Key benchmark indices hovered in the positive terrain after hitting fresh intraday high in mid-morning trade after the Reserve Bank of India (RBI) kept policy rates unchanged as widely expected after its monetary policy review today, 7 June 2016. At 11:29 IST, the barometer index, the S&P BSE Sensex was up 79.57 points or 0.3% at 26,857.02. The Nifty 50 index was currently up 25.80 points or 0.31% at 8,226.85. Firmness in Asian stocks supported gains on the domestic bourses.
The Sensex rose 129.13 points or 0.48% at the day's high of 26,906.58 in mid-morning trade, its highest level since 3 June 2016. The index gained 52.08 points or 0.19% at the day's low of 26,829.53 at the onset of the trading session. The Nifty rose 39.25 points or 0.47% at the day's high of 8,240.30 in mid-morning trade, its highest level since 3 June 2016. The index rose 21.15 points or 0.25% at the day's low of 8,222.20 at the onset of the trading session.
In overseas markets, Asian stocks rose today, 7 June 2016 after Federal Reserve Chairwoman Janet Yellen yesterday, 6 June 2016 said US interest rate hikes are likely on the way but held back any reference to the timing. The Fed chief said last month's jobs report was "disappointing" and bears watching, though she gave a largely upbeat assessment of the US economic outlook, warning against attaching too much significance to the payrolls data in isolation. Uncertainty in timing of further hikes in Fed rate would support emerging market assets as investors have less incentive to draw out money from these markets in their search for higher yields in the US.
US stocks gained yesterday, 6 June 2016, even as Federal Reserve Chairwoman Janet Yellen said a rate-hike following an ugly jobs report late last week was still a possibility. The Federal Open Market Committee next undertakes monetary policy review on 14-15 June 2016.
Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,263 shares rose and 891 shares declined. A total of 125 shares were unchanged. The BSE Mid-Cap index was currently up 0.31%. The BSE Small-Cap index was currently up 0.55%. Both these indices outperformed the Sensex.
The RBI after its monetary policy review said that on the basis of an assessment of the current and evolving macroeconomic situation, it has decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5%. The RBI has also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL) and said it will continue to provide liquidity as required but progressively lower the average ex ante liquidity deficit in the system from one per cent of NDTL to a position closer to neutrality. Consequently, the reverse repo rate under the LAF will remain unchanged at 6%, and the marginal standing facility (MSF) rate and the bank rate at 7%.
Auto stocks gained after RBI kept policy rates unchanged after the monetary policy review today, 7 June 2016. Mahindra & Mahindra (M&M) (up 0.76%), Ashok Leyland (up 0.48%), Maruti Suzuki India (up 1%), Bajaj Auto (up 0.12%), and Hero MotoCorp (up 1.22%) gained. Eicher Motors (down 0.19%) and TVS Motor Company (down 0.1%) declined.
Commercial vehicles maker, Tata Motors gained after its British luxury car unit, Jaguar Land Rover recorded good sales in May. The stock rose 0.35%. Jaguar Land Rover's retail sales rose 18% to 44,946 units in May 2016 over May 2015. Jaguar Land Rover recorded best ever sales for May. Jaguar's sales jumped 90% to 10,633 units in May 2016 over May 2015. Land Rover's sales rose 6% to 34,313 units in May 2016 over May 2015. The announcement was made during market hours today, 7 June 2016.
Bank stocks gained after RBI kept policy rates unchanged after the monetary policy review today, 7 June 2016. Among public sector banks, Punjab National Bank (up 0.19%), Bank of Baroda (up 0.91%), State Bank of India (SBI) (up 2.08%), Union Bank of India (up 0.22%), Canara Bank (up 0.1%) and Bank of India (up 1.07%) edged higher.
Among private sector banks, ICICI Bank (up 2.34%), Kotak Mahindra Bank (up 0.25%), Yes Bank (up 1.95%), and IndusInd Bank (up 0.16%) edged higher. HDFC Bank dropped 0.13%.
Axis Bank fell 0.73%. The bank said that it opened trade at London to celebrate the bank's landmark issuance of Asia's first internationally listed certified green bond on London Stock Exchange. The bond certified by the Climate Bonds Standards Board, raised $500 million. It is the first green bond for Axis Bank within its $5 billion Medium Term Note (MTN) programme, which has additionally listed its entire MTN programme in London. The proceeds of the bond will be invested in green energy, transportation and infrastructure projects, reinforcing India's commitment to produce 175,000 megawatts (MW) of renewable power by 2022. The announcement was made after market hours yesterday, 6 June 2016.
The RBI said that government's reform measures on small savings rates combined with the Reserve Bank's refinements in the liquidity management framework should help the transmission of past policy rate reductions into lending rates of banks. The Reserve Bank will shortly review the implementation of the Marginal Cost Lending Rate framework by banks. Timely capital infusions into constrained public sector banks will also aid credit flow, RBI said.
Shreyas Shipping & Logistics rose 4.29% after the company said that it has recently entered into a vessel sharing arrangement (VSA) with Shipping Corporation of India (SCI) on two of the services connecting East coast of India to West coast of India and vice versa along with Persian Gulf with addition of new ports commencing with effect from 9 June 2016. The announcement was made after market hours yesterday, 6 June 2016. SCI rose 0.45%.
Prism Cement gained 1.57% after the company said that it has agreed to acquire 15.23% (post acquisition) equity stake for approximately Rs 21 crore in BLA Power, which is in the sole business of generating thermal power. The company shall enter into a power supply agreement (PSA) with BLA Power for the purchase and consumption of 25 megawatts (MW) of RTC (Round The Clock) power from BLA Power for its cement plants - Unit I and Unit II at Satna, Madhya Pradesh under the group captive arrangement under the Electricity Rules, 2005, Prism Cement said. This agreement is expected to reduce the cost of cement production, the company said. The announcement was made after market hours yesterday, 6 June 2016.
Meanwhile, in its bi-monthly monetary policy statement of April 2016, the RBI had stated that it would watch macroeconomic and financial developments in the months ahead with a view to responding as space opens up. Incoming data since then show a sharper-than-anticipated upsurge in inflationary pressures emanating from a number of food items (beyond seasonal effects), as well as a reversal in commodity prices. A strong monsoon, continued astute food management, as well as steady expansion in supply capacity, especially in services, could help offset these upward pressures. Given the uncertainties, the Reserve Bank will stay on hold, but the stance of monetary policy remains accommodative, RBI said. The RBI will monitor macroeconomic and financial developments for any further scope for policy action.
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