Key benchmark indices trimmed losses in mid-afternoon trade as European stocks edged higher in early trade there. The market breadth, indicating the overall health of the market, was weak. The barometer index, the S&P BSE Sensex, was down 103.45 points or 0.49%, up about 55 points from the day's low and off about 110 points from the day's high.
HDFC Bank dropped in choppy trade as the private sector bank's net interest margin declined to 4.2% in Q3 December 2013, from 4.3% in Q3 December 2012. Realty stocks reversed intraday gains. Capital goods stocks declined.
Key benchmark indices edged lower amid initial volatility on weak Asian stocks. After regaining positive terrain for a brief period, the key benchmark indices once again slipped into the red in morning trade. Key benchmark indices extended losses and hit fresh intraday low in mid-morning trade. The Sensex further extended losses and hit fresh intraday low in early afternoon trade. Selling intensified in afternoon trade as key benchmark indices extended losses and hit fresh intraday low. The Sensex trimmed losses in mid-afternoon trade as European stocks edged higher in early trade there.
At 14.20 IST, the S&P BSE Sensex was down 103.45 points or 0.49% to 21,161.73. The Sensex fell 158.27 points at the day's low of 21,106.91 in afternoon trade, its lowest level since 15 January 2014. The index rose 4.93 points at the day's high of 21,270.11 in morning trade.
The CNX Nifty was down 31.20 points or 0.49% to 6,287.70. The index hit a low of 6,275.55 in intraday trade, its lowest level since 15 January 2014. The index hit a high of 6,327.10 in intraday trade.
The BSE Small-Cap index was off 70.95 points or 1.08% at 6,513. The BSE Mid-Cap index was off 61.19 points or 0.93% at 6,512.90. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,662 shares fell and 847 shares rose. A total of 151 shares were unchanged.
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Coal India (down 9.53%), TCS (down 5.17%), and Wipro (down 3.3%) edged lower from the Sensex pack.
Capital goods stocks declined. ABB (down 0.3%), Bhel (down 0.59%), BEML (down 2.94%), L&T (down 0.08%) and Punj Lloyd (down 0.89%) fell.
HDFC Bank dropped in choppy trade as the private sector bank's net interest margin declined to 4.2% in Q3 December 2013, from 4.3% in Q3 December 2012. The stock was off 1.1% at Rs 666. The scrip hit high of Rs 678.40 and low of Rs 659.20 so far during the day. The bank's net profit rose 25.1% to Rs 2325.70 crore on 17.75% growth in total income to Rs 12738.95 crore in Q3 December 2013 over Q3 December 2012. The bank announced Q3 results during market hours.
HDFC Bank's net interest income (NII) rose 16.4% to Rs 4634.80 crore in Q3 December 2013 over Q3 December 2012. The net interest margin or NIM declined to 4.2% in Q3 December 2013, from 4.3% in Q3 December 2012.
Realty stocks reversed intraday gains. DLF (down 2.41%), HDIL (down 2.77%), Sobha Developers (down 0.94%) and Unitech (down 1.8%) declined.
In the foreign exchange market, the rupee edged higher against the dollar on dollar selling by foreign banks. The partially convertible rupee was hovering at 61.44, compared with its close of 61.535/545 on Thursday, 16 January 2014.
Bond prices rose as data released by the government this week showed inflation based on the wholesale price index (WPI) eased to a five-month low in December 2013, raising hopes that the central bank won't raise interest rates at its next monetary policy review later this month. The sentiments were also boosted by the absence of fresh supplies of gilts with the Reserve Bank of India deferring the bond auction scheduled for the current week. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.6083%, lower than its close of 8.6157% on Thursday, 16 January 2014. Bond yield and bond prices are inversely related.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.
On the political front, Congress President Sonia Gandhi said at a meeting of the All India Congress Committee (AICC) today, 17 January 2014, that the Congress party is ready and prepared for the 2014 Lok Sabha battle. "This election will be a battle for India as was conceived by our forefathers," Sonia Gandhi said. She also said the decision of the Congress Working Committee (CWC) on not naming Rahul Gandhi as the party's prime ministerial candidate for the 2014 Lok Sabha elections is final. Congress Vice President Rahul Gandhi will lead the party's campaign for the 2014 Lok Sabha elections.
Sonia Gandhi also said that it was because of the Congress that changes and reforms were brought. Highlighting the Congress's achievements, Sonia Gandhi spoke about the MNREGA scheme and the Right to Information Act. She also praised Prime Minister Manmohan Singh for withstanding criticism. "The Prime Minister has achieved all its targets steadily," she said.
European stocks advanced on Friday, 17 January 2014, as investors awaited reports on US housing starts and industrial production. Key benchmark indices in France, Germany and UK were up 0.06% to 0.26%.
Asian stocks edged lower in choppy trade on Friday, 17 January 2014, as US bank earnings disappointed and investors waited for Chinese economic data due next week. Key benchmark indices in China, Japan, Singapore, South Korea and Taiwan were off 0.03% to 0.93%. Key benchmark indices in Indonesia and Hong Kong were up 0.13% to 0.64%.
China's central bank has vowed to maintain liquidity at appropriate levels while urging financial institutions to enhance their ability to manage liquidity. The authorities will use various liquidity management tools and will adjust liquidity levels if needed, Zhang Xiaohui, head of the People's Bank of China's (POBC) monetary policy department, wrote in an article published in China Finance magazine. The PBOC has been maintaining a relatively hawkish stance toward liquidity since a cash crunch occurred in the nation's financial system last June, refraining from injecting funds into the system in an effort to curb high debt levels in the economy. The central bank will also study measures to allow financial institutions to issue certificates of deposit to individuals and nonfinancial enterprises, Ms. Zhang wrote in the same article published in the magazine, which is run by the central bank. She didn't give a time frame.
China began allowing banks to issue negotiable certificates of deposit in the interbank market late last year, in a move seen as setting the stage for liberalizing deposit rates.
Trading in US index futures indicated that the Dow could advance 14 points at the opening bell on Friday, 17 January 2014. US stocks ended lower on Thursday, 16 January 2014, snapping a two-day rally, after disappointing results from Best Buy Co. Inc., Citigroup Inc. and Goldman Sachs Group Inc. The Nasdaq Composite edged higher.
In economic news, the number of Americans who applied last week for unemployment benefits fell slightly and is now back to a level that prevailed shortly before the Thanksgiving holiday. Separately, US consumer prices rose a seasonally adjusted 0.3% in December, led by higher energy and shelter costs, the Labor Department said.
Fed Bank of Atlanta President Dennis Lockhart, who doesn't vote on monetary policy this year, said yesterday that he expects inflation that's been "too low" will accelerate toward the Fed's 2% target.
During an interview with Liaquat Ahamed, Fed Chairman Ben Bernanke defended the response to the financial crisis and said stock market valuations are within historic range. Commenting about the central bank's bond purchases, known as quantitative easing, he said: "The problem with QE is that it works in practice but it doesn't work in theory." Meanwhile, in a paper delivered at a Brookings Institution seminar on US monetary policy, San Francisco Fed President John Williams warned of "nagging concerns that large-scale asset purchases carry with them particular risks to the economy or the health of the financial system that we still don't fully understand." He also said the central bank's new forward-guidance tool seems "overly simplified and prone to misinterpretation."
The Senate cleared for President Barack Obama's signature a bipartisan $1.1 trillion bill to finance the US government through Sept. 30, making a debt ceiling increase the next potential fiscal showdown. The Democratic-controlled Senate voted 72-26 in favor of the spending measure a day after the Republican-led House passed it, 359-67. The bipartisan cooperation marks a turnaround from the Tea Party-fueled discord that caused a 16-day partial government shutdown in October.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
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