Sensex, Nifty rise 0.7%; auto, bank, FMCG stocks support

Moneycontrol Bureau11:45 am Rate cut? The process to set up India's monetary policy committee is ongoing and it is not clear if it will get to set interest rates at the central bank's next policy review on August 9, Reserve Bank of India (RBI) Governor Raghuram Rajan said according to TV channels.

India is in the midst of putting in place a six-member monetary policy committee that will be tasked with deciding interest rates.

11:30 am Houseview: Betting big on State Bank of India, Deutsche Bank says that it is the only PSU bank gaining market share with right basics, doing well in retail loans and becoming more efficient bank with right investments in digital. The brokerage has also raised target price on SBI by 13 percent to Rs 270 per share with a buy rating.

It says that SBI's business strategy focusing on net interest margin (NIM), fees and current and savings account ratio (CASA) are right on track. It is also confident that consolidation with its subsidiary may further improve efficiency.

Deutsche Bank believes that the worst of non-performing loan (NPL) recognition and credit costs are behind  while slippages at 2.7 percent and credit costs at 2.1 percent in FY16 should gradually improve. FY16 credit costs were at 220 basis points versus last six-year average of 120 bps. It expects gradual improvement in FY17 return on equity (RoEs).

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The market continues to rise with support from auto, bank, FMCG amd pharma stocks. The Sensex is up 199.81 points or 0.7 percent at 26940.20, and the Nifty is up 56.30 points or 0.7 percent at 8260.30. About 1529 shares have advanced, 616 shares declined, and 156 shares are unchanged.

Tata Motors, BHEL, Axis Bank, ICICI Bank and NTPC are top gainers while HDFC and M&M are losers in the Sensex.

Oil prices fell as supply outlook improved with both commodities hovering close to the key USD 50 mark, worrying traders about producers coming back online.

Crude dipped after two days of strong gains which saw the commodity soar past the benchmark that makes financial sense for producers to restart production. Prices had been falling following the global financial market turmoil that followed last week's British vote to bolt out of the European Union.