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15 June 2017
I had mentioned in Wednesday’s closing report
that Nifty, Sensex were in no-man’s land. The major indices of the Indian stock
markets suffered a minor correction on Thursday and closed with small losses
over Wednesday’s close. 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)
Following
their global peers, the Indian equity markets fell during the mid-afternoon
session on Thursday, a day after the US Federal Reserve hiked its benchmark
rates. The rate-hike assumes significance as it is expected to lead FPIs
(Foreign Portfolio Investors) away from emerging markets such as India, and is
also expected to dent business margins as access to capital from the US will
become expensive. Consequent to the late-night US rate hike, the Asian markets
traded broadly in the red and eroded Indian investors' confidence in the highly
expensive conditions in the domestic stock markets. Selling pressure was
witnessed in banking, oil and gas and capital goods stocks. On the NSE, there
were 837 advances, 805 declines and 311 unchanged.
The US Federal Reserve on Wednesday raised
its benchmark interest rates for the third time since December and unveiled
plans to start trimming its balance sheet, even as news of the Fed's relatively
hawkish stance provoked caution in early trading in the Indian equity markets,
which were trading flat on Thursday morning. "In view of realised and
expected labour market conditions and inflation, the FOMC (Federal Open Market
Committee) decided to raise the target range for the federal funds rate to 1%
to 1.25%," the American central bank said in a statement after concluding
its two-day monetary policy meeting. This rate is a 25 basis points increase
over the current one of 0.91%. The Total Investment & Insurance Solutions
Expressing
confidence that the US economy is recovering, the Federal Reserve said America's
labour market has "continued to strengthen" and economic activity has
been "rising moderately" so far this year. Employment gains have been
moderate but solid, on average, since the beginning of the year, and the
unemployment rate has declined. Household spending has picked up in recent
months, and fixed investment by business has continued to expand. The statement
also said inflation "has declined recently" and in the next 12 months
"is expected to remain somewhat below 2% in the near term".
As per data made available, the previous rate
hike by the US central bank in May had a 0.77% upward impact on the BSE Sensex,
while the decision to hold rates in March was impacted by 0.64%. However, the
recent US rate hike has belied fears of capital outflows from India, with
foreign funds continuing to pump in huge liquidity into the stock market.
Riding on ample liquidity and confidence of the global fund managers, India's
market capitalisation has crossed a massive $2 trillion. In fact, such volumes
have also provoked calls for caution in handling inflows. The Total Investment & Insurance
Solutions
Two-
and three-wheeler major Bajaj Auto on Wednesday said that it has reduced the
prices of its bikes by up to Rs4,500 with immediate effect, in order to pass on
the expected GST price advantage to its customers. "The savings will range
up to Rs4,500 depending on the model and the state in which the motorcycle is
purchased," the company said in a statement. According to the company, the
post-GST benefits will vary for each state and differ across motorcycle models.
"With GST implementation just around the corner, we felt that it would be
appropriate to pass on this significant savings to customers," said Eric
Vas, President, Motorcycle Business, Bajaj Auto. After the GST is implemented
from July 1, motorcycles with more than 350 cc engines will attract a 28.84%
tax, while mid-segment and high-end luxury cars will call for a tax incidence
of 32.2%. The company’s shares closed at Rs2,810.00, down 0.54% on the BSE.
Taking higher haircuts is the way forward for
resolving the bad loans of banks, UCO Bank MD and CEO RK Takkar said on
Wednesday. "We may have to take some haircuts. The banks will be prepared
for that and moving forward. I think that's the way things have to move. Most
of these (non-performing assets) accounts will be having 40 per cent
provisions, so the only issue that comes is for the banks to take higher
haircuts," Takkar told BTVi in an interview. The Reserve Bank of India
(RBI) has given banks a time frame of six months to resolve their bad loan
cases, apart from the 12 identified by its Internal Advisory Committee, failing
which the cases will have to be dealt with through the insolvency route.
"Banks will be examining each NPA case during the six months. It is also
to put pressure on the promoters," Takkar said. "It has to be done
within six months. The only option left after that will be liquidation,"
he said. The RBI on Tuesday identified for insolvency proceedings 12 accounts
totalling 25% of the non-performing assets (NPAs), or bad loans, of the banking
system. The Bank Nifty closed at 23,391.75, down 0.46% on the NSE. The Total Investment & Insurance
Solutions
Indians
working overseas sent home $62.74 billion last year, an increase of 68.6% in
the last decade, according to a UN agency. India received the most overseas
remittances last year, a report by the International Fund for Agricultural
Development (IFAD) issued here on Tuesday said. The money sent by Indians
overseas amounted to 3.3% of India's gross domestic product, the report said.
Gulf countries were the primary destination for Indian workers going abroad,
with the US as a "popular destination". The data is likely to
indicate stability of the Indian rupee against the US dollar and British pound
sterling and ensure that there is hardly any volatility in the Indian stock
markets on account of foreign institutional investors.
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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