A bout of volatility was witnessed as the two benchmark indices extended losses after staging a recovery from lower level in early afternoon trade. At 12:15 IST, the barometer index, the S&P BSE Sensex, was off 158.13 points or 0.56% at 28,024.44. The Nifty 50 index was currently off 55.55 points or 0.64% at 8,655.80. The losses on the domestic bourses materialized in the wake of the Reserve Bank of India's (RBI) decision to keep the benchmark lending rate viz. the repo rate unchanged after a policy review in line with market expectations.
The Sensex lost 179.09 points or 0.64% at the day's low of 28,003.48 in early afternoon trade, its lowest level since 5 August 2016. The barometer index rose 107.39 points or 0.38% at the day's high of 28,289.96 at onset of trading session, its highest level since 10 August 2015. The Nifty fell 60.30 points or 0.69% at the day's low of 8,651.05 in early afternoon trade, its lowest level since 5 August 2016. The index rose 17 points or 0.2% at the day's high of 8,728.35 at onset of trading session, its highest level since 16 April 2015.
The market breadth indicating the overall health of the market was negative. On BSE, 1,387 shares fell and 1,004 shares rose. A total of 103 shares were unchanged. The BSE Mid-Cap index was currently off 0.79%. The fall in this index was higher than the Sensex's decline in percentage terms. The BSE Small-Cap index was currently off 0.56%, matching the Sensex's fall in percentage terms.
In overseas stock markets, most Asian shares rose as US crude oil traded near its highest price in two weeks. US stocks closed lower yesterday, 8 August 2016, after touching record highs as Wall Street caught its breath in the wake of last week's upbeat jobs data.
Index heavyweight and cigarette major ITC dropped 1.24% to Rs 246.90. The stock hit a high of Rs 252.40 and low of Rs 246.50 so far during the day.
FMCG stocks dropped. Colgate-Palmolive (India) (down 3.73%), Dabur India (down 0.72%), Godrej Consumer Products (down 2.32%), Britannia Industries (down 0.35%), GlaxoSmithkline Consumer Healthcare (down 1.16%), Marico (down 2.32%), Nestle India (down 0.45%), Tata Global Beverages (down 1.05%), Jyothy Laboratories (down 0.73%), Bajaj Corp (down 1.17%) dropped. Hindustan Unilever (up 0.34%) and Procter & Gamble Hygiene and Health Care (up 2.09%) rose.
Cement stocks fell. Ambuja Cements (down 2.79%), ACC (down 1.55%), UltraTech Cement (down 0.38%) declined. Shree Cement rose 1.37%.
Grasim Industries was off 1.57% at Rs 5,205. Grasim has exposure to the cement sector through its holding in UltraTech Cement.
SRF rose 3.01% after consolidated net profit rose 27.13% to Rs 144.19 crore on 0.10% decline in total income to Rs 1224.73 crore in Q1 June 2016 over Q1 June 2015. SRF said consolidated net sales declined 0.86% to Rs 1195.08 crore in Q1 June 2016 over Q1 June 2015, mainly due to the consistent subdued commodity prices. The company said that the surge in profitability can be attributed to robust demand, operational efficiency with renewed focus on cost improvement and market penetration especially in the international market.
Meanwhile in a separate announcement after market hours yesterday, 8 August 2016, the company said that its board approved setting up third multipurpose plant at SRF's chemical complex in Dahej, Gujarat at an estimated cost of Rs 180 crore. The board also approved setting up Chloromethanes plant at SRF's chemical complex in Dahej, Gujarat at an estimated cost of Rs 165 crore.
Nitin Fire Protection Industries tumbled 7.25% after the company reported net loss of Rs 5.25 crore in Q1 June 2016 compared with net profit of Rs 3.39 crore in Q1 June 2015. The company's net sales declined 40.9% to Rs 79.32 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 8 August 2016.
Mukand rose 6.41% after the company reported net profit of Rs 10.26 crore in Q1 June 2016 compared with net loss of Rs 5.69 crore in Q1 June 2015. The company's net sales declined 0.2% to Rs 673.39 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 8 August 2016.
The Reserve Bank of India (RBI) kept its benchmark lending rate viz. the repo rate unchanged at 6.5% after a monetary policy review today, 9 August 2016. The RBI also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL). The central bank said it will continue to provide liquidity as required and will progressively lower the average ex ante liquidity deficit in the system from 1% of NDTL to a position closer to neutrality. The RBI announced the outcome of the monetary policy review at around 11:00 IST.
The RBI said that the recent sharper-than-anticipated increase in food prices has pushed up the projected trajectory of inflation over the rest of the year. The central bank also said that the strong improvement in sowing on the back of the monsoon's steady progress, along with supply management measures, augers well for the food inflation outlook. According to the central bank, risks to the inflation target of 5% for March 2017 continue to be on the upside.
The RBI has retained the projected GVA growth projection for 2016-17 at 7.6%. According to the central bank, the risk to this projection is evenly balanced. The central bank expects the momentum of growth to be quickened by the normal monsoon raising agricultural growth and rural demand, as well as by the stimulus to consumption spending that can be expected from the disbursement of pay, pension and arrears following the implementation of the 7th CPC's award. The passage of the Goods and Services Tax (GST) Bill augurs well for the growing political consensus for economic reforms. While timely implementation of GST will be challenging, its implementation will raise returns on investment across much of the economy and also strengthen government finances over the medium-term, according to the central bank.
The RBI said that the stance of monetary policy remains accommodative and will continue to emphasise the adequate provision of liquidity. According to the central bank, easy liquidity conditions are already prompting banks to modestly transmit past policy rate cuts through their MCLRs (Marginal Cost of Funds based Lending Rate) and pro-active liquidity management should facilitate more pass-through.
Meanwhile, the amended goods and services tax (GST) constitutional amendment bill was passed by the Lok Sabha yesterday, 8 August 2016. The bill was passed by the Rajya Sabha last week. Prime Minister Narendra Modi in Lok Sabha said that with GST, the government intends to bring uniformity in taxation. Most of the things that can impact consumer inflation have been kept out of the ambit of GST, Modi said. He was intervening during the debate in the Lok Sabha on the GST Bill yesterday, 8 August 2016. The government plans to implement the nationwide GST from 1 April 2017. The main objective of the GST is to eliminate excessive taxation. GST is a uniform indirect tax levied on goods and services across a country. The measure would harmonize 11 state and central levies into a national sales tax, reducing business transaction costs.
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