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PSU bank stocks in demand as Govt announces revamp plan

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Weakness continued for key benchmark indices in morning trade. The barometer index, the S&P BSE Sensex, continued to hover below the psychological 28,000 level after falling below that mark in early trade. The market breadth indicating the overall health of the market was negative. The Sensex was currently off 238.68 points or 0.85% at 27,828.63.

Shares of public sector banks (PSU banks) edged higher after the government after trading hours on Friday, 14 August 2015, announced a revamp plan for PSU banks. Shares of private sector banks edged lower. HDFC dropped amid volatility after the company said that it has agreed to sell 17.95 crore equity shares of Rs 10 each of HDFC Standard Life Insurance Company (HDFC Life) to Standard Life (Mauritius Holdings) 2006 Limited at a price of Rs 95 per share.

Foreign portfolio investors (FPIs) bought shares worth a net Rs 403.76 crore during the previous trading session on Friday, 14 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 179.20 crore on Friday, 14 August 2015, as per provisional data released by the stock exchanges.

In overseas markets, Asian stocks edged lower. US stocks closed higher during the previous trading session on Friday, 14 August 2015, after a string of upbeat economic reports.

At 10:17 IST, the S&P BSE Sensex was down 238.68 points or 0.85% at 27,828.63. The index fell 328.18 points at the day's low of 27,739.13 in early trade. The index rose 28.66 points at the day's high of 28,095.97 at the onset of the trading session.

The CNX Nifty was down 56.50 points or 0.66% at 8,462.05. The index hit a low of 8,428.05 in intraday trade. The index hit a high of 8,530.60 in intraday trade, its highest level since 11 August 2015.

The BSE Mid-Cap index was up 4.32 points or 0.04% at 11,458.10, outperforming the Sensex. The BSE Small-Cap index was down 13.15 points or 0.11% at 11,753.63. The decline in this index was lower than Sensex's decline in percentage terms.

The market breadth indicating the overall health of the market was negative. On BSE, 1,107 shares declined and 938 shares rose. A total of 72 shares were unchanged.

Shares of public sector banks (PSU banks) edged higher after the government after trading hours on Friday, 14 August 2015, announced a revamp plan for PSU banks. The government announced the appointment of MD and CEOs of five public sector banks (PSU banks) and Non-executive Chairman of five PSU banks. The government also announced capital allocation of Rs 20088 crore to a total of 13 PSU banks as part of Tranche 1 and Tranche 2 of recapitalization announced recently. The government also announced the structure of Bank Board Bureau (BBB) which will replace the Appointments Board for appointment of Whole-Time Directors and Non-Executive Chairman of PSU banks. The government also announced a new framework of Key Performance Indicators (Kpis) to be measured for evaluating the performance of PSU banks.

Bank of Baroda was up 11.79% at Rs 206.20. P S Jayakumar was appointed as MD & CEO of Bank of Baroda while Ravi Venkatesan was appointed as Non-Executive Chairman of the bank.

Bank of India was up 5.35% at Rs 179.35. M O Rego was appointed as MD & CEO of Bank of India while G Padmananbhan was appointed as Non-Executive Chairman of the bank.

Canara Bank was up 5.92% at Rs 323.70. Rakesh Sharma was appointed as MD & CEO of Canara Bank while T N Manoharan was appointed as Non-Executive Chairman of the bank.

IDBI Bank was up 4.08% at Rs 68.90. Kishore Kharat Piraji was appointed as MD & CEO of of IDBI Bank.

Punjab National Bank (PNB) was up 3.94% at Rs 172.80. Usha Ananthasubramanian was appointed as MD & CEO of PNB.

Vijaya Bank was up 2.31% at Rs 39.80. G Narayanan was appointed as Non-Executive Chairman of the bank

Indian Bank was up 4.96% at Rs 155.50. T C V Subramainian was appointed as Non-Executive Chairman of the bank.

Among other PSU banks, Union Bank of India (up 4.18%), United Bank of India (up 3.28%), Indian Overseas Bank (up 3.36%), Corporation Bank (up 4.19%) and State Bank of India (up 2.44%) edged higher.

Shares of private sector banks edged lower. Axis Bank (down 1.32%), Kotak Mahindra Bank (down 1.09%), HDFC Bank (down 0.83%), IndusInd Bank (down 0.94%), Yes Bank (down 1.04%) and ICICI Bank (down 0.69%) edged lower.

HDFC dropped amid volatility after the company said that it has agreed to sell 17.95 crore equity shares of Rs 10 each of HDFC Standard Life Insurance Company (HDFC Life), constituting 9% of the issued and paid-up share capital of HDFC Life, to Standard Life (Mauritius Holdings) 2006 Limited at a price of Rs 95 per share. The stock was off 1.72% at Rs 1,277.50. The stock hit a high of Rs 1,306.40 and a low of Rs 1,275.50 so far during the day. The announcement was made after market hours on Friday, 14 August 2015. After the stake sale, HDFC's holding in HDFC Life will be 61.65% and that of Standard Life will increase to 35% from existing 26%.

Infosys fell 1.27% Rs 1,134.40. The stock hit a high of Rs 1,150.75 and a low of Rs 1,131.20 so far during the day. Infosys Finacle, part of EdgeVerve Systems, a product subsidiary of Infosys on Friday, 14 August 2015, announced a partnership with Payveris, an online and mobile digital payments company headquartered in Connecticut. The two entities will jointly provide integrated payment solutions to banks and credit unions throughout the United States. The offering will facilitate bill payments and innovative money movement services such as interbank transfers and person-to-person payments. The announcement was made after market hours on Friday, 14 August 2015.

Meanwhile, investors continue to watch the progress of the monsoon rains which will have a bearing on food prices and rural income. India's weather office, the India Meteorological Department (IMD), said in a daily report issued yesterday, 16 August 2015, that for the country as a whole, cumulative rainfall during this year's monsoon season was 10% below the Long Period Average (LPA) until 16 August 2015. Region wise, the rainfall was 20% below the LPA in South Peninsula, 13% below the LPA in East & Northeast India, 9% below the LPA in Central India and 1% above the LPA in Northwest India until 16 August 2015.

The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.

In overseas markets, Asian stocks edged lower today, 17 August 2015. Key indices in China, Hong Kong, Taiwan, Singapore, and South Korea were off 0.12% to 1.06%. In Japan, the Nikkei 225 was up 0.26%. Indonesian stock market was shut due to holiday.

Japan's economy contracted in the April-June quarter, but managed to perform slightly better than expected, data released today, 17 August 2015 showed. Gross domestic product (GDP) for the quarter fell 1.6% on-year. Compared with the previous quarter, GDP contracted 0.4%.

US stocks closed higher during the previous trading session on Friday, 14 August 2015, after a string of upbeat economic reports.

The International Monetary Fund (IMF) has called on eurozone ministers to offer Greece debt relief, following the approval of a new bailout deal. Greece will receive up to 86 billion euros in loans over the next three years, in return for tax rises and spending cuts.

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First Published: Mon, August 17 2015. 10:22 IST
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