Key benchmark indices edged higher in volatile trade on reports that the finance ministry is working on a proposal to cut the fiscal deficit to 3.8% to 3.9% of GDP for the year ending 31 March 2015 (FY 2015). The 50-unit CNX Nifty attained record closing high. The barometer index, the S&P BSE Sensex, garnered 76.38 points or 0.31%, up close to 50 points from the day's low and off about 150 points from the day's high. The market breadth indicating the overall health of the market was quite strong, with more than 3 gainers for every loser on BSE. The BSE Small-Cap and Mid-Cap index indices rose more than 2% each. Both these indices outperformed the Sensex.
Shares of small-cap and mid-cap firms have risen sharply this week. The BSE Small-Cap index has risen 1,074.94 points or 13.63% in just four trading sessions from 7,885.76 on 16 May 2014. The BSE Mid-Cap index has risen 752.50 points or 9.69% in four trading sessions from 7,765.72 on 16 May 2014.
The Sensex has risen 1,956.60 points or 8.72% in this month so far (till 22 May 2014). The Sensex has gained 3,203.72 points or 15.13% in calendar year 2014 so far (till 22 May 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 6,925.69 points or 39.69%. From a record high of 25,375.63 on 16 May 2014, the Sensex has fallen 1,001.23 points or 3.94%.
Coming back to today's trade, index heavyweight Reliance Industries (RIL) edged higher in volatile trade. Coal India surged to hit 52-week high on reports that the newly elected PM designate Narendra Modi is exploring to break up the company and opening up the sector to foreign investment. Maruti Suzuki India jumped after a foreign brokerage reiterated the stock as its top pick among India's automobile stocks while maintaining its 'buy' rating with an aggressive price target. Realty stocks were in demand on renewed buying.
Key benchmark indices edged higher amid initial volatility. The Sensex extended initial gains in morning trade. A bout of volatility was witnessed as the key benchmark indices regained strength after paring intraday gains in mid-morning trade. Firmness continued on the bourses in afternoon trade. Key benchmark indices trimmed intraday gains in mid-afternoon trade. High volatility was witnessed as key benchmark indices recovered from lower level after trimming a lion's part of intraday gains in late trade.
The S&P BSE Sensex garnered 76.38 points or 0.31% to settle at 24,374.40, its highest closing level since 20 May 2014. The index jumped 226.74 points at the day's high of 24,524.76 in early afternoon trade. The index rose 28.46 points at the day's low of 24,326.48 in late trade.
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The CNX Nifty garnered 23.50 points or 0.32% to settle at 7,276.40, a record closing high for the index. The index hit a high of 7,319.55 and a low of 7,258.15 in intraday trade.
The BSE Mid-Cap index garnered 175.86 points or 2.11% to settle at 8,518.22. The BSE Small-Cap index garnered 202.42 points or 2.31% to settle at 8,960.70. Both these indices outperformed the Sensex.
The S&P BSE Realty index (up 5.54%), the S&P BSE Metal index (up 1.8%), the S&P BSE Consumer Durables index (up 6.78%), the S&P BSE FMCG index (up 0.7%), the S&P BSE Power index (up 2.2%), the S&P BSE Capital Goods index (up 0.5%), the S&P BSE Oil & Gas index (up 1.1%), and the S&P BSE Bankex (up 0.7%) outperformed the Sensex.
The S&P BSE Teck index (down 0.47%), the S&P BSE Auto index (up 0.09%), the S&P BSE IT index (down 0.31%), and the S&P BSE Healthcare index (up 0.12%) underperformed the Sensex.
The total turnover on BSE amounted to Rs 5369 crore, higher than Rs 4696.14 crore on Wednesday, 21 May 2014.
The market breadth indicating the overall health of the market was quite strong, with more than 3 gainers for every loser on BSE. On BSE, 2,269 shares gained and 744 shares fell. A total of 83 shares were unchanged.
Among the 30-share Sensex pack, 16 stocks gained and rest of them declined.
Multi Commodity Exchange of India (up 19.91%), Suzlon Energy (up 14.88%), Rajesh Exports (up 11.1%), Triveni Turbine (up 11%), Bajaj Electricals (up 10.89%), IL&FS Transportation Networks (up 10.68%), Bajaj Finance (up 10.32%), IIFL Holdings (up 9.84%), TV18 Broadcast (up 9.58%) and Wabco India (up 9.19%) were the top gainers from the BSE Mid-Cap index.
Tribhovandas Bhimji Zaveri (up 19.96%), Uttam Value Steels (up 19.9%), 3i Infotech (up 19.81%), Zodiac Clothing Company (up 19.69%), PC Jeweller (up 19.59%), Gujarat NRE Coke (up 18.61%), Gujarat Alkalies & Chemicals (up 17.58%), Jayaswal Neco Industries (up 16.86%), Tinplate Company of India (up 15.62%), Can Fin Homes (up 14.29%) were the top gainers from the BSE Small-Cap index.
Power generation stocks rose on renewed buying. NTPC (up 5.31%), Reliance Power (up 4.81%), Reliance Infrastructure (up 2.18%), Tata Power Company (up 3.27%), JSW Energy (up 2.32%), and Adani Power (up 3.21%) edged higher.
Shares of power finance companies edged higher. Rural Electrification Corporation was up 2% at Rs 333.75.
Power Finance Corporation was up 1.49% at Rs 299.50. The stock hit 52-week high of Rs 306.80 in intraday trade.
Index heavyweight Reliance Industries (RIL) rose 2.24% to Rs 1,102.30. The stock was volatile. The stock hit high of Rs 1,113.50 and low of Rs 1,085.
Coal India jumped 4.84% to Rs 390.15 on reports that the newly elected PM designate Narendra Modi is exploring to break up the company and opening up the sector to foreign investment. The stock hit 52-week high of Rs 401 in intraday trade. Modi reportedly wants to fix the coal sector quickly to ensure unbroken electricity supply across the country. Coal generates more than half of India's power.
There is a possibility of converting various units of Coal India into independent companies, and making respective state governments equity holders to help speed up land acquisition and other such processes, reports suggested. Apart from using modern mining technologies to boost efficiencies and convert challenging mines into modern mines, the government will also explore international private-sector partnership in a significant way, reports added.
Auto stocks were mixed. Ashok Leyland was flat. Tata Motors declined 1.53%.
Maruti Suzuki India surged 4.14% to Rs 2,258 after a foreign brokerage put an aggressive three-year target of Rs 4,500 on the stock. The foreign brokerage said that the Maruti Suzuki India stock price could double in three years in a bull scenario in which personal vehicle industry volume grows at a compounded annual growth rate of 20% due to pent-up demand should the economic growth pick up.
Still, the brokerage said its base case remains a 14% industry growth in personal vehicle demand over fiscal years 2015 to 2017, although it noted actual growth could be closer to around 20%.
The brokerage also noted that Maruti Suzuki has a strong product cycle starting in fiscal 2015, thus raising hopes about its market share.
The brokerage reiterated Maruti as its top pick among India's automobile stocks while maintaining its 'buy' rating.
Mahindra & Mahindra (M&M) declined 1.35% to Rs 1,134.10. The stock was volatile. The stock hit high of Rs 1,171.90 and low of Rs 1,125.25. The company during market hours on Wednesday, 21 May 2014, said that as part of aligning its production with sales requirements, the company will suspend production at the company's automotive plants for upto 3 days during the remaining period of this month. The company also said that Mahindra Vehicle Manufacturers' plant at Chakan would also be observing no production days for upto 3 days during the remaining period of May 2014. Mahindra Vehicle Manufacturers is a wholly-owned subsidiary of M&M. M&M said that the management does not envisage any adverse impact on availability of vehicles in the market due to adequacy of vehicle stocks to serve the market requirements.
Shares of two-wheeler makers were mostly higher. TVS Motor Company jumped 7.63%. Hero MotoCorp declined 1.57%.
Bajaj Auto rose 1.35% to Rs 1,985.60 in volatile trade. The stock hit high of Rs 2,028.60 and low of Rs 1,975.25.
According to reports, Egypt lifted a ban on import of two wheelers and three wheelers, after more than three months. For Bajaj Auto, the biggest exporter of three-wheelers, Egypt is the second biggest export market for the company after Sri Lanka. Egypt banned the imports of two-wheelers and three-wheelers in the middle of February this year. A committee was set up, to look into the matter, as three-wheelers were considered as common man's transport.
Meanwhile, Bajaj Auto has reportedly received an export order from Egypt for 5,500 three wheelers and 3,500 motorcycles for the month of June 2014.
Realty stocks were in demand on renewed buying. DLF (up 9.92%), Godrej Properties (up 2.37%), Indiabulls Real Estate (up 6.89%), Parsvnath Developers (up 4.98%), Housing Development & Infrastructure (HDIL) (up 4.71%), D B Realty (up 3.74%) and Unitech (up 9.02%) gained. Oberoi Realty dropped 1.6%. Sobha Developers shed 0.9%.
Sugar stocks extended recent gains. Bajaj Hindusthan (up 4.05%), Dhampur Sugar Mills (up 5.42%), Sakthi Sugars (up 4.8%), Balrampur Chini Mills (up 6.52%), Shree Renuka Sugars (up 6.19%), Simbhaoli Sugar Mills (up 4.8%) and Dwarikesh Sugar Industries (up 4.91%) gained.
Indian government bond prices rose on reports that the finance ministry is working on a proposal to cut the fiscal deficit to 3.8% to 3.9% of GDP for the year ending 31 March 2015 (FY 2015). The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.7106%, lower than its close of 8.7684% on Wednesday, 21 May 2014. Bond yields and bond prices move in opposite direction.
As per reports, the finance ministry is working on a proposal to cut the fiscal deficit to 3.8% to 3.9% of GDP for the year ending 31 March 2015 (FY 2015). In its interim budget presented in February this year, Congress party-led United Progressive Alliance (UPA) government set fiscal target of 4.1% of GDP for FY 2015. The first budget of the Bharatiya Janata Party (BJP) led National Democratic Alliance government is expected by July 2014.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 58.47, compared with its close of 58.775/785 on Wednesday, 21 May 2014.
After Bharatiya Janata Party (BJP) led National Democratic Alliance's (NDA) landslide victory in the recently concluded Lok Sabha election, investors are expecting measures from the incoming government to revive the Indian economy. There are expectations that Narendra Modi will be in a position to replicate the economic success he enjoyed in Gujarat state when he takes over as the country's Prime Minister. With Modi at the helm of affairs, Gujarat's economy expanded by 10.1% a year, on average and adjusting for inflation, from 2001 and 2012, compared with 7.7% growth a year for India's economy as a whole. India's GDP growth slowed sharply at 4.7% in Q3 December 2013. Investors hope that a BJP-led government would be able to accelerate policy reforms and overhaul the country's poor infrastructure. Investors will now be keenly watching policy announcements from the new government to drive a turnaround in the investment cycle.
Ever since NDA's victory in the election last week, speculation has been rife about the likely allocation of key ministerial portfolios in the Modi-led NDA government.
Modi will be sworn in as India's next Prime Minister on Monday, 26 May 2014, evening at the Rashtrapati Bhawan.
The first budget of the new government is expected by July 2014. An interim budget was presented by P. Chidambaram in February this year. Essentially, in the nature of a vote on account, the interim budget was intended to get Parliament approval for expenditure to be incurred during the first few months of fiscal year 2014-15 due to Lok Sabha elections.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June 2014. The RBI left its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review on 1 April 2014, as consumer-price inflation eased to a two-year low and as the rupee firmed up against the dollar.
European stocks edged higher on Thursday, 22 May 2014, as minutes from the latest Federal Reserve meeting showed policy makers expect the inflation rate to remain below their target, and as Chinese manufacturing data beat estimates. Key benchmark indices in Germany and UK were up 0.07% to 0.1%. France's CAC 40 index was off 0.2%.
Markit's euro-zone composite PMI fell to a two-month low of 53.9 in May 2014, from 54 in April 2014. The PMI stayed above the 50 level that indicates growth. Markit said the data indicate the euro zone is having its best quarter in three years and that "ongoing improvement in business conditions was evident in both manufacturing and services".
The country-specific readings showed further divergence between powerhouse Germany and France, which has struggled with economic headwinds recently. The French composite PMI slipped into contraction at 49.3, while Germany stayed at 56.1 in May.
Asian stocks edged higher on Thursday, 22 May 2014, after Federal Reserve meeting minutes showed policy makers see a muted risk of inflation from continued US stimulus and a China manufacturing gauge rose to a five-month high in May. Key benchmark indices in Singapore, Taiwan, Hong Kong, Japan, Indonesia and South Korea were up 0.12% to 2.11%. China's Shanghai Composite fell 0.18%.
The China manufacturing purchasing managers' index released today by HSBC Holdings Plc and Markit Economics delivered a provisional reading of 49.7 for May, rising from 48.1 in April. Readings below 50 indicate contraction.
Trading in US index futures indicated that the Dow could advance 17 points at the opening bell on Thursday, 22 May 2014. US stocks rebounded on Wednesday from the previous day's losses and ended the session with solid gains, led by advances in the consumer discretionary and energy sectors. The main benchmarks extended gains after the release of the minutes from the Federal Open Market Committee meeting, which showed officials considering options on exiting from ultra-loose monetary policy and a decision to remain flexible.
Minutes from the April 29-30 meeting showed that Fed officials are monitoring progress toward the goal of full employment in the US as they consider the timing of the first interest-rate increase since 2006. The minutes also showed policy makers agreed that early communication of their exit strategy on stimulus and interest rates would enhance the clarity and credibility of monetary policy. The Fed reiterated in the minutes that it will keep the key interest rate target near zero for a "considerable time" once it concludes the bond program. The Fed minutes also showed that policy makers expect inflation to remain well below the Fed's long-term target of 2%.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 17-18 June 2014. The Fed on 30 April 2014 said after a monetary policy review that it will keep the benchmark interest-rate target at almost zero for a "considerable time" after its bond-buying program ends. The FOMC also reduced monthly debt purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in "measured steps" if the economy continues to improve.
The Bank of Russia said Thursday it cut the amount of daily currency interventions, aimed at limiting ruble volatility, moving closer to inflation targeting. The central bank plans to let the ruble float freely starting from 2015 and instead focus on taming inflation through interest rates.
The central bank, however, retains a right to intervene if it deems it necessary for financial stability. The central bank, which keeps the ruble within a floating band against the euro-dollar basket, said it trimmed the amount of daily interventions by $100 million.
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