Weakness continued on the bourses in early afternoon trade. The barometer index, the S&P BSE Sensex, was trading below the psychological 29,000 level after falling below that level in early afternoon trade. The market breadth indicating the overall health of the market was negative. The barometer index, the S&P BSE, Sensex was currently off 197.92 points or 0.68% at 28,924.35.
Index heavyweight and cigarette major ITC edged higher. Sesa Sterlite extended intraday gain. Housing finance major HDFC extended intraday fall. Private sector banking major Axis Bank reversed direction after scaling a record high in intraday trade. FMCG stocks were mixed. Shares of Bajaj Corp scaled record high. Among tyre shares, shares of Apollo Tyres scaled record high. Asahi India Glass and Tata Elxsi also scaled record high.
The Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review today, 3 February 2015. The central bank announced a reduction in the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points with effect from the fortnight beginning 7 February 2015 in order to create space for banks to expand credit to the productive sectors so as to support investment and growth in the economy.
The central bank said that it has decided to allow foreign portfolio investors reinvestment of coupons in government securities even when the existing limits are fully utilised. Simultaneously, the RBI has decided that henceforth all future investments by foreign portfolio investors (FPIs) within the limit for investment in corporate bonds will be allowed only in paper with a minimum residual maturity of three years. Furthermore, FPIs will not be allowed to invest incrementally in short maturity liquid/money market mutual fund schemes, the RBI said.
Earlier, the Sensex hit 1-1/2-week low and the 50-unit CNX Nifty hit its lowest level in almost two weeks as these two benchmark indices extended intraday losses in early afternoon trade.
Foreign portfolio investors sold shares worth a net Rs 629.97 crore yesterday, 2 February 2015, as per provisional data.
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In the overseas markets, Asian stocks were mixed. US stocks ended sharply higher yesterday, 2 February 2015, after a late rally driven by hopes for a Greek debt deal and as energy shares bounced with oil prices.
In the foreign exchange market, the rupee edged higher against the dollar in choppy trade.
Brent crude oil futures extended gains registered during the previous trading session.
At 13:15 IST, the S&P BSE Sensex was down 197.92 points or 0.68% at 28,924.35. The index fell 221.86 points at the day's low of 28,900.41 in early afternoon trade, its lowest level since 22 January 2015. The index jumped 130.79 points at the day's high of 29,253.06 in early trade.
The CNX Nifty was down 60.60 points or 0.69% at 8,736.80. The index hit a low of 8,726.65 in intraday trade, its lowest level since 21 January 2015. The index hit a high of 8,837.30 in intraday trade.
The BSE Mid-Cap index was off 32.36 points or 0.3% at 10,766.77. The BSE Small-Cap index was down 38.77 points or 0.34% at 11,418.07. The decline in both these indices was lower than Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was negative. On BSE, 1,449 shares declined and 1,189 shares advanced. A total of 110 shares were unchanged.
The total turnover on BSE amounted to Rs 2976 crore by 13:15 IST.
Index heavyweight and cigarette major ITC rose 1.15% to Rs 364.75. The stock hit a high of Rs 366.15 and low of Rs 360 so far during the day.
Sesa Sterlite surged 4.39% to Rs 207.10. The stock extended intraday gain. The stock hit high of Rs 208.10 and low of Rs 199.85 so far during the day.
Housing finance major HDFC dropped 2.68% to Rs 1,236.20. The stock extended intraday fall. The stock hit high of Rs 1,271 and low of Rs 1,231.40 so far during the day.
Axis Bank dropped 3.52% to Rs 595.30. The stock reversed direction after scaling a record high of Rs 625.90 in intraday trade.
FMCG stocks were mixed. Hindustan Unilever (up 0.63%), Britannia Industries (up 1.12%), Colgate-Palmolive (India) (up 0.86%), Dabur India (up 1.78%) and Godrej Consumer Products (up 0.82%) rose.
Marico (down 1.21%), Nestle India (down 0.44%) and Tata Global Beverages (down 1.89%) declined.
Bajaj Corp rose 3.27% to Rs 435.60 after scaling a record high of Rs 441.25 in intraday trade.
Apollo Tyres gained 1.62% to Rs 247.90 after scaling a record high of Rs 249.45 in intraday trade.
Asahi India Glass rose 2.19% to Rs 142.60 after scaling a record high of Rs 145.45 in intraday trade.
Tata Elxsi jumped 5.16% to Rs 798.20 after scaling a record high of Rs 823.30 in intraday trade.
Shanthi Gears dropped 3.56% after net profit fell 18.61% to Rs 3.76 crore on 3.29% rise in total income from operations (net) to Rs 42.98 crore in Q3 December 2014 over Q3 December 2013. The company announced Q3 results after market hours yesterday, 2 February 2015.
Shanthi Gears said that the Tamil Nadu Generation and Distribution Corporation through its Executive Engineer disconnected the supply power to the Foundry unit of the Company on 31 January 2015 based on a direction from the Tamil Nadu Pollution Control Board. The company is seeking legal remedy to restore the power supply since the company is in compliance with all relevant pollution control laws and regulations, Shanthi Gears said.
In the foreign exchange market, the rupee edged higher against the dollar in choppy trade. The partially convertible rupee was hovering at 61.7775, compared with its close of 61.80 during the previous trading session.
Brent crude oil futures extended gains registered during the previous trading session. Brent for March settlement was up 55 cents at $55.30 a barrel. The contract had jumped $1.76 a barrel or 3.32% to settle at $54.75 a barrel during the previous trading session.
The Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review today, 3 February 2015. The RBI announced a reduction in the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points with effect from the fortnight beginning 7 February 2015 in order to create space for banks to expand credit to the productive sectors so as to support investment and growth in the economy. The RBI has decided to replace the export credit refinance (ECR) facility with the provision of system level liquidity with effect from 7 February 2015. In pursuance of the Dr. Urjit R. Patel Committee's recommendation to move away from sector-specific refinance, the ECR limit has been gradually lowered since June 2014. Continuing with this rationalisation, it has been decided to merge the facility with system level liquidity provision with effect from 7 February 2015, the RBI said. The central bank said it will continue to meet system wide liquidity needs as per the revised liquidity adjustment framework announced on 22 August 2014.
The RBI said that the upside risks to inflation stem from the unlikely possibility of significant fiscal slippage, uncertainty on the spatial and temporal distribution of the monsoon during 2015 as also the low probability but highly influential risks of reversal of international crude prices due to geo-political events. Heightened volatility in global financial markets, including through the exchange rate channel, also constitute a significant risk to the inflation assessment, RBI Governor Dr. Raghuram G. Rajan said in a statement. The RBI said that as per its assessment, inflation is likely to be around the target level of 6% by January 2016. As regards the path of inflation in 2015-16, the Reserve Bank of India will keenly monitor the revision in the consumer price index (CPI), which will rebase the index to 2012 and incorporate a more representative consumption basket along with methodological improvements.
The outlook for growth has improved modestly on the back of disinflation, real income gains from decline in oil prices, easier financing conditions and some progress on stalled projects. These conditions should augur well for a reinvigoration of private consumption demand, but the overall impact on growth could be partly offset by the weaker global growth outlook and short-run fiscal drag due to likely compression in plan expenditure in order to meet consolidation targets set for the year. The RBI has retained its baseline projection for growth using the old GDP base at 5.5% for 2014-15. The RBI has forecast real GDP growth at 6.5% for 2015-16, with risks broadly balanced. The revised GDP statistics (base 2011-12) released on 30 January 2015 along with advance estimates for 2014-15 expected on 9 February 2015 will need to be carefully analysed and could result in revisions to the RBI's growth projections for 2015-16, the central bank said.
The RBI said that despite a generalised fall in the cost of funds, commercial banks have yet to pass through these effects, as also the effects of the RBI's policy rate cut announced on 15 January 2015, into the spectrum of lending rates.
Given that there have been no substantial new developments on the disinflationary process or on the fiscal outlook after 15 January 2015 -- the day when the RBI cut repo rate by 25 basis points in an unscheduled monetary policy review, it is appropriate for the RBI to await them and maintain the current interest rate stance, Rajan said.
The RBI further said that the global financial markets remain vulnerable to uncertainty surrounding monetary policy normalization in advanced economies (AEs) as well as possibly weaker growth in China and oil exporting emerging market economies.
After the latest monetary policy review, the central bank said that it has decided to allow foreign portfolio investors reinvestment of coupons in government securities even when the existing limits are fully utilised. Simultaneously, the RBI has decided that henceforth all future investments by foreign portfolio investors (FPIs) within the limit for investment in corporate bonds will be allowed only in paper with a minimum residual maturity of three years. Furthermore, FPIs will not be allowed to invest incrementally in short maturity liquid/money market mutual fund schemes, the RBI said.
The RBI has decided to allow the stock exchanges to introduce cash settled interest rate futures (IRF) contracts on 5-7-Year and 13-15 year Government of India Securities. At present, IFR contracts are allowed only in cash settled IRF contract on 10-Year Government of India (GoI) Security.
With regard to currency futures, the RBI said that domestic entities and FPIs will henceforth be allowed to take foreign currency positions in the USD-INR pair up to $15 million per exchange without having to establish the existence of any underlying exposure. In addition, they shall be allowed to take foreign currency positions in EUR-INR, GBP-INR and JPY-INR pairs, all put together up to $5 million equivalent per exchange, without having to establish the existence of any underlying exposure. Domestic entities and FPIs who want to take a position exceeding the above limits in the exchange traded currency derivatives (ETCD) market will have to establish the existence of an underlying exposure, the RBI said.
For importers of goods and services, the limit up to which they can take appropriate hedging positions in ETCD markets will be determined as 100 per cent of the higher of the average of their last three years' imports turnover or the previous year's turnover, compared with 50% present. Documentation and other administrative requirements for hedging on the ETCD markets are also being rationalised, the RBI said.
Asian stocks were mixed today, 3 February 2015. Key indices in China, Hong Kong, Taiwan and Indonesia were up 0.22% to 2.45%. Key indices in Japan, South Korea and Singapore were off 0.04% to 1.27%.
The Reserve Bank of Australia (RBA) cut its key policy rate by a quarter percentage point after a monetary policy review today, 3 February 2015, citing weak inflation and a stronger-than-desired currency. The move put the cash rate at a historic low of 2.25%. In comments accompanying the move, RBA Governor Glenn Stevens said that the consumer price index recorded the lowest increase for several years in 2014 and it appears likely that inflation will remain consistent with the target over the next one to two years given weak growth in labor costs. Meanwhile, Stevens repeated the RBA view that the Australian dollar remained above most estimates of its fundamental value, particularly given the significant declines in key commodity prices.
Trading in US index futures indicated that the Dow could fall 17 points at the opening bell today, 3 February 2015. US stocks ended sharply higher yesterday, 2 February 2015 after a late rally driven by hopes for a Greek debt deal and as energy shares bounced with oil prices.
In Europe, Greece's new government has proposed ending a standoff with its international creditors by swapping its outstanding debt for new growth-linked bonds, Finance Minister Yanis Varoufakis was quoted as saying yesterday, 2 February 2015.
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