A bout of volatility was witnessed as key benchmark indices trimmed losses after slipping into the red from green in early afternoon trade. The barometer index, the S&P BSE Sensex, was currently off 14.62 points or 0.05% at 28,060.93. The market breadth indicating the overall health of the market was positive. Asian stocks fell after the Swiss National Bank in its stunning move yesterday, 15 January 2015, dumped its long-standing minimum exchange rate of 1.20 Swiss francs to the euro, as the cap on the franc appeared increasingly indefensible in the face of the weakening euro. Trading in US equity index futures indicated weak opening of US stocks later in the global day today, 16 January 2015.
Union Bank of India joined United Bank of India in cutting base rate after a surprise reduction in repo rate announced by the Reserve Bank of India (RBI) yesterday, 15 January 2015, morning. The RBI surprised financial markets by announcing a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled monetary policy review yesterday, 15 January 2015, and stated that easing of inflationary pressures provided headroom for a shift in the monetary policy stance.
Most bank stocks declined. Axis Bank gained after reporting good Q3 results.
Meanwhile, the Ministry of Commerce & Industry today, 16 January 2015, said that some Japanese companies are seriously contemplating their future investment plans in India amounting to about Rs 75000 crore over the next 2-3 years.
Foreign portfolio investors bought shares worth a net Rs 1738.24 crore yesterday, 15 January 2015, as per provisional data.
In overseas markets, Asian stocks fell today, 16 January 2015, after the Swiss National Bank in its stunning move yesterday, 15 January 2015, dumped its long-standing minimum exchange rate of 1.20 Swiss francs to the euro, as the cap on the franc appeared increasingly indefensible in the face of the weakening euro. US stocks edged lower in a volatile trading session yesterday, 15 January 2015, after the Swiss National Bank stunned global markets by cutting its currency cap with the euro.
In the foreign exchange market, the rupee strengthened past 62 against the dollar.
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Brent crude futures edged higher after yesterday's decline.
At 12:18 IST, the S&P BSE Sensex was down 14.62 points or 0.05% at 28,060.93. The index fell 130.24 points at the day's low of 27,945.31 in early trade. The index rose 33.18 points at the day's high of 28,108.73 in early afternoon trade.
The CNX Nifty was down 4.20 points or 0.05% at 8,489.95. The index hit a low of 8,452.25 in intraday trade. The index hit a high of 8,530.75 in intraday trade, its highest level since 8 December 2014.
The BSE Mid-Cap index was up 24.99 points or 0.24% at 10,623.68. The BSE Small-Cap index was up 20.07 points or 0.18% at 11,334.17. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,317 shares advanced and 1,279 shares declined. A total of 105 shares were unchanged.
Most bank stocks declined. Among private sector banks, ICICI Bank (down 0.07%), IndusInd Bank (down 0.39%), Federal Bank (down 0.38%) and Kotak Mahindra Bank (down 0.96%) declined. HDFC Bank rose 1.65%. Yes Bank rose 0.21%.
Axis Bank gained 0.95% to Rs 518.50 on strong Q3 result. The stock hit high of Rs 521.80 and low of Rs 513 so far during the day. The bank's net profit rose 18.43% to Rs 1899.76 crore on 15.85% rise in total income to Rs 10928.81 crore in Q3 December 2014 over Q3 December 2013. The result was announced during market hours.
Axis Bank's provisions and contingencies jumped 150.45% to Rs 507.15 crore in Q3 December 2014 over Q3 December 2013. Provisions and contingencies declined 30.05% to Rs 507.15 crore in Q3 December 2014 over Q2 September 2014. The bank said that it held provision coverage of 78% as on 31 December 2014, as a proportion of gross NPAs, including prudential write-offs. The provision coverage before accumulated write-offs was 87%.
On absolute basis, gross non-performing assets (NPAs) edged up to Rs 3901.59 crore as on 31 December 2014, from Rs 3613.10 crore as on 30 September 2014 and Rs 3008.20 crore as on 31 December 2013. The ratio of gross NPAs to gross advances was unchanged at 1.34% as on 31 December 2014, from 1.34% as on 30 September 2014, and rose from 1.25% as on 31 December 2013. The ratio of net NAPs to net advances was unchanged at 0.44% as 31 December 2014, from 0.44% as on 30 September 2014 and rose from 0.42% as on 31 December 2013.
CASA (Current and Savings Account) and retail term deposits constituted 78% of the bank's total deposits as on 31 December 2014.
Axis Bank said that the bank is well capitalised with a healthy Capital Adequacy Ratio (CAR). Under Basel III, Total CAR & Tier I CAR (including the net profit for 9 months ended December 2014) stood at 15.64% & 12.44% respectively.
Axis Bank also said during market hours that the board of directors of the bank at its meeting held today, 16 January 2015, has approved issuance of long term bonds/non-convertible debentures upto Rs 15000 crore on a private placement basis. The approval of shareholders of the bank in terms of the provisions of Companies Act 2013 is proposed to be obtained by way of postal ballot.
Among PSU bank stocks, State Bank of India (SBI) (down 1.25%), Canara Bank (down 0.2%), Bank of India (down 0.08%), Punjab National Bank (down 1.86%) Syndicate Bank (down 0.57%), Indian Overseas Bank (down 1.14%), Andhra Bank (down 1.11%), Oriental Bank of Commerce (down 1.53%), Dena Bank (down 0.58%) and Indian Bank (down 0.3%), declined.
Union Bank of India rose 0.04% to Rs 239.25. The stock hit high of Rs 241.50 and low of Rs 236.55 so far during the day. The bank after trading hours yesterday, 15 January 2015, said that it would reduce its base rate to 10% from 10.25% with effect from 27 January 2015. Interest rate on deposits in various buckets under retail and bulk deposits would also be reduced from 10 basis points (bps) to 50 bps, Union Bank of India said.
Finance Minister Arun Jaitley yesterday, 15 January 2015, said that there is an immediate need to give impetus to credit growth. Jaitley made these comments during the Pre Budget Consultative Meeting with the representatives of Banks and Financial Institutions yesterday, 15 January 2015. The Finance Minister said that credit growth, on year-on-year basis, declined to 10% in September 2014, with Public Sector Banks (PSBs) recording a growth of 7.9%. He further informed that growth in deposits also declined to 12.9% as of September 2014 from 13.7% as of March 2014.
The Reserve Bank of India (RBI) yesterday, 15 January 2015, said in a notification issued to commercial banks that banks may undertake insurance business by setting up a subsidiary/joint venture as well as undertake insurance broking/insurance agency/either departmentally or through a subsidiary subject to the conditions. The central bank said that if a bank or its group entities, including subsidiaries, undertake insurance distribution through either broking or corporate agency mode, the bank/other group entities would not be permitted to undertake insurance distribution activities, i.e., only one entity in the group can undertake insurance distribution.
In the foreign exchange market, the rupee strengthened past 62 against the dollar. The partially convertible rupee was hovering at 61.92, compared with its close of 62.065 during the previous trading session.
Brent crude futures edged higher after yesterday's decline. Brent for March settlement was up 34 cents at $48.61 a barrel.The contract had fallen $1.59 a barrel or 3.18% to settle at $48.27 a barrel during the previous trading session.
On macro front, India's merchandise export declined 3.8% to $25.4 billion in December 2014 over December 2013. Meanwhile, merchandise imports also declined 4.8% to $34.83 billion in December 2014. Thus, the trade deficit narrowed to 10-month low of $9.4 billion in December 2014, while nearly halving from $16.86 billion in November 2014. Trade data was announced after market hours yesterday, 15 January 2015.
Meanwhile, the Ministry of Commerce & Industry today, 16 January 2015, said that some Japanese companies are seriously contemplating their future investment plans in India amounting to about Rs 75000 crore over the next 2-3 years. Also, the issues related to the state government of Rajasthan concerning Japanese trading firm Sojitz Corp, working for Dedicated Freight Corridor (DFC), has been resolved, the Ministry of Commerce & Industry said. The government has set up Japan Plus, a special management team to facilitate Japanese investors.
Asian stocks fell today, 16 January 2015, as the market turmoil sparked by Switzerland abandoning the franc's cap extended into a second day. Key benchmark indices in Singapore, Hong Kong, Taiwan, South Korea, Indonesia and Japan were off 0.03% to 1.43%. In mainland China, the Shanghai Composite was up 1.61%.
China's foreign direct investment (FDI) rose an annual 1.7% last year, although the pace slowed from 2013 as a cooling economy and shifting drivers of growth weighed on offshore investment flows. China attracted a record $119.56 billion from foreign investors last year compared to $117.6 billion in 2013, the Ministry of Commerce said in a statement.
Trading in US index futures indicated that the Dow could slide 103 points at the opening bell today, 16 January 2015. US stocks suffered their fifth-straight session of declines yesterday, 15 January 2015, under pressure from disappointing earnings and worries about global economic growth.
On economic data front, more Americans unexpectedly filed applications for unemployment benefits last week, indicating companies let go of seasonal workers following the holidays. Jobless claims climbed by 19,000 to 316,000 in the week ended 10 January 2015, the most since early September, from a revised 297,000 in the prior period, a Labor Department report showed.
In Europe, in its stunning move yesterday, 15 January 2015, the Swiss National Bank dumped its long-standing minimum exchange rate of 1.20 Swiss francs to the euro, as the cap on the franc appeared increasingly indefensible in the face of the weakening euro.
Meanwhile uncertainties over the status of Greece including its possible exit from the eurozone are likely to persist until the early election in the country later this month. Greece is set to hold snap elections on 25 January 2015 after it failed to elect a new president in a third round of voting late last year. The Greek leftist opposition party Syriza leads opinion polls ahead of national elections on 25 January 2015. Syriza has demanded debt relief from the eurozone and promised to roll back the austerity and reform measures that the country has undertaken in exchange for the international bailout that the government negotiated in 2012.
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