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After opening the day flat, the Indian Markets inched upwards and are presently trading in the green. Barring pharma stocks, sectoral indices are trading on a positive note with metal and banking stocks leading the gains.
The BSE-Sensex is trading up 120 points (up 0.5%) and the NSE-Nifty is trading up 40 points (up 0.5%). Both the BSE Mid Cap index and the BSE Small Cap indices are trading up by 0.6%. The rupee is trading at 66.31 to the US$.
Banking stocks are trading on a positive note with ICICI Bank and Karur Vysya Bank leading the gainers. As per an article in Economic Times, depositors have pulled out a net Rs 400 billion from banks since the Reserve Bank of India (RBI) lowered its policy rates by 0.5% in October. According to RBI data, term deposits mobilized by the commercial banks dipped by Rs 414 billion between October 2 and November 27. This was as against Rs 396 billion additions to term deposits that were seen in the same period a year ago.
Most of the above activity is seen as depositors have parked their funds in alternate investment avenues. Off late, falling interest rates have prompted a shift from traditional bank term deposits to tax-free bonds and select mutual funds debt schemes. The same can be seen with the rise in bond issuances by various companies in recent times. During the past two months, NTPC, Power Finance Corporation, Rural Electrification Corporation, Indian Railways Finance Corporation and National Highway Authorities of India have together sold bonds worth more than Rs 160 billion. These securities offer tax-free interest rates that are higher than bank fixed deposits now.
In 2015, the RBI has slashed the benchmark rate by 1.25%. However, banks have so far passed only 0.6% to customers, thereby leaving space for sharp rate cuts. An article in The Daily Reckoning has explained this in a detailed manner. You can read it here.
Meanwhile, Tata Motors has entered the top-50 league of the world's biggest companies in terms of their R&D (research and development) investments. The company has moved up from 104th position last year to 49th at present. Moreover, it has also shown the largest increase in R&D investments on the list. Most of this R&D expansion for the company was seen at its UK subsidiary Jaguar Land Rover.
In the expanded list of the world's 2,500 top R&D firms, there are a total of only 26 Indian companies. This is as against 829 companies from the US, 608 companies from the EU countries, 360 from Japan, 301 from China, 114 from Taiwan, 80 from Switzerland and 27 each from Canada and Israel. India, on the whole, is placed at 15th position in terms of the number of companies on the list.
To note, among many other Indian companies on the list, Dr Reddy's Laboratories is ranked 404th, Mahindra & Mahindra is at 451st, Lupin at 624th, Sun Pharma at 669th, Cipla at 831st and Infosys at 884th.
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