Sensex and Nifty erased gains as RBI Monetary Policy Committee left the repo rate unchanged at 6.25%. Industry was expecting at least 25 basis point cut.
Although Nifty dropped below 8100 points, Nifty was gaining back some confidence. Sensex also gained back after a dip.
On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25%.
MPC stated all the key rates remain unchanged. This includes Bank Rate which remains at 6.75%, Repo Rate remains 6.25%, Reverse Repo Rate remains 5.75%, CRR remains 4.00% and SLR remains 20.75%.
The announcement of the RBI Monetary Policy wherein the committee decided to keep the repo rate unchanged, has impacted price sensitive sectors including Auto and Realty.
RBI Withdraws the Incremental CRR
On November 26, 2016 the Reserve Bank had announced an incremental cash reserve ratio (CRR) of 100 per cent of the increase in net demand and time liabilities (NDTL) of scheduled banks between September 16, 2016 and November 11, 2016, effective the fortnight beginning November 26, 2016. It was intended to absorb a part of the large increase in liquidity in the system following the withdrawal of the legal tender status of Rs 500 and Rs 1,000 denomination bank notes. It was also indicated that the incremental CRR was purely a temporary measure and that it would be reviewed on December 9, 2016 or even earlier.
With the enhancement in the ceiling for issue of securities under the Market Stabilisation Scheme (MSS) to Rs 6,000 billion, it has been decided to withdraw the incremental CRR effective the fortnight beginning December 10, 2016. The liquidity released by the discontinuation of the incremental CRR would be absorbed by a mix of MSS issuances and liquidity adjustment facility (LAF) operations.
Nifty Bank index witnessed a downtrend primarily due to the RBI announcement of withdrawal of incremental Cash Reserve Ratio imposed on bank's deposits in late November to be withdrawn from December 10. Kotak Bank, Federal Bank, IndusInd bank, HDFC Bank, ICICI Bank, SBI, Canara Bank were all trading in red, while Yes Bank was the only bank trading in green on Nifty bank index.
The BSE Sensex ended with a loss of 156 points at 26237. The benchmark indices opened at 26456.21, touched an intra-day high of 26540.83 and low of 26164.82.
The NSE Nifty dropped 41 points and closed at 8,102. It opened at 8,168.40 points, hitting a high of 8,190.45 and low of 8,077.50.
The India VIX (Volatility) index was down 1.52% at 16.8450. The BSE Midcap closed at 12324.54 and Smallcap indices closed at 12101.77, both indices ending marginally down.
Out of 1884 stocks traded on the NSE, 961 declined and 636 advanced today.
A total of 17 stocks registered a fresh 52-week high in trade today, whereas 9 stocks touched a new 52-week low on the NSE.
At the close of day, Eicher Motors, BPCL, Adani Ports, Idea, HDFC were the top gainers while Sun pharma, Bank of Baroda, Axis bank, Bosch, Bajaj Auto, Lupin were among the losers on NSE.
The rupee was trading at 67.86 per US dollar. Gold was trading at Rs 27,934 per 10 gms and silver was trading at Rs 41,163 per kg.
On the global front, most Asian indices closed in green and marginally up. In Europe, the FTSE 100 was up 1.25%. CAC 40 and DAX was up 0.90% and 1.33% respectively while, the US Nasdaq was also up 0.45%.
European indices open on a positive note ahead of the ECB policy primarily as traders expected the central bank to extend the duration of its bond-buying programme. The ECB will commence its two-day policy meeting on Thursday, with the policy statement to be detailed on Friday. As expected, banks led the rally in European shares, as investors expected them to benefit from any extension of the ECB's bond-buying plan.
Although Nifty dropped below 8100 points, Nifty was gaining back some confidence. Sensex also gained back after a dip.
On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25%.
MPC stated all the key rates remain unchanged. This includes Bank Rate which remains at 6.75%, Repo Rate remains 6.25%, Reverse Repo Rate remains 5.75%, CRR remains 4.00% and SLR remains 20.75%.
The announcement of the RBI Monetary Policy wherein the committee decided to keep the repo rate unchanged, has impacted price sensitive sectors including Auto and Realty.
RBI Withdraws the Incremental CRR
On November 26, 2016 the Reserve Bank had announced an incremental cash reserve ratio (CRR) of 100 per cent of the increase in net demand and time liabilities (NDTL) of scheduled banks between September 16, 2016 and November 11, 2016, effective the fortnight beginning November 26, 2016. It was intended to absorb a part of the large increase in liquidity in the system following the withdrawal of the legal tender status of Rs 500 and Rs 1,000 denomination bank notes. It was also indicated that the incremental CRR was purely a temporary measure and that it would be reviewed on December 9, 2016 or even earlier.
With the enhancement in the ceiling for issue of securities under the Market Stabilisation Scheme (MSS) to Rs 6,000 billion, it has been decided to withdraw the incremental CRR effective the fortnight beginning December 10, 2016. The liquidity released by the discontinuation of the incremental CRR would be absorbed by a mix of MSS issuances and liquidity adjustment facility (LAF) operations.
Nifty Bank index witnessed a downtrend primarily due to the RBI announcement of withdrawal of incremental Cash Reserve Ratio imposed on bank's deposits in late November to be withdrawn from December 10. Kotak Bank, Federal Bank, IndusInd bank, HDFC Bank, ICICI Bank, SBI, Canara Bank were all trading in red, while Yes Bank was the only bank trading in green on Nifty bank index.
The BSE Sensex ended with a loss of 156 points at 26237. The benchmark indices opened at 26456.21, touched an intra-day high of 26540.83 and low of 26164.82.
The NSE Nifty dropped 41 points and closed at 8,102. It opened at 8,168.40 points, hitting a high of 8,190.45 and low of 8,077.50.
The India VIX (Volatility) index was down 1.52% at 16.8450. The BSE Midcap closed at 12324.54 and Smallcap indices closed at 12101.77, both indices ending marginally down.
Out of 1884 stocks traded on the NSE, 961 declined and 636 advanced today.
A total of 17 stocks registered a fresh 52-week high in trade today, whereas 9 stocks touched a new 52-week low on the NSE.
At the close of day, Eicher Motors, BPCL, Adani Ports, Idea, HDFC were the top gainers while Sun pharma, Bank of Baroda, Axis bank, Bosch, Bajaj Auto, Lupin were among the losers on NSE.
The rupee was trading at 67.86 per US dollar. Gold was trading at Rs 27,934 per 10 gms and silver was trading at Rs 41,163 per kg.
On the global front, most Asian indices closed in green and marginally up. In Europe, the FTSE 100 was up 1.25%. CAC 40 and DAX was up 0.90% and 1.33% respectively while, the US Nasdaq was also up 0.45%.
European indices open on a positive note ahead of the ECB policy primarily as traders expected the central bank to extend the duration of its bond-buying programme. The ECB will commence its two-day policy meeting on Thursday, with the policy statement to be detailed on Friday. As expected, banks led the rally in European shares, as investors expected them to benefit from any extension of the ECB's bond-buying plan.
