Firmness continued on the bourses in mid-morning trade. The barometer index, the S&P BSE Sensex, was hovering above the psychological 22,000 level. The Sensex was 263.12 points or 1.21%, up 190.94 points from the day's low and off 28.14 points from the day's high. The market breadth, indicating the overall health of the market, was positive. The market sentiment was boosted by firm Asian stocks.
Index heavyweight Reliance Industries (RIL) extended intraday gains after the company on Saturday, 22 March 2014, said that since the Union Cabinet decided the new gas price policy way back in June 2013 and notified the decision on 10 January 2014, the model code of conduct should not be applied for the proposed revision in gas price which is to take effect from 1 April 2014. Bank stocks rose across the board, with HDFC Bank hittign record high and ICICI Bank hitting 52-week high. Auto and realty stocks edged higher. Among side counters, shares of footwear retailers Bata India hit record high.
Key benchmark indices edged higher in early trade on firm Asian stocks. Key benchmark indices extended initial gains in morning trade. The Sensex and the 50-unit CNX Nifty, both, hit record high. Firmness continued on the bourses in mid-morning trade.
Asian stocks edged higher on Monday, 24 March 2014, shrugging off weak Chinese economic data.
Indian stocks may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near-month March 2014 series to April 2014 series. The near-month March 2014 F&O contracts expire on Thursday, 27 March 2014.
At 11:15 IST, the S&P BSE Sensex was up 263.12 points or 1.21% to 22,018.44. The index jumped 291.26 points at the day's high of 22,046.58 in morning trade, a record high for the barometer index. The index rose 72.18 points at the day's low of 21,827.50 in opening trade.
The CNX Nifty was up 79.25 points or 1.22% to 6,574.15. The index hit a high of 6,580.90 in intraday trade, a record high. The index hit a low of 6,510.50 in intraday trade.
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The market breadth, indicating the overall health of the market, was positive. On BSE, 1,209 shares gained and 1,050 shares fell. A total of 134 shares were unchanged.
The BSE Mid-Cap index was up 21.40 points or 0.32% at 6,813.55. The BSE Small-Cap index was up 24.99 points or 0.37% at 6,856.98. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 686 crore by 11:15 IST, compared with Rs 436 crore by 10:15 IST.
Among the 30-share Sensex pack, 22 stocks gained and rest of them declined.
Hindalco Industries (down 1.4%), Tata Steel (down 1.02%) and Wipro (down 0.44%) edged lower from the Sensex pack.
Index heavyweight Reliance Industries (RIL) extended intraday gains after the company on Saturday, 22 March 2014, said that since the Union Cabinet decided the new gas price policy way back in June 2013 and notified the decision on 10 January 2014, the model code of conduct (MCC) should not be applied for the proposed revision in gas price which is to take effect from 1 April 2014. The stock was up 2.11% at Rs 907. The stock hit high of Rs 908 and low of Rs 892 so far during the day.
RIL said that a political party has written to the Election Commission (EC) to keep on hold a bonafide decision of the Union Cabinet on gas pricing. The party has a history of ill-informed diatribe, RIL said. It is thus important to examine established conventions in this regard, RIL.
RIL said that the decision to implement the new gas price from 1 April 2014 is part of this contractual obligation. This decision was taken keeping in view of the fact that the current gas prices are valid only till 31 March 2014, RIL said. The existing code of conduct came into force on 5 March 2014 and the cabinet decided on the new gas price policy on 27 June 2013 and notified the same on 10 January 2014. Even a bare reading of this factual position leads to a simple conclusion: change in gas pricing from April 1 is not a new decision but only implementation of a cabinet decision taken in June 2013, RIL said.
The notification of the gas price is a mere formality and not a policy decision which will lead to any political benefit to an elected government and the Union Cabinet several months before MCC kicked in, RIL said. Ensnaring the EC in this pursuit of political disinformation is regrettable, the company said in a statement.
Auto stocks edged higher. Mahindra & Mahindra (M&M) (up 1.06%), Maruti Suzuki India (up 0.19%), Tata Motors (up 0.69%) and Ashok Leyland (up 0.54%) edged higher.
Shares of two wheeler makers gained. Bajaj Auto (up 1.11%) and Hero MotoCorp (up 0.91%) rose.
Among private sector banks, HDFC Bank rose 2.15% to Rs 747.75 after hitting a record high of Rs 749.50 in intraday trade.
ICICI Bank surged 3.56% to Rs 1,240.55 after hitting a 52-week high of Rs 1,243 in intraday trade.
Realty stocks edged higher. DLF (up 1.85%), Housing Development Infrastructure (HDIL) (up 2.15%), Indiabulls Real Estate (up 0.89%), Godrej Properties (up 1.41%) and Unitech (up 2.32%) gained.
Bata India gained 2.59% to Rs 1,140.60 after hitting record high of Rs 1,143.50 in intraday trade.
In the foreign exchange market, the rupee edged higher against the dollar, tracking gains in most other Asian units versus the greenback. The partially convertible rupee was hovering at 60.715, compared with its close of 60.895/905 on Friday, 21 March 2014.
The Reserve Bank of India will announce the First Bi-monthly Monetary Policy Statement, 2014-15 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.
The next major trigger for the stock market is the outcome of the upcoming Lok Sabha elections. Lok Sabha elections will be held between 7 April 2014 and 12 May 2014 in nine phases. The counting of votes will be take place on 16 May 2014. The term of the current Lok Sabha expires on June 1 and the new House has to be constituted by May 31. Along with the Lok Sabha election, Andhra Pradesh (AP), including the regions comprising Telangana, Odisha and Sikkim will go to polls to elect new assemblies. AP, Odisha and Sikkim assemblies come to end on June 2, June 7 and May 7 respectively.
Investors are watching the development of the Ukraine crisis. Leaders of the US, the European Union, China, Japan and others meet today, 24 March 2014, with US President Barack Obama seeking to mobilize opposition to Russia's incursion into Crimea.
Asian stocks edged higher on Monday, 24 March 2014, shrugging off weak Chinese economic data. Key benchmark indices in Taiwan, Hong Kong, China, Singapore, Japan, Indonesia and South Korea were up 0.09% to 1.71%.
A preliminary gauge of China's factory activity fell to an eight-month low. The "flash" edition of HSBC's China manufacturing Purchasing Managers' Index (PMI) dropped to 48.1 from February's 48.5, remaining below the 50 level separating expansion from contraction. "Weakness is broadly-based with domestic demand softening further. We expect Beijing to launch a series of policy measures to stabilize growth. Likely options include lowering entry barriers for private investment, targeted spending on subways, air-cleaning and public housing, and guiding lending rates lower," Qu Hongbin, Hong Kong-based chief China economist at HSBC, said in a statement.
China issued rules on 21 March 2014 for a trial program allowing companies to sell preferred stock, expanding financing options for the country's banks as they seek to address tougher capital requirements. Companies will be able to issue the shares if they are included in the Shanghai Stock Exchange 50 A-Share Index, the China Securities Regulatory Commission said in a statement on its official microblog.
Trading in US index futures indicated that the Dow could drop 4 points at the opening bell on Monday, 24 March 2014. US stocks dropped on Friday, 21 March 2014, pressured by a sell-off in the health-care sector, but major equity indexes still posted solid weekly gains.
Federal Reserve Governor Jeremy Stein on Friday, 21 March 2014, said monetary policy should be less accommodative when bond markets are overheated even if it raises the risk of higher unemployment. "All else being equal, monetary policy should be less accommodative -- by which I mean that it should be willing to tolerate a larger forecast shortfall of the path of the unemployment rate from its full-employment level -- when estimates of risk premiums in the bond market are abnormally low," Stein said. He didn't comment on the current stance of policy. Stein said pursuing lower levels of unemployment with low interest rates may also entail costs if they raise financial instability that could affect jobs and growth at later time if yields shoot back up. "There is a cost to be weighed alongside the benefit" of an accommodative policy, Stein said at a forum on monetary policy at Georgetown University in Washington. Financial stability matters "insofar as it affects the degree of risk around the employment leg of the Federal Reserve's mandate."
As one measure of financial overheating, Stein pointed to risk premiums on longer-term debt, or the component of the bond's yield that compensates investors for owning a longer-term security as opposed to a short-term security. He said that in the spring of 2013 in the US when yields on US 10-year notes were around 1.6 percent, estimates of the term premium were around negative 0.80 percentage point. "Applied to this period, my approach would suggest a lesser willingness to use large-scale asset purchases to push yields down even further," he said. Stein said the "dark side" of collapsed risk premiums occurs if they return to normal abruptly in a way that causes "larger economic effects than the initial compression."
Minneapolis Fed President Narayana Kocherlakota, the sole dissenter on the Federal Open Market Committee (FOMC), released a statement on Friday, 21 March 2014, in which he criticized the Fed's new guidance, saying it "weakens the credibility of FOMC's commitment to target 2% inflation" and "fosters policy uncertainty and thereby suppresses economic activity."
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 29-30 April 2014. The Federal Reserve on 19 March 2014 said after the conclusion of a monetary policy review that it will trim its monthly bond purchases by $10 billion to $55 billion. The Federal Reserve will end its bond-buying program before the end of the year with an interest-rate increase likely to follow in "around six months," Chair Janet Yellen said on 19 March 2014. Quarterly Fed forecasts on 19 March 2014 showed more officials predicting that the benchmark interest rate, now close to zero, will rise to at least 1% by the end of 2015 and 2.25% a year later.
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