Firmness continued for key benchmark indices after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015. Interest rate sensitive banking, auto and realty stocks rose after the surprise rate cut. The barometer index, the S&P BSE Sensex, was currently up 429.64 points or 1.57% at 27,776.46. The market breadth indicating the overall health of the market was strong, with more than two gainers for every loser on BSE.
Earlier, the Sensex hit its highest level in more than a week and the 50-unit CNX Nifty hit its highest level in more than five weeks at the onset of the trading session's after the Reserve Bank of India's (RBI) surprise rate cut announcement.
Foreign portfolio investors sold shares worth a net Rs 69.74 crore yesterday, 14 January 2015, as per provisional data.
In overseas markets, most Asian stocks rose today, 15 January 2015, as a rebound by Japanese energy companies and exporters outweighed disappointing US retail sales. US stocks fell in choppy trading session yesterday, 14 January 2015, after surprisingly weak December retail sales data, which cast doubt on the pace of economic growth in the world's biggest economy.
In the foreign exchange market, the rupee strengthened past 62 against the dollar after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015.
Brent crude futures edged lower after staging a rebound during the previous trading session.
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At 10:18 IST, the S&P BSE Sensex was up 429.64 points or 1.57% at 27,776.46. The index jumped 600.77 points at the day's high of 27,947.59 in early trade, its highest level since 5 Janaury 2015. The index rose 356.88 points at the day's low of 27,703.70 in early trade.
The CNX Nifty was up 134 points or 1.62% at 8,411.55. The index hit a high of 8,453.60 in intraday trade, its highest level since 8 December 2014. The index hit a low of 8,380.55 in intraday trade.
The BSE Mid-Cap index was up 92.51 points or 0.88% at 10,564.42. The BSE Small-Cap index was up 84.76 points or 0.76% at 11,285.84. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was strong, with more than two gainers for every loser on BSE. On BSE, 1,411 shares advanced and 667 shares declined. A total of 78 shares were unchanged.
Bank shares rose across the board after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015. Among private sector banks, ICICI Bank (up 3.94%), Axis Bank (up 2.74%), IndusInd Bank (up 1.76%), Federal Bank (up 2.06%), Kotak Mahindra Bank (up 1.77%) and HDFC Bank (up 2.21%), edged higher.
Yes Bank rose 3.99% after the bank said before market hours that the Board of Directors of the bank at its meeting held yesterday, 14 January 2015, approved the proposal to seek approvals from the regulators for setting up Asset Management Business and Primary Dealership business considering that the bank has established a distribution network of 600 branches as of 31 December 2014 across metro, urban, semi-urban and rural centers with a pan India distribution presence spreading across all states and union territories of the country.
With a view to complete the overall bouquet of financial products to its customer franchise, the bank plans to set up an Asset Management Company (AMC), primarily to channelize the savings of retail investors in equity and debt capital markets. This will complement the bank's retail liabilities strategy, strengthen multi-product customer engagement and also allow the bank to leverage its distribution network for customer acquisition. The bank will simplify and integrate "manufacturing to distribution" of equity and debt investment products for all its customers.
The AMC will complement Yes Securities brokerage business which has now stabilized its operations and is rapidly growing its business footprint. The AMC will also complement the bank's retail strategy and help in leveraging existing infrastructure to provide the necessary retail thrust. This will allow the bank to build a holistic wealth management proposition for its customers and enable the bank to strengthen traction witnessed in building retail market share on the back of its savings account proposition.
Among public sector banks, State Bank of India (up 3.46%), Union Bank of India (up 3.77%), Andhra Bank (up 3.45%), Syndicate Bank (up 3.36%), Canara Bank (up 3.37%), Bank of India (up 3.11%), Dena Bank (up 3.12%), Punjab National Bank (up 2.71%), Bank of Baroda (up 2.36%), and Indian Bank (up 1.47%) edged higher.
In the foreign exchange market, the rupee strengthened past 62 against the dollar after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015. The partially convertible rupee was hovering at 61.75, compared with its close of 62.19 during the previous trading session.
Brent crude futures edged lower after staging a rebound during the previous trading session. Brent for February settlement, which expires today, 15 January 2015, was off 45 cents at $48.24 a barrel. The contract had jumped $2.10 a barrel or 4.5% to settle at $48.69 a barrel during the previous trading session. Brent for March settlement was off 44 cents at $49.40 a barrel.
The RBI said inflationary pressures as measured by changes in the consumer price index have been easing since July 2014. To some extent, lower than expected inflation has been enabled by the sharper than expected decline in prices of vegetables and fruits since September, ebbing price pressures in respect of cereals and the large fall in international commodity prices, particularly crude oil. Crude prices, barring geo-political shocks, are expected to remain low over the year, RBI Governor Dr. Raghuram G Rajan said in a statement while announcing a surprise cut in repo rate today, 15 January 2015. Weak demand conditions have also moderated inflation excluding food and fuel, especially in the reading for December, Rajan said. Rajan further said that the government has reiterated its commitment to adhering to its fiscal deficit target. These factors have significantly reduced the momentum of inflation, compensating for the widely anticipated ending of favourable base effects, Rajan said. Households' inflation expectations have adapted and both near-term and longer-term inflation expectations have eased to single digits for the first time since September 2009. These developments have provided headroom for a shift in the monetary policy stance, Rajan said.
Inflation outcomes have fallen significantly below the 8% targeted by January 2015, the RBI said. On current policy settings, inflation is likely to be below 6% by January 2016, Rajan said. The RBI Governor said that key further easing of monetary policy easing are data that confirm continuing disinflationary pressures. Also critical would be sustained high quality fiscal consolidation as well as steps to overcome supply constraints and assure availability of key inputs such as power, land, minerals and infrastructure. The latter would be needed to ensure that potential output rises above the projected pick-up in growth in coming quarters so as to contain inflation, Rajan said.
The RBI's next monetary policy review is scheduled on 3 February 2015.
Most Asian stocks rose today, 15 January 2015, as a rebound by Japanese energy companies and exporters outweighed disappointing US retail sales. Key benchmark indices in China, Indonesia, Singapore, Hong Kong, Taiwan and Japan were up 0.04% to 1.24%. South Korea's Kospi fell 0.22%.
China's shadow banking industry staged a comeback in December as equity investors and local governments contributed to a surge in credit, underscoring challenges for a central bank trying to revive growth without exacerbating risks. Aggregate financing was 1.69 trillion yuan ($273 billion), the People's Bank of China said in Beijing today, 15 January 2015.
Trading in US index futures indicated that the Dow could gain 12 points at the opening bell today, 15 January 2015. US stocks fell yesterday, 14 Janaury 2015, as a deepening commodities rout and an unexpected drop in American retail sales fueled concern over growth..
US retail sales dropped 0.9% in December, the biggest slide since January 2014, following a 0.4% gain in November that was smaller than previously estimated, according to the Commerce Department.
Meanwhile in Europe, 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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