A bout of volatility was witnessed as key benchmark indices slipped into the negative zone from positive zone in morning trade. At 10:15 IST, the barometer index, the S&P BSE Sensex, was down 3.85 points or 0.01% at 27,832.06. The Nifty 50 index was currently down 10.95 points or 0.13% at 8,581.25.
The Sensex fell 41.45 points or 0.14% at the day's low of 27,794.46 in morning trade, its lowest level since 11 August 2016. The barometer index rose 99.97 points or 0.35% at the day's high of 27,935.88 in early trade. The Nifty fell 13.40 points or 0.15% at the day's low of 8,578.80 in morning trade, its lowest level since 11 August 2016. The index rose 30.75 points or 0.35% at the day's high of 8,622.95 in early trade.
In overseas stock markets, Asian stocks witnessed a mixed trend ahead of Federal Reserve Chairwoman Janet Yellen's speech today, 26 August 2016, which could provide hints about the timing of the next rate hike from the Fed. US stocks registered small losses yesterday, 25 August 2016, with healthcare stocks extending previous trading session's decline.
Globally, investors are awaiting Yellen's speech today, 26 August 2016, which could provide hints about the timing of the next rate hike from the Fed. High US interest rates would pull money out of emerging markets and redirect it to the US. Yellen is due to speak at the Kansas City Fed's annual Monetary Policy Symposium in Jackson Hole, Wyoming. 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.
The market breadth indicating the overall health of the market was positive. On BSE, 995 shares rose and 874 shares declined. A total of 89 shares were unchanged. The BSE Mid-Cap index was currently down 0.11%. The decline in this index was higher than Sensex's fall in percentage terms. The BSE Small-Cap index was currently up 0.01%, outperforming the Sensex.
Bank stocks witnessed a mixed trend. Among public sector banks, IDBI Bank (down 1.7%), Punjab National Bank (down 0.12%), Bank of India (down 0.09%) and UCO Bank (down 0.61%) edged lower. Corporation Bank (up 0.12%), Bank of Baroda (up 0.49%), Union Bank of India (up 0.15%) and Indian Bank (up 0.63%) edged higher.
Among private sector banks, Yes Bank (down 0.74%), IndusInd Bank (down 1.02%) and Kotak Mahindra Bank (down 0.22%) edged lower. Axis Bank (up 0.24%) edged higher.
Index heavyweight HDFC Bank was up 0.18% at Rs 1,260. The stock hit a high of Rs 1,261.75 and a low of Rs 1,255.15 so far during the day.
The Reserve Bank of India (RBI) said in a draft paper on banks' large exposure (LE) limit that large exposure limit in respect of each counterparty and group of connected counterparties will be capped at 20% and 25% respectively of the bank's eligible capital base under normal circumstances. The eligible capital base will be defined as the Tier 1 capital of the bank as against capital funds at present. A group of connected counterparties will be identified on the basis of 'control' as well as 'economic dependence' criteria. The RBI has sought public comments on the draft LE framework by 15 September 2016.
Separately, RBI has allowed banks to issue rupee bonds overseas (Masala Bonds) for their capital requirements and for financing infrastructure and affordable housing. This was a part of the measures announced by RBI for the development of fixed income and currency markets.
State Bank of India (SBI) was down 0.1% at Rs 249.80. ICICI Bank was up 0.34% at Rs 248. The RBI continued to classify these two banks as domestic systemically important banks (D-SIBs). The additional Common Equity Tier 1 (CET1) requirement for D-SIBs has already been phased-in from 1 April 2016 and would become fully effective from 1 April 2019. The additional CET1 requirement will be in addition to the capital conservation buffer. On account of being classified as D-SIB, there is additional CET1 requirement of 0.6% of Risk Weighted Assets (RWAs) for SBI and 0.2% of RWAs for ICICI Bank.
Telecom stocks were mixed. Bharti Airtel (down 0.27%) and Idea Cellular (down 1.52%) edged lower. Reliance Communications (up 0.49%) edged higher.
Bharti Infratel was up 1.68% at Rs 344.95. Bharti Infratel is a telecom tower arm of Bharti Airtel.
J Kumar Infraprojects was locked at 5% upper circuit at Rs 162.15 after the company said that its joint venture has won a contract worth Rs 5012 crore from Mumbai Metro Rail Corporation (MMRC). J Kumar Infraprojects said that J. Kumar-CRTG joint venture (JV) won a contract worth Rs 5012 crore from MMRC for Phase-3 of the city metro project. MMRC had issued the LoA to J. Kumar-CRTC JV for the 3rd phase of the metro project and the project was assigned to the JV on 5 July 2016. The requisite preparatory work like conducting surveys and related investigations are in progress and the project work is likely to commence in October 2016. The announcement was made after market hours yesterday, 25 August 2016.
Meanwhile, RBI after trading hours yesterday, 25 August 2016, announced a package of measures for the development of fixed income and currency markets. The central said it has been decided to enhance the aggregate limit of partial credit enhancement (PCE) provided by banks, permit brokers in corporate bond repos, authorise the platform for repo in corporate bonds and encourage credit supply for large borrowers through market mechanism. The RBI has allowed banks to issue issue rupee bonds overseas (Masala Bonds) for their capital requirements and for financing infrastructure and affordable housing.
Foreign Portfolio Investors (FPIs) will be given direct access to NDS-OM to ease the process of investment in debt securities. The RBI said it has also been decided to provide FPIs facility to trade directly in corporate bonds.
Meanwhile, the India Meteorological Department (IMD) in its monsoon update issued yesterday, 25 August 2016, said that for the country as a whole, cumulative rainfall during this year's monsoon so far (till 25 August 2016) was 3% below the long period average (LPA).
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