The Indian equity market ended near day’s high on Tuesday snapping a four day losing streak amid a highly lackluster day. The session was so dull that NSE Nifty index was stuck in a mere 40 points range while BSE Sensex was trapped in a 160 points range. Nifty closed with again of 18 points at 7,749 while Sensex ended with again of 75 points at 25,305.
Asian markets finished mixed as of the most recent closing prices with Japanese shares dropping amid renewed strength in yen as fresh data showed the country’s exports continued to fall. The Nikkei 225 & the Hang Seng fell 0.49% and 0.22% respectively while the Shanghai Composite gained 0.64%. European markets are lower today with shares in France off the most. The CAC 40 is down 0.29% while London’s FTSE 100 is off 0.10% and Germany’s DAX is lower by 0.09%.
A report by State Bank of India(SBI) highlighted that credit growth in India is unlikely to revive materially in near term as demand conditions are still acting as a drag. The report offered that it is too early and premature to conclude about the credit growth picking up in the country.
During the fiscal 2015-16, credit growth witnessed some improvement and stood at 11.3% as on March 18, 2016. However, come April 29 this year, credit off-take declined to 9.2%.
The report also stated that the supposed correlation between balance sheet cleaning and credit growth picking up will only happen once the growth cycle picks up significantly.
To aid credit growth, the Reserve Bank of India (RBI) has cut interest rates by 1.5% so far. However, the transmission of rates by banks has been much lower. Hopefully, with the marginal cost of funds based lending rate that came into effect from April 2016, banks are now in a better position to pass on the rate-cuts. However, more than this, the revival in the broad economy will play a key role in bringing about a more sustainable recovery in credit demand.
Engineering stocks are trading on a mixed note with Welspun Corp and Jyoti Structure leading the losses. In another news update it was reported that L&T Infotech, an arm of engineering giant Larsen and Toubro (L&T), has received approval from the SEBI for its proposed initial public offering (IPO).
The company had filed its draft red herring prospectus (DRHP) with Securities and Exchange Board of India (SEBI) in April. SEBI approved its final observations on the draft offer documents on May 20, which is necessary for any company to launch a public offer.
The company’s IPO comprises an offer-for-sale of up to 17,500,000 equity shares of the subsidiary by L&T. The issue is being managed by Kotak Mahindra Capital Company, Citigroup Global Markets India and ICICI Securities.
USDINR trade today tradingdown 15 paise at 67.63 per US dollar.
Out of 1,812 stocks traded on the NSE, 1046 declined and 503 advanced today.
Top 5 Nifty Gainers: ICICI Bank (2.50%), Asian Paints (2.07%), Infosys Ltd (1.98%), Tata Motors (1.91%) and Axis Bank (1.90%).
Top 5 Nifty Losers: Cipla (-6.73%)
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