Key benchmark indices hovered in a small range with positive bias in mid-morning trade. At 11:25 IST, the barometer index, the S&P BSE Sensex was up 110.27 points or 0.42% at 26,635.73. The gains for the Nifty 50 index were lower in percentage terms than those for the Sensex. The Nifty was currently up 25.90 points or 0.32% at 8,166.65. Positive Asian stocks boosted sentiment on the domestic bourses.
In overseas markets, Asian stocks were trading higher after the previous day's sell-off and a rebound on Wall Street, ahead of the UK's upcoming 23 June 2016 referendum vote on its future within the European Union. US stocks closed modestly higher yesterday, 16 June 2016 ending a five-day streak of losses with telecoms leading sector advancers. Meanwhile, the Bank of England yesterday, 16 June 2016 kept its key interest rate at a record low of 0.5% and made no changes to its 375-billion-pound ($530 billion) asset-purchase program. All nine rate-setting policy makers voted to hold rate unchanged. The decision marked the last before the 23 June 2016 referendum in the UK on whether the country should stay or exit the European Union (EU). A vote to leave the EU could materially alter the outlook for output and inflation, and therefore the appropriate setting of monetary policy, the BOE said in a statement. The interest rate decision was announced after close of Indian market hours yesterday, 16 June 2016.
Closer home, the market breadth, indicating the overall health of the market, was strong on BSE. 1,354 shares advanced and 826 shares declined. A total of 134 shares were unchanged. The BSE Mid-Cap index was currently up 0.26%, underperforming the Sensex. The BSE Small-Cap index was currently up 0.56%, outperforming the Sensex.
Bank stocks rose. Among private bank stocks, HDFC Bank (up 0.91%), Federal Bank (up 0.43%), Kotak Mahindra Bank (up 0.43%), ICICI Bank (up 0.1%), Axis Bank (up 1.63%) and Yes Bank (up 0.69%) gained. IndusInd Bank slipped 0.7%.
Among PSU bank stocks, Central Bank of India (up 4.07%), Vijaya Bank (up 3.02%), Corporation Bank (up 2.96%), Bank of Maharashtra (up 2.28%), State Bank of India (SBI) (up 0.05%), Punjab National Bank (up 2%), Canara Bank (up 1.46%), IDBI Bank (up 0.35%) and Bank of India (up 0.38%) gained. Bank of Baroda (down 0.49%) and Union Bank of India (down 0.48%) fell.
Shares of HDFC and Max Financial Services rose on reports that insurance units of both these firms are in talks to create the country's biggest private life insurer. Index heavyweight and housing finance major HDFC was up 1.39%. Max Financial Services was up 14.17%.
According to a media report, HDFC Life and Max Life are in talks to create the country's biggest private life insurer as stiff competition and regulatory hurdles force firms to find new ways of growing market share and profitability. The board of HDFC Life is meeting in Mumbai today, 17 June 2016, to discuss the proposal, the report said.
Max Life is a joint venture between Max Financial Services and Mitsui Sumitomo Insurance (MSI), a Japan headquartered global leader in insurance. Max Financial Services holds 68.01% equity in Max Life, while MSI holds 26%.
HDFC Standard Life Insurance Company (HDFC Life) is a partnership between HDFC, India's leading housing finance institution and Standard Life, a global long term investment savings player. Currently HDFC holds 61.63% and Standard Life (Mauritius Holdings) 2006 holds 35% of equity in HDFC Life, while the rest is held by others.
Reports added that it will be a dual merger, where HDFC Life would merge with Max Life and later the merged entity would merge with Max Financial Services.
Cement stocks rose. Shree Cement (up 1.23%), Ambuja Cements (up 0.06%), ACC (up 0.14%) and UltraTech Cement (up 0.51%) gained. Grasim Industries was up 0.8% at Rs 4,320. Grasim has exposure to the cement sector through its holding in UltraTech Cement.
Carborundum Universal rose 1.39% after the central bank withdrew restrictions on buying of shares by foreign investors after foreign shareholding fell below the revised threshold limit. The Reserve Bank of India (RBI) notified yesterday, 16 June 2016, that the aggregate share holdings in Carborundum Universal by foreign institutional investors (FIIs)/registered foreign portfolios investors (RFPIs) have gone below the prescribed threshold caution limit stipulated under the extant foreign direct investment (FDI) policy. Hence the restrictions placed on the purchase of shares of the above company are withdrawn with immediate effect. Equity shares of Carborundum Universal can now be purchased through primary market and stock exchanges, RBI said.
On the macro front, India's current account deficit (CAD) narrowed sharply to $0.3 billion (0.1% of GDP) in Q4 of 2015-16, significantly lower than $7.1 billion (1.3% of GDP) in Q3 of 2015-16 and marginally lower than $0.7 billion (0.1% of GDP) in Q4 of 2014-15. The contraction in CAD was primarily on account of a lower trade deficit ($24.8 billion) than in Q4 of last year ($31.6 billion) and $34 billion in the preceding quarter. The government announced the economic data after market hours yesterday, 16 June 2016.
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