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6
April 2017
Snapping
the two-day winning streak, the domestic equity market ended in the red on
Thursday after the minutes of the US Fed’s last policy review induced weakness
in global equities and back home. The market recovered a bit after Reserve Bank
of India kept the repo rate unchanged at 6.25%. The trends of the major indices
in the course of Thursday’s trading are given in the table below: The Total Investment & Insurance Solutions
 |
Major Indices (The Total
Investment & Insurance Solutions)
The
S&P BSE Sensex closed the session 47 points lower at 29,927 with ITC, ICICI
Bank and SBI contributing most to the fall. The headline index, which opened at
29,946 against the previous day’s close of 29,974, hit an intraday high and low
of 29,954 and 29,817, respectively.
In
the midcap space, the S&P BSE Midcap index closed 0.15% higher at 14,276
with Jindal Steel, Concor and M&M Finance being the major contributors in
the surge in the index. The broader Nifty50 of the National Stock Exchange
(NSE) ended at 9,261, down 3.20 points.
Benchmark
indices ended the day on a lower note, but not before staging a recovery from
the day’s low post the RBI’s policy announcement. The Street had factored in
the central bank’s decision. A rally in real estate stocks could have helped in
the recovery.
The
Reserve Bank of India (RBI) kept the repo rate unchanged at 6.25% on Thursday,
forecast robust 7.4% growth in 2017-18 aided by waning effects of
demonetisation, although inflation risks remain in the medium term. The RBI
hinted at a looming inflation threat over the next 6-12 months, obliquely
leaving the door ajar for an interest rate hike in 2017-18. For 2017-18,
inflation is projected to average 4.5% in the first half and 5% in the second
half. “Underlying inflation pressures persist, especially in prices of
services. Input cost pressures are gradually bringing back pricing power to
enterprises as demand conditions improve,” the central bank said flagging weak
monsoon, expected rise in government employees’ allowances and goods and
services tax (GST) as the primary factors that could knock up prices in the
short-term.
The
status quo on rates, however, was accompanied by a string of regulatory changes
including raising the reverse repo by 25 basis points to 6%, allowing banks to
investment in real estate investment trusts (REITs), raising the minimum fund
requirements of asset reconstruction companies (ARCs), allowing collateral
substitution under repo that will give banks more funds to lend, and proposing
the introduction of standing deposit facility (SDF)—another window for banks to
borrow. The six member monetary policy committee (MPC), headed by RBI governor
Urjit Patel, also reduced the liquidity corridor – the difference between the
repo and reverse repo rates or the liquidity adjustment facility (LAF)—to 25
basis points with immediate effect. Likewise, the marginal standing facility
(MSF) or the rate at which banks borrow from the RBI during periods of acute
liquidity shortage, will stand reduced to 6.5%.
Rate
sensitive stocks such as banks, real estate stocks rallied after the Monetary
Policy Committee (MPC) decided to keep the policy rates and cash reserve ratio
(CRR) unchanged. Real estate stocks rallied after the Reserve Bank of India
(RBI) said that it plans to allow banks to invest in REITs and InvITs. The Total Investment & Insurance Solutions
Tata
Power said electricity generation from all its plants collectively crossed
51,000 Million Units (MUs) in 2016-17. It also reported significant increase of
15.2% in output, with its total power generation capacity at 10,577 MW from
various fuel sources such as thermal, hydroelectric power, renewable energy
(wind and solar PV) and waste heat recovery. According to a statement by the
company, it also has a significant presence in the clean energy space with a
gross installed capacity of 3,141 MW. Toyota Kirloskar Motor is recalling
23,157 units of its sedan Corolla Altis in India, as part of the ongoing recall
of 2.9 million vehicles globally for defective air bags. Bharat Forge hit fresh
52-week high, up nearly 3% after sharp jump in North America truck orders. The Total Investment & Insurance Solutions
On
the global front, Wall Street ended lower on Wednesday after a late-afternoon
reversal following signals from the Federal Reserve that it could change its
bond buying policy this year, quenching a rally sparked by a strong private
sector jobs report, said a Reuters report. Stocks in China bucked the trend as
they extended gains on Thursday to hit a four-month high as investors continued
to chase stocks which could benefit from the government's launch of a massive
new economic zone near Beijing. Most of the Asian markets settled lower, as the
region nervously watched for market-moving news from the first meeting between
US President Donald Trump and his Chinese counterpart Xi Jinping. European
stocks opened lower.
The
top gainers and top losers of the major indices are given in the table below:
 |
Top Gainer (The Total
Investment & Insurance Solutions)
The
closing values of the major Asian indices are given in the table below: The Total Investment & Insurance Solutions
 |
| Asian Indices (The Total Investment & Insurance Solutions) |
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