Key benchmark indices edged higher on the last trading session of the week, with the market sentiment boosted by data showing that foreign funds remained net buyers of Indian stocks on Thursday, 20 February 2014. Gains in Asian and European stocks also aided the upmove on the domestic bourses. The barometer index, the S&P BSE Sensex, was provisionally up 153.55 points or 0.75%, off close to 55 points from the day's high and up about 90 points from the day's low. The market breadth, indicating the overall health of the market, was positive.
Index heavyweight Reliance Industries (RIL) edged higher in choppy trade. Index heavyweight and cigarette maker ITC extended intraday gains in late trade. Bank stocks were mostly higher. HCL Technologies surged to a record high after HCL Corp., the holding company for HCL Technologies, today, 21 February 2014, denied a newspaper report that said its founder Shiv Nadar was seeking potential buyers for his $10 billion stake in the company.
The market edged higher in early trade on firm Asian stocks. The Sensex extended initial gains and hit fresh intraday high in morning trade. The Sensex trimmed gains after hitting fresh intraday high in mid-morning trade. Firmness continued on the bourses in afternoon trade. The Sensex trimmed intraday gains in mid-afternoon trade.
The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Thursday, 20 February 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 206.46 crore on Thursday, 20 February 2014, as per provisional data from the stock exchanges.
Asian and European stocks edged higher on Friday, 21 February 2014, after a larger-than-forecast climb in a measure of US manufacturing in February tempered concern about global growth. US economy is the world's biggest economy.
As per provisional figures, the S&P BSE Sensex was up 153.55 points or 0.75% to 20,690.19. The index jumped 188.40 points at the day's high of 20,725.04 in mid-morning trade, its highest level since 19 February 2014. The index rose 63.27 points at the day's low of 20,599.91 in early trade.
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The CNX Nifty was up 60.40 points or 0.99% to 6,151.85, as per provisional figures. The index hit a high of 6,159.65 in intraday trade, its highest level since 19 February 2014. The index hit a low of 6,108 in intraday trade.
The BSE Mid-Cap index rose 44.24 points or 0.69% at 6,421.26. The BSE Small-Cap index was up 27.68 points or 0.44% at 6,389.53. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 1707 crore, lower than Rs 1807.71 crore on Thursday, 20 February 2014.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,477 shares rose and 1,184 shares fell. A total of 155 shares were unchanged.
Among the 30-share Sensex pack, 22 stocks rose and rest fell. Tata Steel (up 1.97%), L&T (up 1.64%) and Tata Motors (up 1.24%) edged higher from the Sensex pack.
Cement stocks surged on reports that cement makers have raised cement prices in North India. ACC, Ambuja Cements, Shree Cement and UltraTech Cement rose 3.7% to 6.09%. "Prices are up by Rs 30-45 per bag month-on-month in February (over Jan-14 average) across all these markets (North largely Delhi, Rajasthan and Punjab)," a brokerage wrote in an email to clients today, 21 February 2014, according to reports.
Index heavyweight and cigarette maker ITC rose 1.7% at Rs 317.10. The stock hit high of Rs 317.85 and low of Rs 313.
Index heavyweight Reliance Industries (RIL) rose 0.56% at Rs 809.85. The scrip hit high of Rs 815.95 and low of Rs 806.20.
Bank stocks were mostly higher. Among private sector banks, ICICI Bank (up 1.83%), Yes Bank (up 1.16%), Federal Bank (up 1.38%), and AXIS Bank (up 2.7%), gained. HDFC Bank (down 0.19%) and Kotak Mahindra Bank (down 0.37%) declined
Among PSU bank stocks, State Bank of India, Canara Bank, Bank of India, Bank of Baroda and Punjab National Bank shed 0.24% to 1.05%. Union Bank of India fell 0.29%.
The government's allocation of Rs 11200 crore for capital injection into state-run banks is credit negative as it is much smaller than estimated requirements, global credit rating agency Moody's Investors Service said on Thursday, 20 February 2014. The rating agency said in a report that it estimates lenders would need Rs 25000-36000 crore to meet a minimum Tier 1 ratio of 8% in the fiscal year ending March 2015. "Indian public-sector banks' need for significant external capital is a result of an increase in non-performing loans (NPLs) owing to the country's slowing economy and infrastructure bottlenecks, and profitability that is insufficient for internal capital generation to fund loan growth," it said. Early this week, the government unveiled its interim budget for the fiscal year starting in April, allocating Rs 11200 crore for capital injection into public-sector banks.
Shares of United Bank of India edged higher in choppy trade after Mrs. Archana Bhargava resigned as chairperson and managing director of the state-run bank. The stock rose 1.4% to Rs 24.60. United Bank of India said that Ministry of Finance vide its letter dated 21 February 2014 has communicated its acceptance to the application for voluntary retirement of Archana Bhargava, chairperson and managing director (CMD) of the bank with effect from 20 February 2014. The announcement was made during trading hours today, 21 February 2014.
In absence of the CMD, both the executive directors shall jointly remain in charge of the bank, till such time that a regular incumbent takes over the charge of CMD, United Bank of India said in a statement.
According to reports, Archana Bhargava resigned at a time when the bank is struggling with mounting losses, deteriorating credit quality and low capital adequacy ratio.
United Bank of India has been under pressure after reports on non-performing assets (NPA) mismanagement surfaced earlier in this week.
HCL Technologies surged to a record high after HCL Corp., the holding company for HCL Technologies, today, 21 February 2014, denied a newspaper report that said its founder Shiv Nadar was seeking potential buyers for his $10 billion stake in the company. The stock jumped 4.32% to Rs 1,537 after hitting record high of Rs 1,546 in intraday trade. "HCL Corporation denies any plans to exit HCL Technologies," it said in a statement. Mr. Nadar, who founded HCL in 1991, holds about 62% stake in HCL Technologies.
In the foreign exchange market, the rupee edged higher against the dollar on global risk-on sentiment. The partially convertible rupee was hovering at 62.12, compared with its close of 62.26/27 on Thursday, 20 February 2014.
The Reserve Bank of India will need to continue raising its policy interest rate given the sticky nature of inflation, the International Monetary Fund (IMF) said on Thursday, 20 February 2014. "The ingrained nature of inflation and inflation expectations mean that reducing inflation-even over a protracted horizon-will require significant increases in policy rates, which will weigh on growth. Should high inflation expectations persist and inflation remain sticky, a more front-loaded path of interest rate increases may be needed," the IMF said.
The IMF expects India's consumer price index to remain near double digits well into next year driven by food prices. The IMF has suggested giving more emphasis to consumer prices for making policy decisions. "Headline CPI should provide the principal nominal anchor for monetary policy, as food and fuel price shocks propagate rapidly into core inflation, and inflation expectations and wage formation are closely linked to CPI inflation," the IMF said. The IMF expects India's economy to grow at 4.6% in 2013-14, picking up to 5.4% in 2014-15.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Citing price pressures, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
On the political front, lawmakers passed a bill to create India's 29th state on Thursday despite mayhem in parliament, as opponents made a futile last attempt to stop the upper house carving landlocked Telangana from coastal Andhra Pradesh. Demands that the southern region be made a separate state have existed almost as long as independent India. Thursday's vote fulfils a promise made by the government in 2009, and comes just weeks before a national election in April.
The new state will have a population of around 3.5 crore people. The bill must now be signed by president to become law, a formality expected to take place in a few days.
European stocks edged higher on Friday, 21 February 2014, after a larger-than-forecast climb in a measure of US manufacturing in February tempered concern about global growth. US economy is the world's biggest economy. Key benchmark indices in France, Germany and UK were up 0.01% to 0.49%.
UK retail sales fell more than economists forecast in January, led by a drop in demand at food and clothing stores. Sales including fuel plunged 1.5% from December, when they surged 2.5%, the Office for National Statistics said today in London.
Ukraine's presidential administration today, 21 February 2014, said that a preliminary agreement has been reached to bring an end to the political crisis that has rocked the country following overnight talks between the government, opposition leaders and representatives of the European Union and Russia. "The parties agreed on signing an agreement to resolve the crisis," said a statement on the presidential administration's website.
Global rating agency Standard & Poor's today, 21 February 2014, cut its long-term foreign currency rating on Ukraine by one notch to CCC, saying the country's worsening political situation is putting the government's capability to service its debt at increasing risk. An eruption of violent clashes between anti-government protestors and police have left nearly 70 people dead and more than 560 wounded, and has led S&P "to conclude that a conciliatory end to the political stand-off is now out of reach." The ratings agency's outlook on Ukraine is negative. Expected financial support from Russia "is becoming increasingly uncertain and dependent on the outcome of the deteriorating political situation in Ukraine," said S&P. Should that support "fall short of Russia's commitments, we expect the government of Ukraine to default on its foreign-currency obligations", S&P said.
Asian stocks edged higher on Friday, 21 February 2014, after a larger-than-forecast climb in a measure of US manufacturing in February tempered concern about global growth. US economy is the world's biggest economy. Key benchmark indices in Indonesia, Taiwan, Singapore, Japan, Hong Kong and South Korea were up 0.43% to 2.88%. China's Shanghai Composite fell 1.17%.
Minutes from the Bank of Japan's Jan. 22 policy meeting showed some board members said the central bank should provide a clearer explanation that an expected decline in second-quarter domestic growth was factored into its outlook.
Trading in US index futures indicated that the Dow could advance 40 points at the opening bell on Friday 21 February 2014. US stocks edged higher on Thursday, 20 February 2014, as investors found encouragement in a gauge of US manufacturing jumping to its highest level in almost four years, as well as in more M&A activity, this time involving Facebook. Late Wednesday, Facebook announced a $19 billion deal to acquire messaging service WhatsApp.
Markit Economics' preliminary index of US manufacturing increased to 56.7 in February, surpassing economists' estimates, while Labor Department figures indicated fewer applications for unemployment benefits last week. The Conference Board's index of US leading indicators, a gauge of the outlook for the next three to six months, rose in January in line with estimates.
Federal Reserve policy makers backed away from their year-old commitment to consider raising interest rates when unemployment falls below 6.5%, according to minutes of their January meeting released on Wednesday, 19 February 2014. Federal Reserve Chair Janet Yellen last week said the economy has strengthened enough to withstand continued cuts to monetary stimulus, adding that only a notable change in the outlook for the economy would prompt the central bank to slow the pace of tapering.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion.
Sweeping reforms are urgently needed to boost productivity and lower barriers to trade if the world is to avoid a new era of slow growth and stubbornly high unemployment, the OECD warned on Friday. In its 2014 study on "Going for Growth", The Organisation for Economic Co-operation and Development said momentum on reforms had slowed in the aftermath of the global financial crisis, with much of it now piecemeal and incremental. "The widespread deceleration in productivity since the crisis could presage the beginning of a new low-growth era," warned Pier Carlo Padoan, deputy secretary-general and chief economist at the Paris-based OECD. "These concerns, already prevalent among advanced OECD countries for some time, now encompass emerging-market economies and are fuelled also by high unemployment and falling labour force participation in many countries."
Group of 20 finance ministers meet in Sydney this weekend, with US stimulus cuts and political turmoil from Ukraine to Venezuela stoking concern over emerging-market volatility.
German Finance Minister Wolfgang Schaeuble said in TV interview broadcast today, 21 February 2014, that emerging markets should get their own houses in order before demanding solidarity from other nations. The troubles in emerging markets would be the main topic discussed by finance ministers and central bank chiefs at the G20 summit in Sydney this weekend, Schaeuble said. "In my opinion we must always strive towards an approach of solidarity. Everyone must first of all do their own homework and then countries can demand solidarity from others," Schaeuble said.
Schaeuble said emerging countries must ensure they carried out structural reforms and did not rely only on monetary policy. "We've had the problem recently in Europe and have always used the tool of monetary policy to gain some time, but this should not be misused to avoid solving the problems," he said.
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