With European stocks sliding in early trade there, key equity benchmark indices in India pared gains. The barometer index, the S&P BSE Sensex, was currently up 296.37 points or 1.14% at 26,404.90. The market breadth was strong. The BSE Mid-Cap index was up 1.1%. The market sentiment was upbeat after the government on Saturday, 18 October 2014, announced deregulation of diesel prices and raised gas prices. The deregulation of diesel prices will reduce the government's fuel subsidy burden. As a result of the gas price hike, the government will get additional revenue of approximately Rs 3800 crore per annum on account of higher royalty, higher profit petroleum and higher taxes. Investors also cheered a strong showing of the Bharatiya Janata Party (BJP) in assembly election in Maharashtra and Haryana.
Meanwhile, the sharp cut in diesel price announced by oil marketing companies on Saturday, 18 October 2014, is expected to bring down freight rates. This could reduce consumer price inflation and provide room for the Reserve Bank of India (RBI) to cut interest rates. Diesel is the main fuel for transporters and directly affects the retail price of items ranging from foodstuffs to white goods that are transported across cities.
Capital goods stocks edged higher. Bharat Heavy Electricals advanced after the company issued clarification with regard to a media news item. Shree Cement gained after the company clarified on media reports that stated that Jaiprakash Associates may sell Bhilai unit to the company. Oberoi Realty surged after good Q2 earnings.
On the political front, the Bharatiya Janata Party (BJP) on Sunday, 19 October 2014, created history in Haryana by securing a clear majority on its own for the first time and is set to form the government in state. For the first time, the BJP emerged with a clear mandate in Haryana, winning 47 seats in the 90-member assembly with a 33.2% vote share. The party emerged as the single largest party in Maharashtra and is set to form the government in state. In Maharashtra, the BJP won 122 seats in the 288-member assembly, falling well short of the 145 seats required for a simple majority. Its ally Rashtriya Samaj Paksha won one. The NCP, which won 41 seats, said it will offer BJP "outside support" to form a stable government in the state, leaving the former BJP ally and runner up Shiv Sena high and dry. The Shiv Sena won 63 seats. Shiv Sena Chief Uddhav Thackeray said after the election results that nobody from the BJP has approached his party for support, and his party would not approach it with any proposal.
BJP's strong showing in the two assembly polls will help it progress toward greater influence in the upper house of the parliament, where it is in a minority. State elections are important for control of the Rajya Sabha, or the upper house of parliament, where representation is based on seats in local assemblies. While the BJP controls the lower house, or Lok Sabha, after winning India's strongest mandate in 30 years, it is in a minority in Rajya Sabha.
The results of the assembly elections for Maharashtra and Haryana were announced yesterday, 19 October 2014. The polls for the assembly election in these two states were held on 15 October 2014.
Earlier, key indices had hit their highest level in almost a week at the onset of the trading session after the government's decision on Saturday, 18 October 2014, to deregulate diesel prices and raise gas prices.
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In overseas markets, European stocks fell in early trade on worse-than-estimated financial results. Asian stocks rose after solid US data and earnings calmed tumult in global financial markets and reassured investors worried about the health of the world economy.
Brent crude futures edged higher after robust US data buoyed global financial markets, with a cut in Saudi-Kuwait oil output providing further support.
In the foreign exchange market, the rupee edged higher against the dollar after the government's decision on Saturday, 18 October 2014, to deregulate diesel prices and raise gas prices.
At 13:14 IST, the S&P BSE Sensex was up 296.37 points or 1.14% at 26,404.90. The index jumped 409.37 points at the day's high of 26,517.90 in mid-morning trade, its highest level since 14 October 2014. The index rose 291.31 points at the day's low of 26,399.84 in early trade.
The CNX Nifty was up 93.20 points or 1.2% at 7,872.90. The index hit a high of 7,905.95 in intraday trade, its highest level since 14 October 2014. The index hit a low of 7,867.05 in intraday trade.
The BSE Mid-Cap index was up 101.58 points or 1.1% at 9,374.07. The BSE Small-Cap index was up 95.17 points or 0.92% at 10,409.14. Both theses indices underperformed the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 1,638 shares rose while 960 shares declined. A total of 112 shares were unchanged.
Capital goods stocks edged higher. Siemens (up 3.21%), L&T (up 2.93%), ABB (up 0.61%), Thermax (up 0.88%), and Alstom T&D India (up 0.58%) gained.
Bharat Heavy Electricals (Bhel) rose 0.51% at Rs 227.70. The company during market hours in a clarification with regard to news item titled "Bhel Commissions 600 mw project" said that the company has commissioned a 600 MW unit in Madhya Pradesh. There is no material impact of this development on the company and no financial figures or forecast have been shared with the media in this regard, Bhel said.
Shree Cement rose 1.2% at Rs 8,518.45. The company during market hours in a clarification with regard to news item titled "Jaypee may sell Bhilai Unit to Shree Cement" said that the news item is speculative in nature and the company would not like to comment on the same. In the course of business, the company evaluates various proposals on a regular basis, Shree Cement said. There is no proposal which has reached the stage which requires intimation to Stock Exchange under Clause 36 of the Listing Agreement, the company added.
Oberoi Realty surged 4.24% at Rs 220 after consolidated net profit rose 9.97% to Rs 70.54 crore on 6.09% decline in total income to Rs 189.37 crore in Q2 September 2014 over Q2 September 2013. The result was announced on Saturday, 18 October 2014.
Hindustan Construction Company surged 6.17% at Rs 28.40 after the company during market hours said it has secured a road project worth Rs 393.08 crore from Ministry of Road Transport & Highway.
Meanwhile, provisional data released by the stock exchanges after trading hours on Friday, 17 October 2014, showed that foreign portfolio investors (FPIs) sold shares worth a net Rs 1430.03 crore on that day.
In the foreign exchange market, the rupee edged higher against the dollar after the government's decision on Saturday, 18 October 2014, to deregulate diesel prices and raise gas prices. The partially convertible rupee was hovering at 61.275, compared with its close of 61.44 during the previous trading session.
Brent crude futures edged higher after robust US data buoyed global financial markets, with a cut in Saudi-Kuwait oil output providing further support. Brent for December settlement was up 31 cents at $86.47 a barrel. The contract had risen 34 cents to end at $86.16 a barrel on Friday, 17 October 2014.
European stocks fell in early trade today, 20 October 2014,on worse-than-estimated financial results. Key indices in Germany, France and UK were down 0.11% to 0.63%.
Teresa Romero, the Spanish nursing aide who became the first person outside of West Africa to contract Ebola, has reportedly tested negative for the virus for the first time. Romero will undergo a second test to be sure she is free of the disease. Another 15 patients who came in contact with Romero have shown no symptoms of the disease, according to reports.
Germany's producer prices index continued its fall on an annual basis in September 2014, as energy costs kept it under downward pressure, while it remained steady in on the month earlier, official data showed today, 20 October 2014. Producer prices were unchanged on the month and fell 1% on the year, data from the country's statistics office Destatis showed today, 20 October 2014. In August 2014, producer prices fell 0.1% on the month and declined 0.8% on the year.
Japanese stocks led a rally in Asian stocks today, 20 October 2014, after solid US data and earnings reassured investors worried about the health of the world economy. Key benchmark indices in Japan, China, Taiwan, South Korea Hong Kong, Singapore and Indonesia were up 0.33% to 3.98%.
Japanese stocks surged after a weekend media report that Japan's $1.2 trillion Government Pension Investment Fund, the world's largest public pension fund, is working out plans to increase its portfolio allocation devoted to domestic stocks to around 25%.
Meanwhile, in China, the country's central bank -- the People's Bank of China -- is reportedly planning the injection of about 200 billion yuan ($32.7 billion) into some national and regional lenders. The National Bureau of Statistics is due to announce data on third-quarter economic growth and September industrial production, retail sales and fixed-asset investment tomorrow, 21 October 2014. The Communist Party starts its plenary session today, 20 October 2014.
In Hong Kong, protest leaders and government officials pledged to move ahead with talks aimed at ending more than three weeks of pro-democracy demonstrations, even after a weekend of violent clashes that injured dozens. Talks between the two sides are set to begin tomorrow afternoon and will go ahead amid rising tensions in the streets. The clashes this weekend were concentrated in Mong Kok, one of the three sites occupied by demonstrators, after police cleared protesters from a key intersection on Friday, 17 October 2014, prompting thousands to pour back into the neighborhood to take back the streets.
Trading in US index futures indicated that the Dow could gain 23 points at the opening bell today, 20 October 2014. US stocks rallied on Friday, 17 October 2014, as earnings beat estimates, consumer confidence reached a seven-year high and investors speculated that central banks will add more economic stimulus.
US consumer confidence unexpectedly rose in October to the highest level in seven years, showing a brightening in Americans' moods as gas prices drop and the labor market gains traction. The Thomson Reuters/University of Michigan preliminary sentiment index for this month increased to 86.4, the strongest since July 2007.
The Federal Reserve may want to extend its bond-buying program beyond October to keep its policy options open given falling US inflation expectations, Federal Reserve Bank of St. Louis President James Bullard said on 16 October 2014.
The Federal Open Market Committee (FOMC) next undertakes a monetary policy review at a two-day meeting on 28-29 October 2014.
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