Market is seen opening lower in the early trade tracking negative leads from the global market. Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could fall 48 points at the opening bell.
In overseas market, Asian stock markets were mostly in negative territory today, 18 December 2015, tracking weak cues overnight from Wall Street as the euphoria over the US Federal Reserve's first interest rate increase since 2006 faded and as commodity prices resumed their downward slide. US stocks snapped a three-day winning streak overnight as oil prices dropped to their lowest levels in nearly seven years. Energy and materials sectors sold off sharply, but losses were broad-based.
Closer home, foreign portfolio investors (FPIs) bought shares worth a net Rs 638.01 crore yesterday, 17 December 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 366.23 crore yesterday, 17 December 2015, as per provisional data.
Among corporate news, Tata Power Company (Tata Power) announced after market hours yesterday, 17 December 2015, that it has issued a turkey contract to Gamesa India for commissioning a 100 megawatts (MW) wind power project at Nimbagallu in Andhra Pradesh. The project is to be commissioned by May 2017. The company has also signed Gamesa for long term operations & maintenance to ensure smooth functioning of the wind farm, Tata Power said.
Power Grid Corporation of India will be in focus. The Reserve Bank of India yesterday, 17 December 2015, notified that the restrictions placed on the purchase of shares of the above company by foreign institutional investors (FIIs)/registered foreign portfolios investors (RFPIs) are withdrawn with immediate effect as the foreign share holding by FIIs/RFPIs in the company has gone below the prescribed threshold caution limit stipulated under the extant FDI Policy. The shares of Power Grid Corporation of India can now be purchased through primary market and stock exchanges.
Bank stocks will be watched. Banks will soon have to price their loans based on rules announced by the central bank yesterday, 17 December 2015, in a move that is aimed at making lending rates more responsive to policy rate changes. The Reserve Bank of India (RBI) released the final guidelines on computing interest rates on advances based on the marginal cost of funds. The guidelines come into effect from 1 April 2016. Apart from helping improve the transmission of policy rates into the lending rates of banks, these measures are expected to improve transparency in the methodology followed by banks for determining interest rates on advances. The guidelines are also expected to ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks. Further, marginal cost pricing of loans will help the banks become more competitive and enhance their long run value and contribution to economic growth, RBI said in a statement.
According to the new rules, all rupee loans sanctioned and credit limits renewed from 1 April 2016 will be priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which will be the internal benchmark for such purposes. The MCLR will be a tenor linked internal benchmark. Actual lending rates will be determined by adding the components of spread to the MCLR. Banks will review and publish their MCLR of different maturities every month on a pre-announced date.
Further, banks may specify interest reset dates on their floating rate loans. They will have the option to offer loans with reset dates linked either to the date of sanction of the loan/credit limits or to the date of review of MCLR. The periodicity of reset shall be one year or lower. The MCLR prevailing on the day the loan is sanctioned will be applicable till the next reset date, irrespective of the changes in the benchmark during the interim period.
Meanwhile, existing loans and credit limits linked to the Base Rate may continue till repayment or renewal, as the case may be. Existing borrowers will also have the option to move to the Marginal Cost of Funds based Lending Rate (MCLR) linked loan at mutually acceptable terms. Banks will continue to review and publish Base Rate as hitherto, RBI said.
A rally in global stocks aided fresh upmove on the domestic bourses yesterday, 17 December 2015, as investors interpreted the US Federal Reserve's move to raise interest rates for the first time in nearly a decade as a sign of confidence in the strength of the world's biggest economy. The barometer index, the S&P BSE Sensex, jumped 309.41 points or 1.21% to settle at 25,803.78. The 50-unit Nifty 50 index rose 93.45 points or 1.21% to settle at 7,844.35. The Sensex and the Nifty, both, attained a 2-week closing high.
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