After a good start, the Indian stock markets have remained well above the dotted line in the morning session. All sectoral indices except the IT index are trading higher. Banking stocks are particularly finding favour.
Most of the food stocks are trading higher today. Britannia and United Spirits are among the top gainers. India's leading cigarette company ITC is continuing its diversification into the non cigarette business. According to a leading business daily ITC will set up a paper and pulp unit at the Palvancha division in Khammam district of Andhra Pradesh. ITC already has a unit at this location and wants to invest up to Rs 30 bn to build a new plant close to it. The Andhra Pradesh Board for Wildlife has decided to recommend allocation of forest land to ITC for setting up of this unit.
The Andhra Pradesh Industrial Infrastructure Corporation (APIIC), the nodal agency for allocation of land allocation for industries, had requested for allocation of 300 acres in Kistasagar forest reserve in the Palvancha division to ITC a few months ago. The ITC unit, apart from creating job opportunities for local people, is expected to create a market for pulp wood for the local farmers who have a land holding of nearly 6,000 acres in the vicinity. ITC is up 1.4% today.
All banking sector stocks are trading positive today. Indian Bank and Union Bank are leading the gainers, while Central Bank and Punjab & Sind Bank are leading the losers. SBI has announced a hike in the base rate as well as the deposit rate. The bank has hiked the base rate by 10 bps to 9.8%; while deposit rates have been hiked by 30-100 bps for various maturities. The bank has also hiked the rates on home and auto loans by 30 bps. According to Arundhati Bhattacharya, MD and CFO of the bank, the increase in rates will help the bank to protect its margins at 3.5%. She said that they have aligned their deposits rates with what the market is offering currently. Notably, most public sector banks had refrained from increasing the rates earlier hoping that RBI may withdraw the liquidity tightening measures. However, the bank has gone ahead with the rate hike just a day before the RBI monetary policy review. SBI is trading up 6.8% today.