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22Nd Aug 2016
I had mentioned in Friday’s closing report that Nifty,
Sensex were stalling on lower volumes. The major indices of the Indian stock
markets suffered a minor correction on Monday and closed around 0.40% lower
than Friday’s close. Investors were cautious and the lower NSE volumes were a
clear indicator of uncertainty. The trends of the major indices in the course
of Monday’s trading are given in the table below: The Total Investment & Insurance Solutions
 |
Major Indices (The Total
Investment & Insurance Solutions)
Key equity indices traded in the red, as
selling pressure was witnessed in automobile, information technology (IT) and
healthcare stocks. The BSE market breadth was slightly tilted in favour of the
bears -- with 1,463 declines and 1,254 advances and 202 unchanged. On the NSE,
on Monday, there were 702 advances, 889 declines and 264 unchanged. The Total Investment & Insurance
Solutions
The indices opened on a flat note with a
slightly negative bias following cues from negative Asian markets. The markets
also traded with apprehension as caution prevailed ahead of a speech by Federal
Reserve Chair Janet Yellen later in the week. Further, investors were seen
cautious after government's decision on Saturday to appoint economist and
banker Urjit R Patel as the next Governor of the Reserve Bank of India (RBI).
Moreover, a weak rupee and lower crude oil prices also dented investors'
sentiments.
The appointment of Urjit Patel, as Governor
of the Reserve Bank of India (RBI), effective from September 4, has naturally
raised expectation among those who were critical of outgoing Governor Raghuram
Rajan for not easing enough the monetary policy by cutting rates. Since January
2015, Rajan has cut lending rates by 150 basis points (bps) but banks have only
cut their interest rates by about half of that. To nudge banks to transfer the
benefit of rate cuts, Rajan even announced a shift to the marginal cost of
lending (MCLR) regime. Under the MCLR, banks need to consider their marginal
cost of funds, or the cost incurred on incremental deposits across different
maturities, to decide on interest rates. However, three months after the MCLR
was launched on April 1 this year, banks have hardly cut their lending rates. A
lower interest rate regime is likely to push the bulls in the stock market
forwards.
Coal India on Saturday said its workers will
go on a nationwide strike on September 2 to protest against divestment and
strategic sale in the nationalised coal sector and to demand higher social
security measures and recruitment drives. "We have received a
communication of strike notice... for general strike on September 2. Efforts
are being made for conciliation process," the coal behemoth said in a
regulatory filing to the Bombay Stock Exchange. "In case they resort to
strike, it will affect product and dispatch of coal," the filing said.
Almost five lakh bank union staff and officers are likely to join the
strike on September 2 to protest against the "anti-people policies of the
Modi government and labour reforms". Last year, coal production took a
substantial hit due to a strike called by trade unions. Major trade unions like
INTUC, AITUC and CITU called for the one-day strike. The unions demanded a stop
to the disinvestment of Coal India, end to allocations of coal blocks to
private companies, settlement of wage revision of contact workers as well as
outsourcing workers working in the coal industry. Coal India shares closed at
Rs335.40, up 0.36% on the BSE on Monday.
In the Goods and Services Tax (GST) regime,
exporters will need to adapt as exemptions and incentives given to promote
exports will go away, a senior official said on Saturday. "Once the GST is
implemented, exemptions and incentives will have to go away," Union
Commerce Secretary Rita Teaotia said. "Philosophically, we are moving in
the direction of creating a conducive policy and economic environment for
everybody across the country and that is the intention of the GST law,"
she added. "In a fragmented system, there could be cascading effect of
taxes and local duties, but to offer a level-playing field "the
requirement of incentives and subsidies would certainly need to be moderated
and modified". But that would be taken up subsequently," she said at
a session organised by the Engineering Export Promotion Council, Federation of
Indian Export Organisations, Assocham, Bengal Chamber of Commerce and Industry
and Gem Jewellery Export Promotion Council. She said the GST law would be
framed by the Revenue Department, not by the Commerce Department. With the
rupee stabilising against the dollar, there would be no need to promote exports
or have excess protectionism on the part of the government in its policies and
the stock market would also not give higher weightage to exports over domestic
sales in the case of listed companies.
The top gainers and top losers of the major
indices are given in the table below:
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| Top Gainer (The Total Investment & Insurance Solutions) |
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| Asian Indices (The Total Investment & Insurance Solutions) |
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