The Indian stock markets started the day below the dotted line. They continued to trade weak for the rest of today's session. The previous close was not breached for the entire session. The day finally ended on a negative note. The market breadth was more negative with 1.3 declines to every advance. The BSE-Sensex closed negative, lower by around 127 points (down 0.7%), the NSE-Nifty also closed lower by around 48 points (down 0. 9%). The smaller indices also had a weak day on the bourses. The BSE Mid Cap index and the BSE Small Cap closed 0.3%and 0.5% lower respectively in trade today. Metal and consumer goods stocks saw a bulk of the losses today. Banking stocks also closed lower on asset quality concerns. FMCG stocks however bucked the trend.
As regards global markets, Asian indices had a negative outing today. European indices opened the day on a mixed note. The rupee was trading at Rs 55.93 to the dollar at the time of writing.
India's largest bank, State Bank of India (SBI) announced a reduction in interest rate on fixed deposits by 0.5% for most of its maturity periods. However, for deposits between 241 days and 365 days, the downward revision in rates was around 1%. The new rate would be 6.5%as against 7.5%. This move of reduction of interest paid on funds is likely to be followed by other lenders. These new rates would become effective from September 7. The bank has however left interest rate unchanged at 8.5% for term deposit of 5-10 years. Soon after the last monetary policy review, where the Statutory Liquidity Ratio (SLR) was cut by 1%, SBI started lowering its lending rates on cars and home loans by up to 0.5%. This has helped the bank see an uptick in retail interest and has seen disbursements double since the loan cut. Now the cut in deposit rates will help the bank either further cut rates adding to growth or help the bank out on the margin front.
Maruti Suzuki announced that it expects to have full employee strength at its troubled Manesar plant by the end of September after completing fresh recruitments. The regularisation of contract workers and new hiring is underway and should be completed within the next 10 days. The car manufacturer had around 3,300 workers at the Manesar plant before the July 18 violence, in which one executive was killed and 100 injured. After a month-long lockout, which ended on August 21, the company fired 500 permanent workers and said it would not take back those contract workers who were stated to have been involved in the violence.
Learning its lesson from the labour issues, Maruti will be using industrial robots at its first factory outside Haryana, i.e. at Gujarat's Mehsana district. The company is spending Rs 40 bn to set up the Gujarat facility. It has realized the importance of automation in its manufacturing process. The three production lines in Mehsana, scheduled to be operational by 2015, will be 95% automated with at least 800 robots. The robots will be used at the press and weld shops, with humans limited to assembly. The company has already placed an order with Japanese Fanuc Robotics for at least 200 robots.