Sensex floats above 13,900; banks buoyant
The market held firm in afternoon trade, boosted by robust industrial production data for November 2006 and firm Asian markets. There was strong demand for banking, refinery, sugar, IT, auto and cement shares.
At 13:37 IST the Sensex was up 294 points, at 13,924. It rose as many as 317.41 points, to 13,948.12, at 13:08 IST.The BSE clocked a turnover of Rs 2911 crore.The market-breadth was strong. For 1,763 shares rising on BSE, 825 declined. Just 57 shares were unchanged. Gainers outpaced losers by a ratio of 2.1:1.
Banks hogged the limelight after the Union Cabinet, on Thursday, approved the change to a banking law, giving RBI more flexibility for lowering the statutory liquidity ratio requirement (SLR). The law mandates banks to keep a minimum of 25% funds with the central bank as their SLR requirement. A reduction in SLR will release more funds to banks for lending. With the growth in banks’ loan portfolios outstripping the growth in their deposit base, several banks have been selling their SLR holdings in excess of the 25% limit and are now close to the stipulated threshold.
Several banks were boosted by this development. SBI rose 6% to Rs 1223, Bank of India gained 6% to Rs 205.60, Punjab National Bank advanced 5% to Rs 513.90, Bank of Baroda gained 5% to Rs 237, and Canara Bank rose 4% to Rs 268. Among state-run banks, ICICI Bank gained 5% to Rs 942 and HDFC Bank rose 3% to Rs 1034. On Thursday, ICICI Bank ADR gained nearly 5% to $42.92 and HDFC Bank ADR rose 2.3% to $72.64.
Meanwhile, the latest data showed the wholesale price index rose 5.58% in the 12 months to 30 Dec 2006, higher than previous week's annual rise of 5.48% due to a rise in food and fuel prices, data showed on Friday. The figures were slightly lower than estimated 5.6%.
Cabinet move for SLR flexibility boosts banks
The BSE Bankex jumped 318.74 points (4.61%), to 7,232.59, on news that the Cabinet has approved changes to a law, which will permit RBI more flexibility with respect to the statutory liquidity ratio.
The ordinance will amend the Banking Regulation Act 1949, as per which banks must maintain a minimum statutory liquidity ratio (SLR) of 25%. SLR is the percentage of banks' deposits to be invested in government securities. The amendment will grant the Reserve Bank of India operational flexibility to lower the SLR.
The BSE Bankex had struck a lifetime high of 14,060.35 on 4 January 2007.
India's cabinet approved a change in the banking law late on Thursday, which will give the central bank flexibility to lower the level of deposits that banks hold in bonds from 25% now.
PSU banking major State Bank of India (SBI) jumped 6.35% to Rs 1223 on 3.99 lakh shares.
Private sector banking major ICICI Bank advanced 4.92% to Rs 938.15 on 2.92 lakh shares. The bank will release its results on 20 January 2007.
HDFC Bank advanced 3.47% to Rs 1034 on 36,284 shares. HDFC Bank had reported 31.7% growth in net profit for Q3 December 2006 at Rs 295.64 crore. The net profit was within market expectations. Net interest income rose 38.4% to Rs 928.63 crore (Rs 670.61 crore), beating street estimates. Other income rose 26% to Rs 373.30 crore (Rs 296.13 crore).
Bank of India (up 6.12% to Rs 204.75), Punjab National Bank (up 5.11% to Rs 511.10), Kotak Mahindra Bank (up 1.73% to Rs 418.40), Indian Overseas Bank (up 2.82% to Rs 114.75), Bank of Baroda (up 5.10% to Rs 237.50), Oriental Bank of Commerce (up 5.24% to Rs 223.10), Vijaya Bank (up 2.51% to Rs 48.95) and Canara Bank (up 4.31% to Rs 268.50).
Earlier, banking shares had declined after the RBI increased the cash reserve ratio (CRR) by 0.5% to 5.5% on 8 December 2006. The rate hike, which will be effected in two phases — 25 basis points each on 23 December 2006 and 6 January 2007 — is aimed at controlling inflation, while pushing up interest rates. Inflation rate as on 25 November 2006, based on the wholesale prices index (WPI), stood at 5.3%, down from 5.45% in the previous week, while the economy grew 8.9% and 9.2% in the first two quarters of the year.
At 13:37 IST the Sensex was up 294 points, at 13,924. It rose as many as 317.41 points, to 13,948.12, at 13:08 IST.The BSE clocked a turnover of Rs 2911 crore.The market-breadth was strong. For 1,763 shares rising on BSE, 825 declined. Just 57 shares were unchanged. Gainers outpaced losers by a ratio of 2.1:1.
Banks hogged the limelight after the Union Cabinet, on Thursday, approved the change to a banking law, giving RBI more flexibility for lowering the statutory liquidity ratio requirement (SLR). The law mandates banks to keep a minimum of 25% funds with the central bank as their SLR requirement. A reduction in SLR will release more funds to banks for lending. With the growth in banks’ loan portfolios outstripping the growth in their deposit base, several banks have been selling their SLR holdings in excess of the 25% limit and are now close to the stipulated threshold.
Several banks were boosted by this development. SBI rose 6% to Rs 1223, Bank of India gained 6% to Rs 205.60, Punjab National Bank advanced 5% to Rs 513.90, Bank of Baroda gained 5% to Rs 237, and Canara Bank rose 4% to Rs 268. Among state-run banks, ICICI Bank gained 5% to Rs 942 and HDFC Bank rose 3% to Rs 1034. On Thursday, ICICI Bank ADR gained nearly 5% to $42.92 and HDFC Bank ADR rose 2.3% to $72.64.
Meanwhile, the latest data showed the wholesale price index rose 5.58% in the 12 months to 30 Dec 2006, higher than previous week's annual rise of 5.48% due to a rise in food and fuel prices, data showed on Friday. The figures were slightly lower than estimated 5.6%.
Cabinet move for SLR flexibility boosts banks
The BSE Bankex jumped 318.74 points (4.61%), to 7,232.59, on news that the Cabinet has approved changes to a law, which will permit RBI more flexibility with respect to the statutory liquidity ratio.
The ordinance will amend the Banking Regulation Act 1949, as per which banks must maintain a minimum statutory liquidity ratio (SLR) of 25%. SLR is the percentage of banks' deposits to be invested in government securities. The amendment will grant the Reserve Bank of India operational flexibility to lower the SLR.
The BSE Bankex had struck a lifetime high of 14,060.35 on 4 January 2007.
India's cabinet approved a change in the banking law late on Thursday, which will give the central bank flexibility to lower the level of deposits that banks hold in bonds from 25% now.
PSU banking major State Bank of India (SBI) jumped 6.35% to Rs 1223 on 3.99 lakh shares.
Private sector banking major ICICI Bank advanced 4.92% to Rs 938.15 on 2.92 lakh shares. The bank will release its results on 20 January 2007.
HDFC Bank advanced 3.47% to Rs 1034 on 36,284 shares. HDFC Bank had reported 31.7% growth in net profit for Q3 December 2006 at Rs 295.64 crore. The net profit was within market expectations. Net interest income rose 38.4% to Rs 928.63 crore (Rs 670.61 crore), beating street estimates. Other income rose 26% to Rs 373.30 crore (Rs 296.13 crore).
Bank of India (up 6.12% to Rs 204.75), Punjab National Bank (up 5.11% to Rs 511.10), Kotak Mahindra Bank (up 1.73% to Rs 418.40), Indian Overseas Bank (up 2.82% to Rs 114.75), Bank of Baroda (up 5.10% to Rs 237.50), Oriental Bank of Commerce (up 5.24% to Rs 223.10), Vijaya Bank (up 2.51% to Rs 48.95) and Canara Bank (up 4.31% to Rs 268.50).
Earlier, banking shares had declined after the RBI increased the cash reserve ratio (CRR) by 0.5% to 5.5% on 8 December 2006. The rate hike, which will be effected in two phases — 25 basis points each on 23 December 2006 and 6 January 2007 — is aimed at controlling inflation, while pushing up interest rates. Inflation rate as on 25 November 2006, based on the wholesale prices index (WPI), stood at 5.3%, down from 5.45% in the previous week, while the economy grew 8.9% and 9.2% in the first two quarters of the year.
posted by SY at 2:07 PM
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