While the uptrend is intact, Nifty may meet with resistance at around 7,880
We had mentioned in Friday’s weekly report that Nifty, Sensex may head higher and that as long as the Nifty stays above 7,650, the uptrend may continue. The major indices in the Indian stock exchanges rose today despite the fact that the US market plunged deeply in the red on Friday after giving up all the gains, following the rate hike. The trends in the major indices during Monday’s trading are given in the table below:
The bellwether indices of the Indian equity markets opened on a weak note in sync with their Asian peers and last Friday's slump. However, both the indices soon rose. Finance Minister Arun Jaitley on Monday tabled in the Lok Sabha the Insolvency and Bankruptcy Bill, 2015, proposing to enact a single bankruptcy code setting deadlines for processing insolvency cases. Jaitley had announced this on Saturday, saying the government intends to bring important legislative measures on structural reforms during the remaining three days left of parliament's winter session, notwithstanding the setback on the GST Bill. The proposed law aims to reduce delays in resolution of insolvency cases and improve recoveries of amount lent to companies. The draft bill has proposed a timeline of 180 days, extendable by another 90 days, to resolve cases of bankruptcy. The new bankruptcy code will help India in the World Bank's Ease of Doing Business ranking.
The Indian central bank's new guidelines for calculating tenor-based lending rates, effective from April 1, 2016, will reduce pressure on the mortgage lender's net interest margin, global credit rating agency Moody's has said. In an article "Reserve Bank of India Eases Banks' Final Lending Rate Requirements, a Credit Positive" the agency said: "The new guidelines will reduce pressure on the banks' net interest margins (NIMs), a credit positive. Under the finalised guidelines, banks will gradually adopt the marginal cost of funds lending rate (MCLR) to price their loans." On December 17 this year, the Reserve Bank of India (RBI) issued guidelines for calculation of lending rates by banks adopting the marginal cost of funds lending rate (MCLR) while pricing their loans. The guidelines apply for the loans starting next fiscal and will be tenor-based benchmark rate instead of a single base rate. The components of MCLR are the marginal cost of funds, negative carry on the cash reserve ratio, operating costs and tenor premium. Indian banks currently set their base rates on either their average cost of funds, or marginal cost of funds. However, because the marginal cost of funds would result in a lower cost of funds amid declining policy rates, banks have not used it, Moody's said. "The RBI lowered policy rates by 125 basis points year-to-date while banks have reduced their base rates much less. The RBI expects the shift towards the MCLR calculation to result in lower lending rates for borrowers," the article states. The tenor-based lending rates will enable banks to price their loans more efficiently based on their funding composition and strategies, Moody's said.
Even as market regulator SEBI was being questioned over the introduction of new IPO application norms, the abridged form norm has turned out to be a damp squib as the ten-page form has become a 16-page set -- apart from leading to further complications rather than solving any. The Securities and Exchange Board of India (SEBI) has issued a notification introducing a 10-page format -- five sheets, printed on both sides -- replacing the 48-page version of the prospectus, to be issued with IPO application forms. The new format came into effect on December 1. A look at the application forms of recent IPOs by Narayana Hrudayalaya, Alkem Laboratories and Path Labs shows that the companies have actually come out with 16-page forms instead of 10.
In an irony of sorts, foreign players have begun cashing out in a big way from the Indian mutual fund industry when its total asset base is fast nearing Rs15-lakh crore mark and fund houses are upbeat about future growth prospects with retail investors joining the party. As the year 2015 draws to a close, data shows that total Asset Under Management (AUM) of the mutual fund industry crossed Rs13.5 lakh crore mark for the first time, while more than 50 lakh new investor accounts have been added this year. The performance stands out even better when seen in the context of the equities market not performing so well.
Shares of Sun Pharma slumped over 7% intraday on Monday as investors grow cautious about a warning letter for its Halol manufacturing unit. The drug major has received a warning letter from the USFDA over violation of manufacturing norms in its facility at Halol in Gujarat. The warning letter follows inspection of the facility in September 2014 by US Food and Drug Administration (USFDA) inspectors. Shares of Sun Pharma closed at Rs754.45, down 4.55% on the BSE.
The top gainers and top losers of the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below: