Benchmarks extend losses; trade near intra-day low levels

Indian bourses added losses to continue to trade in red in the late afternoon session, hovering near the lowest point of the day on account of profit-booking by funds and retail investors, to cash-in on the recent rally, ahead of the industrial output data for February, amid a weak trend in the global market. Profit booking witnessed in frontline blue chip stocks dragged the market down and most of major indices were trading in red. Bank shares remained weak and were trading down by over 0.70% after the RBI came down heavily on banks for charging different interest rates to customers with similar profiles, saying such discrimination cannot be accepted. Further, IT stocks were under pressure as investors were cautious ahead of the fourth quarter earnings from IT major Infosys. Selling was also witnessed in auto stocks after domestic passenger car sales declined 5.08% to 1,71,489 units in March as compared to 1,80,675 units in the year-ago month. However, healthcare shares continue to attract buying interest following a rebound in Sun Pharma which gained nearly 2% to around Rs 629. On stock specific movement, Indusind Bank shares down by 2.71% to nearly Rs 502 the RBI said the foreign investors would have to get its prior permission for buying shares in the bank.

On global front, Asian equity indices were trading in red with Hang Seng down by 0.68% and Taiwan Weighted down by 0.45%. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,750 and 22,500 levels respectively. The market breadth on BSE was positive, out of 2,366 stocks traded, 1,176 stocks advanced, while 1,079 stocks declined on the BSE.

The BSE Sensex is currently trading at 22,553.20 down by 162.13 points or 0.71% after trading in a range of 22,642.05 and 22,531.87. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.36%, while Small cap index up by 0.58%.

The gaining sectoral indices on the BSE were Healthcare up by 1.09%, Consumer Durables up by 1.00% and Realty up by 0.31%. While, Capital Goods down by 0.81%, Bankex down by 0.77%, FMCG down by 0.70%, Auto down by 0.54% and Oil and Gas down by 0.46% were the losing indices on BSE.   

The top gainers on the Sensex were Sun Pharma up by 2.14%, Cipla up by 0.99%, Dr Reddy’s Lab up by 0.91%, Bharti Airtel up by 0.27% and Tata Steel up by 0.26%. On the flip side, HDFC down by 2.63%, Maruti Suzuki down by 1.52%, Hero Motocorp down by 1.37%, M&M down by 1.36% and Gail India down by 1.34%.

Meanwhile, in a move to bring greater transparency in the pricing of credit, the Reserve Bank of India (RBI) panel suggested a benchmark floating interest rate, especially for home loans. As per the panel’s draft report on Pricing of Credit, the Indian Banks Association (IBA) may develop a new benchmark for floating interest rate products, namely, the Indian Banks Base Rate (IBBR), which may be collated and published by IBA on a periodic basis. The RBI Deputy Governor Anand Sinha headed the panel which was set up recently to examine issues related to discrimination in the pricing of credit and recommend measures for transparent and appropriate pricing of credit under a floating rate regime. The RBI has invited feedback and comments on the recommendations in the draft report by May 16.

The panel draft noted that interest rates on floating rate loan will reset periodicity on particular dates only, irrespective of changes made to the base rate or minimum lending rate within the reset period. Banks are restricted to give loans below the base rate to any customer. The base rate (benchmark lending rate) should be linked to the marginal cost of funds if the average deposit tenure is on the lower side. Draft report further added that benefit of interest reduction on the principal on account of pre-payment should be given on the day the money is received by the bank without waiting for the next EMI cycle date to effect the credit.

Regarding retail loans, the draft highlighted that customers should have ‘exit’ and ‘sans exit’ options at the time of entering the contract. These exit option should be easily exercisable by the customer with minimum notice period and without impediments. Panel report further added that these recommendations will also enable informed decision-making by customers and improved asset-liability management at banks. The grievances redressal systems in banks should be made robust and responsive to customers' needs.

The CNX Nifty is currently trading at 6,752.80 down by 43.60 points or 0.64% after trading in a range of 6,773.55 and 6,743.15. There were only 13 stocks advancing against 37 declining on the index.

The top gainers of the Nifty were Sun Pharma up by 2.32%, NMDC up by 1.70%, HCL Tech up by 1.22%, Ambuja Cement up by 1.20% and Dr Reddy up by 1.00%. On the flip side, HDFC down by 2.82%, Indusind Bank down by 2.71%, Maruti down by 1.61%, Hero Motocorp down by 1.47% and M&M down by 1.27% were the major losers on the index.

Asian equity indices were trading in red; Hang Seng down by 0.68% to 23,028.23, Taiwan Weighted down by 0.45% to 8,908.05, Nikkei 225 down by 2.41% to 13,955.40 and Straits Times was down by 0.06% to 3,201.93. While, Shanghai Composite up by 0.07% to 2,137.13 and Jakarta Composite up by 0.44% to 4,786.83.