Shares of state-run power and coal sector firms and banking stocks led losses for key benchmark indices as the government's decision not to levy minimum alternative tax (MAT) on stock market transactions of foreign institutional investors (FIIs) failed to buoy sentiment on the bourses. The barometer index, the S&P BSE Sensex, lost 242.88 points or 0.95% to settle at 25,453.56. The 50-unit CNX Nifty lost 68.85 points or 0.88% to settle at 7,717. The Sensex and Nifty, both, hit their lowest closing level in more than a year. The market breadth indicating the overall health of the market was negative.
Bank stocks edged lower after the Reserve Bank of India issued draft guidelines on computation of banks' base rate based on marginal cost of funds. Index heavyweights HDFC and L&T dropped while two other heavyweights ITC and Infosys edged higher. Shares of oil exploration & production firms were mixed after the government announced competitive bidding for small oil fields surrendered by ONGC and Oil India.
The S&P BSE Sensex dropped 242.88 points or 0.95% to settle at 25,453.56, its lowest closing level since 8 August 2014. The index fell 301.35 points at the day's low of 25,395.09 in late trade. The index jumped 242.93 points at the day's high of 25,939.37 in early trade.
The CNX Nifty fell 68.85 points or 0.88% to settle at 7,717, its lowest closing level since 11 August 2014. The index hit a low of 7,699.25 in intraday trade. The index hit a high of 7,862.55 in intraday trade.
The BSE Mid-Cap index dropped 86.76 points or 0.82% to settle at 10,437.07. The decline in this index was lower than Sensex's decline in percentage terms. The BSE Small-Cap rose 16.25 points or 0.15% to settle at 10,749.63, outperforming the Sensex.
The market breadth indicating the overall health of the market was negative. On BSE, 1,394 shares declined and 1,221 shares rose. A total of 138 shares were unchanged.
The total turnover on BSE amounted to Rs 2590 crore, higher than turnover of Rs 2525.57 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE Auto index (down 1.37%), BSE Bankex index (down 1.81%), BSE Capital Goods index (down 1.69%), BSE Consumer Durables index (down 1.03%), BSE Metal index (down 1.34%), BSE Oil & Gas index (down 1.27%) and BSE Power index (down 2.43%) underperformed the Sensex. The S&P BSE FMCG Index (up 0.34%), BSE Healthcare index (down 0.86%), BSE IT index (up 1.24%), BSE Realty index (up 0.69%) and BSE Teck index (up 0.97%) outperformed the Sensex.
Index heavyweight and housing finance major HDFC fell 2.81% at Rs 1,125.80. The stock hit a high of Rs 1,175 and a low of Rs 1,113 in intraday trade.
Index heavyweight and construction equipment major L&T dropped 1.89% at Rs 1,528.90. The stock hit a high of Rs 1,585 and a low of Rs 1,522.35 in intraday trade.
Index heavyweight and cigarette major ITC rose 1.41% at Rs 320. The stock hit a high of Rs 323 and a low of Rs 316 in intraday trade.
Index heavyweight and software major Infosys rose 0.98% at Rs 1,100.30. The stock hit a high of Rs 1,114.60 and a low of Rs 1,090.10 in intraday trade.
Shares of state-run coal mining giant Coal India lost 3.07% at Rs 344.50. The stock hit a high of Rs 359.30 and a low of Rs 342.35 in intraday trade.
Shares of state-run power sector firms dropped. Bharat Heavy Electricals (down 5.1%), NTPC (down 2.95%) and Power Grid Corporation of India (down 2.87%) dropped. Shares of NHPC were unchanged at Rs 16.10.
Shares of private sector power generation and distribution companies witnessed mixed trend. GVK Power & Infrastructure (down 2.38%), Tata Power (down 2.82%), Adani Power (down 0.24%) and JSW Energy (down 2.12%) edged lower. Reliance Power (up 0.14%), Torrent Power (up 1.71%) and Reliance Infrastructure (up 1.07%) edged higher.
Auto stocks edged lower. Mahindra & Mahindra (down 3.56%), Ashok Leyland (down 1.77%) and Maruti Suzuki India (down 0.67%) edged lower. Eicher Motors (up 0.46%) and TVS Motor Company (up 1.61%) edged higher.
Bajaj Auto edged lower in volatile trade after the company reported marginal rise in sales volume for August 2015. The stock lost 1.97% at Rs 2,207.35. The stock hit a high of Rs 2,281.95 and a low of Rs 2,200 in intraday trade. Bajaj Auto's total sales rose 2% to 3.41 lakh units in August 2015 over August 2014. Motorcycles sales rose 2% to 2.90 lakh units in August 2015 over August 2014. Sales of commercial vehicles dropped 2% to 51,529 units in August 2015 over August 2014. Exports rose 4% to 1.81 lakh units in August 2015 over August 2014. The company announced the monthly sales volume data during market hours today, 2 September 2015.
Hero MotoCorp (HMCL) edged lower after reporting weak sales for the month just gone by. The stock dropped 1.76% at Rs 2,343.25. HMCL's total two-wheeler sales fell 13.98% to 4.80 lakh units in August 2015 over August 2014. Hero MotoCorp (HMCL) attributed the decline in sales in August 2015 to late onset of the festive season this year compared to last year. The company announced the monthly sales data after market hours yesterday, 1 September 2015. HMCL has decided to launch a slew of new products leading up to the festive season this year. It will initially launch two new scooters which will be followed by introduction of new bikes.
Tata Motors edged lower after reporting decline in sales volume for August 2015. The stock fell 1.29% at Rs 325.35. Tata Motors' domestic sales declined 3% to 35,478 units in August 2015 over August 2014. Exports rose 16% to 5,202 units in August 2015 over August 2014. Sales of passenger cars rose 19% to 9,814 units in August 2015 over August 2014. In commercial vehicles segment, medium and heavy commercial vehicles (M&HCV) sales jumped 31% to 12,017 units in August 2015 over August 2014. Sales of light and small commercial vehicles dropped 25% to 12,267 units in August 2015 over August 2014. This monthly sales data pertains to the standalone operations of Tata Motors. Tata Motors' standalone business mainly comprises of its commercial vehicles and passenger vehicles business in India.
Shares of oil exploration & production firms were mixed after the government announced competitive bidding for small oil fields surrendered by ONGC and Oil India. Reliance Industries (up 1.09%) and Oil India (up 0.52%) edged higher. Cairn India (down 2.98%) and ONGC (down 3.55%) edged lower.
Under the new policy regime for small fields, the government will receive a share of the gross revenue from the sale of oil and gas from small oil fields. The new policy for small oil fields also allows the successful bidder to sell gas at the prevailing market price.
Bank stocks edged lower after the Reserve Bank of India issued draft guidelines on computation of banks' base rate based on marginal cost of funds. Among PSU banks, Union Bank of India (down 5.43%), Punjab National Bank (down 3.82%), State Bank of India (down 3.55%), Canara Bank (down 2.85%), Bank of India (down 2.71%), Bank of Baroda (down 1.74%), Andhra Bank (down 1.71%), IDBI Bank (down 0.96%), Syndicate Bank (down 0.86%) and United Bank of India (down 0.7%) edged lower. Corporation Bank (up 1.16%) and Central Bank of India (up 0.3%) edged higher.
Among private sector banks, Axis Bank (down 2.77%), ICICI Bank (down 2.36%), Kotak Mahindra Bank (down 1.17%), Yes Bank (down 1%), HDFC Bank (down 0.49%) and IndusInd Bank (down 0.66%) edged lower.
As per RBI's draft guidelines, the components of a bank's base rate will include cost of funds, negative carry on CRR/SLR, un-allocable overhead costs and average return on net worth. Negative carry on the mandatory CRR arises because the return on CRR balances is nil. Negative carry on SLR balances may arise if the actual return thereon is less than the cost of funds. The marginal cost of funds will be arrived at by taking into consideration all sources of fund other than equity. The actual lending rates on the loans will be determined by adding the components of spread to the base rate. The base rate is the minimum lending rate charged by a bank.
The RBI has sought comments on the draft guidelines by 15 September 2015 and it intends to implement the revised methodology for calculation of base rate from 1 April 2016.
The Sensex and the Nifty declined for the third straight trading session. The Sensex has lost 938.82 points or 3.55% in three trading sessions from a recent high of 26,392.38 on 28 August 2015. The Sensex has fallen 2,045.86 points or 7.43% in this calendar year so far (till 2 September 2015). The Sensex has risen 155.15 points or 0.61% from a 52-week low of 25,298.42 hit on 25 August 2015. The Sensex is off 4,571.18 points or 15.22% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, the government after trading hours yesterday, 1 September 2015, announced that it has accepted the recommendation of the Justice A.P. Shah Committee not to levy minimum alternative tax (MAT) on stock market transactions of foreign institutional investors (FIIs) for the period prior to 1 April 2015. The latest announcement comes after the government in its February 2015 Budget announced that MAT will not be applicable for FIIs from 1 April 2015.
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