A bout of volatility was witnessed as key benchmark indices regained positive zone in mid-afternoon trade. At 14:15 IST, the barometer index, the S&P BSE Sensex, was up 66.93 points or 0.27% at 24,673.92. The 50-unit Nifty 50 index was trading near the flat line. The Nifty was currently up 6.40 points or 0.09% at 7,482.
The Sensex hit its highest level in more than four weeks when it rose 112.06 points or 0.45% at the day's high of 24,719.05 at the onset of the trading session. The barometer index lost 75.19 points or 0.3% at the day's low of 24,531.80 in early trade. The Nifty hit its highest level in more than three weeks when it rose 30.30 points or 0.4% at the day's high of 7,505.90 at the onset of the trading session. The index lost 31.50 points or 0.42% at the day's low of 7,444.10 in early trade.
In overseas stock markets, European stocks traded with small gains. In Asia, most markets traded in positive zone after a batch of positive US economic data overnight. US stocks closed slightly higher yesterday, 3 March 2016, as oil prices stabilized. The latest data showed US factory orders rose in January after two straight monthly declines and the service sector index showed continued expansion.
Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,420 shares rose and 1,004 shares fell. A total of 141 shares were unchanged. The BSE Mid-Cap index was currently up 1.12%. The BSE Small-Cap index was currently up 0.75%. Both these indices outperformed the Sensex.
Stocks of public sector banks (PSU banks) gained on renewed buying. Indian Bank (up 8.57%), IDBI Bank (up 4.05%), Punjab National Bank (up 4.55%), Bank of India (up 3.23%), State Bank of India (up 1.92%), Union Bank of India (up 1.86%) and Bank of Baroda (up 2.03%) rose. Central Bank of India (down 1.33%) edged lower.
The finance ministry has convened a two-day conference in Gurgaon staring today, 4 March 2016, to provide an informal academic environment to take forward the government's commitment to reforms in the banking and financial sector. Top management of PSU banks, state-run insurance companies and other state-run financial institutions (FIs), finance sector regulators and finance ministry officials will participate in the second such conference called Gyan Sangam.
Meanwhile, the Union Budget 2016-17 disappointed the public sector banks by maintaining the allocation of capital funds unchanged at Rs 25000 crore for FY 2017 considering higher non-performing assets (NPAs) and weak earnings. On the flip side, the Budget has announced to operationalize Banks Board Bureau (BBB) in 2016-17, which will spell out a roadmap for consolidation of public sector banks.
Stocks of private sector banks declined. Axis Bank (down 1.01%), Kotak Mahindra Bank (down 0.33%), HDFC Bank (down 0.36%) and Yes Bank (down 0.25%) edged lower. ICICI Bank (up 1.01%) and IndusInd Bank (up 1.36%) edged higher.
IT stocks edged lower as rupee continued to strengthen against the dollar. HCL Technologies (down 3.14%), Tech Mahindra (down 1.91%), Wipro (down 1.13%), TCS (down 0.96%) and Infosys (down 0.39%) declined. Oracle Financial Services Software (up 3.95%) and Persistent Systems (up 0.39%) rose. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.
In the foreign exchange market, the partially convertible rupee was hovering at 67.31, compared with its close of 67.335 during the previous trading session.
Meanwhile, the Union Budget 2016-17 is mixed for the technology and services sector. Industry association Nasscom believes, in the backdrop of global economic volatility, there are unmet expectations on policy announcements in the budget that enable ease of doing business for the IT sector. The budget partially covers its wish list on policy bottlenecks, including ease of business, nurturing start-ups, products and e-commerce sector. The budget also left IT services sector disappointed as various demands such as clarity on transfer pricing, exemption from minimum alternate tax (MAT) for SEZ units, relief from service tax and VAT double taxation have not been addressed. Domestic IT services and software companies such as TCS, Infosys, and Persistent Systems can look forward to service the technological initiatives announced in the budget and convert them into opportunities for growing their domestic business as well as help the government to increasingly digitize the economy.
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