Key benchmark indices extended losses in early afternoon trade. The barometer index, the S&P BSE Sensex, was down 70.15 points or 0.29%, off 112.81 points from the day's high and up 28.34 points from the day's low. The market breadth, indicating the overall health of the market was strong. The BSE Small-Cap index was up more than 1.5%. The BSE Mid-Cap index was up more than 1%.
Auto stocks rose, with Ashok Leyland hiting 52-week high and Eicher Motors hitting record high. Among auto component makers, Motherson Sumi Systems hit record high. Aviation stocks were in demand.
Key benchmark indices edged lower amid initial volatility on weak Asian stocks. Key benchmark indices cut losses after hitting fresh intraday low in morning trade. Key benchmark indices languished in negative zone in mid-morning trade. Key benchmark indices extended losses in early afternoon trade.
At 12:15 IST, the S&P BSE Sensex was down 70.15 points or 0.29% to 24,306.73. The index fell 98.49 points at the day's low of 24,278.39 in morning trade, its lowest level since 19 May 2014. The index gained 42.66 points at the day's high of 24,419.54 in early trade.
The CNX Nifty was down 18.95 points or 0.26% to 7,256.55. The index hit a low of 7,246 in intraday trade, its lowest level since 19 May 2014. The index hit a high of 7,287.15 in intraday trade.
The BSE Mid-Cap index was up 112.03 points or 1.36% at 8,344.43. The BSE Small-Cap index was up 150.78 points or 1.75% at 8,751.11. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,882 shares gained and 757 shares fell. A total of 99 shares were unchanged.
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The total turnover on BSE amounted to Rs 2305 crore by 12:15 IST, compared with Rs 1769 crore by 11:15 IST.
Among the 30-share Sensex pack, 16 stocks declined and rest of them gained.
Hindalco Industries (up 4.63%), NTPC (up 2.1%) and Infosys (up 0.96%) edged higher from the Sensex pack.
Most auto stocks rose. Tata Motors (up 0.2%) and Mahindra & Mahindra (M&M) (up 0.57%) rose. Maruti Suzuki India declined 0.45%.
Ashok Leyland rose 3.71% to Rs 29.35 after hitting 52-week high of Rs 30.40 in intraday trade.
Shares of two-wheeler makers were mostly higher. TVS Motor Company rose 1.55%. Hero MotoCorp fell 1.03%.
Bajaj Auto advanced 3.53% to Rs 1,937.55 on bargain hunting after the stock fell 8.29% in the preceding four trading sessions to Rs 1,871.40 on 20 May 2014, from a recent high of Rs 2,040.55 on 14 May 2014.
Eicher Motors advanced 6.28% to Rs 7,129.40 after scaling record high of Rs 7,260 in intraday trade.
Motherson Sumi Systems rose 3.61% to Rs 282.40 after hitting record high of Rs 289.50 in intraday trade.
Aviation stocks were in demand. Jet Airways (India) rose 3.53%.
SpiceJet jumped 7.31%. SpiceJet on Tuesday, 20 May 2014, said that the company is in advanced talks with an unnamed investor to raise funds. Some of the cash raised would be allocated to paying down debt, though the company didn't elaborate on the amount or how it would be allocated. SpiceJet also said that existing plans to increase revenue and cut costs are "just starting to take effect, and will intensify in the coming days." "The past nine months have been some of the worst for the Indian aviation industry," the carrier said on Tuesday, 20 May 2014, citing the sluggish Indian economy for crimping demand and the rupee's slide against the dollar for increasing costs. In March, SpiceJet ordered 42 Boeing 737-8 Max Jets for $4.4 billion.
In the foreign exchange market, the rupee edged lower against the dollar as importers stepped in to buy dollars to pay bills. The partially convertible rupee was hovering at 58.83, compared with its close of 58.63/64 on Tuesday, 20 May 2014.
Reserve Bank of India Governor Raghuram Rajan on Tuesday, 20 May 2014, reiterated his call for fiscal discipline, saying it is essential for India to achieve sustainable economic growth. Rajan said India would not always be able to rely on banks to buy a large portion of its government debt as it usually does. "(Bank) deposits will not continue to be cheap, while the government cannot continue to pre-empt financing at the scale it has in the past if we are to have a modern entrepreneurial economy. This is yet another reason why fiscal discipline will be central to sustainable growth going forward," Rajan said at an event in New Delhi. Rajan suggested the need for India to offer more specialised banking licences that would result in smaller banks offering niche services. The RBI on April granted two new commercial banking licences, its first new ones in 10 years.
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.
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 Gujarat chief minister and Prime Minister-designate 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. 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.
Modi will be sworn in as India's next Prime Minister on Monday, 26 May 2014, evening at the Rashtrapati Bhawan.
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.
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.
Asian markets edged lower on Wednesday, 21 May 2014, tracking overnight decline in US markets. Key benchmark indices in Taiwan, South Korea, Singapore, Japan and Indonesia were off 0.15% to 0.29%. Key benchmark indices in China and Hong Kong rose 0.16% to 0.56%.
The Bank of Japan refrained from boosting stimulus as the economy shows signs of weathering the impact of the first sales-tax increase since 1997. The central bank will continue to expand the monetary base at a pace of 60 trillion yen to 70 trillion yen per year, it said in a statement in Tokyo today, 21 May 2014.
Japan posted a trade deficit of 808.9 billion yen ($8 billion) for April, data showed today, 21 May 2014. Exports gained 5.1% year on year, while imports increased 3.4%.
Trading in US index futures indicated that the Dow could advance 17 points at the opening bell on Wednesday, 21 May 2014. US stocks ended Tuesday with broad-based losses after disappointing earnings from TJX Companies, Inc, Staples, Inc. and weak sales numbers from Caterpillar Inc. weighed on investor sentiment. Selling intensified in the afternoon after comments from Philadelphia Fed President Charles Plosser, who said that Fed may need to act sooner rather than later should the economy accelerate.
New York Fed President William Dudley, who gets a vote at every Federal Open Market Committee meeting and is vice chairman of the interest-rate setting committee, told the New York Association for Business Economics on Tuesday, 20 May 2014, said that there will be a considerable period of time between the end of its asset purchases and the first rate hike.
The Federal Reserve releases minutes from the April 29-30 meeting of Federal Open Market Committee today, 21 May 2014. The minutes are expected to contain details of when, and by how much, interest rates will be raised.
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.
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