trade, its highest level since 28 March 2016. The index rose 154.96 points, or 0.62% at the day's low of 25,055.42 in morning trade. The Nifty rose 68.40 points, or 0.90% at the day's high of 7,665.40 in early trade, its highest level since 28 March 2016. The index rose 46.45 points, or 0.61% at the day's low of 7,643.45 in morning trade.

The broad market depicted strength. There were more than three gainers against every loser on BSE. 1,438 shares rose and 426 shares fell. A total of 88 shares were unchanged. The BSE Mid-Cap index was currently up 1.05%. The BSE Small-Cap index was currently up 1.25%. Both these indices outperformed the Sensex.

In overseas stock markets, Asian stocks edged higher tracking overnight gains in US shares as investors welcomed the latest signal from the US Federal Reserve that it would move slowly to raise interest rates. US stocks edged higher yesterday, 29 March 2016, after Federal Reserve chairwoman Janet Yellen, in a speech in New York, reiterated a need to proceed cautiously in lifting interest rates in the backdrop of weaker-than-expected growth overseas and a cloudy US inflation outlook.

Bank stocks edged higher after the Reserve Bank of India (RBI) after market hours yesterday, 29 March 2016, clarified some of the provisions relating to the Marginal Cost of Funds based Lending Rate (MCLR) system which comes into effect on 1 April 2016. Among state-run banks, Corporation Bank (up 1.60%), Bank of Maharashtra (up 1.58%), Andhra Bank (up 1.30%), Syndicate Bank (up 1.26%), Dena Bank (up 1.06%), Allahabad Bank (up 0.86%), Bank of Baroda (up 0.82%), State Bank of India (up 0.79%), Union Bank of India (up 0.68%), Punjab National Bank (up 0.67%), Punjab and Sind Bank (up 0.59%), Indian Bank (up 0.54%), UCO Bank (up 0.54%), Canara Bank (up 0.41%), IDBI Bank (up 0.15%) and Bank of India (up 0.05%), edged higher. Central Bank of India was down 1.87%.

United Bank of India was flat at Rs 19. The bank said before market hours today, 30 March 2016, that it is initiating necessary steps after the Ministry of Finance conveyed that the Government of India has decided to infuse capital funds to the tune of Rs 480 crore in the bank by way of preferential allotment of equity shares in favour of the Government of India.

Vijaya Bank was up 0.81% at Rs 31.10. The bank said before market hours today, 30 March 2016, that the Board of Directors of the bank in a meeting held on 29 March 2016 accorded approval for the infusion of capital funds to the tune of Rs 220 crore by way of preferential allotment of equity shares in favour of Government of India as part of capital infusion for FY 2016. Government of India has already accorded approval for the capital infusion.

Among private sector banks, ICICI Bank (up 2.35%), IndusInd Bank (up 1.20%), Federal Bank (up 1.17%), Axis Bank (up 0.91%), Yes Bank (up 0.42%) and HDFC Bank (up 0.28%), edged higher. City Union Bank (down 0.22%) and Kotak Mahindra Bank (down 0.26%), edged lower.

RBI clarified that fixed-rate loans of up to three years' tenor will be priced with reference to MCLR with effect from 1 April 2016. Fixed rate loans of tenor above three years will continue to be exempted from MCLR system. As regards the effective date for applying MCLR on floating rate loans, the RBI said that MCLR prevailing on the date of first disbursement, whether partial or full, will be applicable on the floating rate loan and future reset dates determined accordingly.

For computing the marginal cost of funds, commercial banks will have the option to reckon the outstanding balances of deposits and other borrowings as on any day, not more than seven calendar days, prior to the date from which the MCLR becomes effective. The chosen time lag shall be maintained consistently for a period not less one year.

The tenor of the funds in the single largest maturity bucket, provided it is more than 30% of the entire funds, will be reckoned for determining the MCLR. In cases where a bank does not have a single time bucket with more than 30% share of the funds reckoned for MCLR, the weighted average tenor of two or more maturity buckets that together account for more than 30% will be reckoned for determining the MCLR.

Power generation stocks in demand. Adani Power (up 3.41%), Jaiprakash Power Ventures (up 2%), NHPC (up 1.60%), JSW Energy (up 1.50%), Torrent Power (up 1.36%), Reliance Power (up 1.30%), CESC (up 0.97%), Reliance Infrastructure (up 0.89%), GMR Infrastructure (up 0.70%), NTPC (up 0.16%) and Tata Power (up 0.08%), edged higher.

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