Volatility ruled the roost as key benchmark indices reversed intraday losses in early afternoon trade. At 12:17 IST, the barometer index, the S&P BSE Sensex, was up 71.26 points or 0.29% at 24,896.09. The gains for the 50-unit Nifty 50 index were lower in percentage terms than those for the Sensex. The Nifty was currently up 9.05 points or 0.12% at 7,565. Key indices turned volatile in the aftermath of the Reserve Bank of India's (RBI) monetary policy decision.
The RBI kept its benchmark interest rate viz. the repo rate unchanged at 6.75% after a monetary policy review. The central bank kept the cash reserve ratio (CRR) unchanged at 4% of net demand and time liability (NDTL). The RBI said the monetary policy stance continues to be accommodative. The RBI announced the monetary policy decision at 11:00 IST.
The Sensex rose 103.92 points or 0.41% at the day's high of 24,928.75 in early afternoon trade. The index lost 114.84 points or 0.46% at the day's low of 24,709.99 in mid-morning trade, its lowest level since 29 January 2016. The Nifty rose 20.35 points or 0.26% at the day's high of 7,576.30 in early afternoon trade. The index lost 47.05 points or 0.62% at the day's low of 7,508.90 in mid-morning trade, its lowest level since 29 January 2016.
The market breadth indicating the overall health of the market once again turned positive from negative. On BSE, 1,182 shares rose and 1,099 shares declined. A total of 108 shares were unchanged. Earlier, the breadth had turned negative from positive in mid-morning trade.
The BSE Mid-Cap index was currently up 0.28%, underperforming the Sensex. The BSE Small-Cap index was currently up 0.31%, outperforming the Sensex.
While retaining accommodative stance of the monetary policy, RBI Governor Raghuram Rajan said in a statement that structural reforms in the Union Budget 2016-17 that boost growth while controlling spending will create more space for monetary policy to support growth. With unfavourable base effects on the ebb and benign prices of fruits and vegetables and crude oil, the January 2016 consumer price inflation target of 6% should be met, the RBI said. Going forward, under the assumption of a normal monsoon and the current level of international crude oil prices and exchange rates, inflation is expected to be inertial and be around 5% by the end of fiscal 2016-17, RBI said. However, the implementation of the VII Central Pay Commission award, which has not been factored into these projections, will impart upward momentum to this trajectory for a period of one to two years, the RBI said.
IT stocks edged higher. Oracle Financial Services Software (up 3.55%), TCS (up 0.72%), Infosys (up 0.96%) and Wipro (up 0.43%) gained. HCL Technologies (down 0.29%) declined.
Tech Mahindra dropped after announcing Q3 results. The stock was off 3.91% at Rs 479.30. Tech Mahindra's consolidated net profit fell 3.4% to Rs 759 crore on 1.3% increase in revenue to Rs 6701 crore in Q3 December 2015 over Q2 September 2015. The sequential decline in bottom line was due to a sharp fall in non-operational income or the so called other income. The other income dropped 61.43% to Rs 63.94 crore in Q3 December 2015 over Q2 September 2015. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 3.2% to Rs 1136 crore in Q3 December 2015 over Q2 September 2015. The EBITDA margin edged higher to 16.95% in Q3 December 2015 from 16.64% in Q2 September 2015. The result was announced after market hours yesterday, 1 February 2016.
In US dollar terms, Tech Mahindra's net profit fell 3.7% to $115 million on 0.4% growth in revenue at $1015 million in Q3 December 2015 over Q2 September 2015. EBITDA rose 2.5% at $172 million in Q3 December 2015 over Q2 September 2015. The EBITDA margin stood at 16.9% in Q3 December 2015, an increase of 30 basis points on sequential basis. In constant currency terms, Tech Mahindra's revenue rose 1.2% on sequential basis in Q3 December 2015.
Realty stocks edged higher after the RBI kept the repo rate unchanged after the latest policy review. . Sobha (up 2.5%), Housing Development & Infrastructure (up 2.91%), Godrej Properties (up 1.29%), D B Realty (up 1.08%), Indiabulls Real Estate (up 0.91%), Unitech (up 0.36%) and Prestige Estates Projects (up 0.08%) edged higher. Oberoi Realty (down 0.94%) declined. Purchases of both residential and commercial property are largely driven by finance.
DLF was up 0.1% at Rs 96.85. The stock hit a high of Rs 97.35 and a low of Rs 94.65 so far during the day. DLF is scheduled to announce its Q3 December 2015 results today, 2 February 2016.
SML Isuzu rose 2.8% at Rs 983.55 after the company said its total sales rose 8.69% to 838 vehicles in January 2016 over January 2015. The announcement was made after market hours yesterday, 1 February 2016.
In overseas stock markets, Asian equities edged lower on fresh weakness in oil prices. But Chinese stocks edged higher after the country's central bank injected more liquidity into the financial system, in a move to stave off potential liquidity squeezes ahead of the weeklong Lunar New Year holiday that starts on 7 February 2016. The Shanghai Composite index was currently up 2.07%. US stocks pared sharp opening losses to finish nearly unchanged for the day yesterday, 1 February 2016, as weak US manufacturing data were taken as an indication that the Federal Reserve will hold off on its plans to raise interest rates later this year.
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