Key benchmark indices edged higher in early trade as firmness in Asian stocks boosted sentiment. The barometer index, the S&P BSE Sensex, was up 69.54 points or 0.31%, up about 40 points from the day's low and off close to 20 points from the day's high. The market breadth, indicating the overall health of the market, was strong.
Union Bank of India declined ahead of its Q4 results today, 8 May 2014. Capital goods pivotals edged higher. Shares of Financial Technologies (India) (FTIL) and Multi Commodity Exchange of India (MCX) dropped after the Mumbai police on Wednesday, 7 May 2014, arrested FTIL chairman Jignesh Shah in connection with the Rs 5500 crore-fraud at the National Spot Exchange or NSEL, which is a commodity exchange promoted by the Financial Technologies group.
Asian stocks rose on Thursday as Federal Reserve Chairwoman Janet Yellen said the Federal Reserve will continue to support the US economy.
Foreign institutional investors (FIIs) bought shares worth a net Rs 119.11 crore on Wednesday, 7 May 2014, as per provisional data from the stock exchanges.
At 9:30 IST, the S&P BSE Sensex was up 69.54 points or 0.31% to 22,393.44. The index rose 89.92 points at the day's high of 22,413.82 in early trade. The index gained 30.23 points at the day's low of 22,354.13 in early trade.
The CNX Nifty was up 26.45 points or 0.4% to 6,679. The index hit a high of 6,680.85 in intraday trade. The index hit a low of 6,661.20 in intraday trade.
The BSE Mid-Cap index was up 40.14 points or 0.55% to 7,400.22. The BSE Small-Cap index was up 34.20 points or 0.45% to 7,561.19. Both these indices outperformed the Sensex.
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The market breadth, indicating the overall health of the market, was strong. On BSE, 615 shares gained and 209 shares fell. A total of 27 shares were unchanged.
Among the 30-share Sensex pack, 24 stocks gained and rest of them fell. Hindalco Industries (up 1.26%), Sesa Sterlite (up 0.98%) and Cipla (up 2.63%) edged higher from the Sensex pack.
Capital goods pivotals edged higher. Bharat Heavy Electricals (Bhel) (up 0.67%) and L&T (up 0.01%) gained.
Union Bank of India declined 0.81% ahead of its Q4 results today, 8 May 2014.
IDFC dropped 0.92%. The Reserve Bank of India on Thursday, 7 May 2014 notified that Foreign Institutional Investors (FIIs), through primary market and stock exchanges, can now purchase up to 52.25% of the paid up capital of IDFC under the Portfolio Investment Scheme (PIS). IDFC has passed resolutions at the board of directors' level and a special resolution by the shareholders, agreeing for decreasing the limit for the purchase of its equity shares and convertible debentures by Foreign Institutional Investors (FIIs). Further the Reserve Bank notified that IDFC will remain included in the ban list for FIIs.
Financial Technologies (India) (FTIL) hit 5% lower circuit a Rs 276.70 on BSE. Multi Commodity Exchange of India (MCX) dropped 4.7%. The Mumbai police on Wednesday, 7 May 2014, arrested FTIL chairman Jignesh Shah in connection with the Rs 5500 crore-fraud at the National Spot Exchange or NSEL, which is a commodity exchange promoted by the Financial Technologies group. Shah has been under police investigation since August after NSEL abruptly suspended trade in most of its commodities contracts on 31 July 2013. Investigations by commodities regulator the Forward Markets Commission showed what it said was a Rs 5500 crore fraud, as the exchange defaulted on obligations to market participants because it did not have enough collateral.
In a statement issued to BSE on Wednesday, 7 May 2014, FTIL acknowledged that Shah has been arrested.
Commodities market regulator Forward Markets Commission has arleady ruled that FTIL is not "fit and proper" to run a bourse. It has directed FTIL to cut its stake in MCX to 2% from 26%. FTIL has announced that it would sell the 24% MCX stake, although it has not yet completed the sale.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June 2014. The RBI left its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review on 1 April 2014, as consumer-price inflation eased to a two-year low and as the rupee firmed up against the dollar.
A major near term trigger for the stock market is the outcome of the ongoing Lok Sabha elections. The 36 days long voting process began on 7 April 2014 and will conclude on 12 May 2014. The results will be declared on 16 May 2014 after which India will get a new government. The term of the current Lok Sabha expires on 1 June and the new House has to be constituted by 31 May.
Investors are hoping that a stable government which will complete its full term of five years in office comes to power after the elections. A party or a combination will need 272 MPs to form government at the Centre, which is a simple majority in 543-member Lok Sabha. Investors are expecting measures for revival of the economy, business-friendly policies and good governance from the new government that comes to power after the elections. Investors expect policy measures from the new government to put India on a high-growth path on a sustainable basis.
Investors are betting that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) will be able to form the next government at the centre with support from some regional parties after Lok Sabha elections which conclude next week. Various opinion polls have forecast that the NDA with Narendra Modi as its prime ministerial candidate is leading the race to Parliament. Most opinion polls have forecast that the NDA will be unable to form the government on its own and that it will have to rely on support from smaller regional parties to form the government. For the first time in mid-April, an opinion poll for a television news channel showed the NDA winning a narrow majority of 275 seats.
The BJP in its Lok Sabha polls manifesto has promised more business-friendly policies if the party comes to power after elections.
Narendra Modi, the prime ministerial candidate from the NDA, is perceived as being more business-friendly and decisive by the business community. As chief minister for the fast-growing state of Gujarat, Modi has built a reputation for getting things done.
Asian stocks rose on Thursday as Federal Reserve Chairwoman Janet Yellen said the Federal Reserve will continue to support the US economy. Key benchmark indices in Japan, Hong Kong, China, Singapore, South Korea and Taiwan were up 0.15% to 1.11%. Indonesia's Jakarta Composite fell 0.09%.
China's exports and imports unexpectedly rose in April, helping leaders put a floor under a slowdown in the world's second-biggest economy. Overseas shipments increased 0.9% from a year earlier, when figures were inflated by fraudulent invoicing, data from the Beijing-based customs administration showed today. Imports gained 0.8%, leaving a trade surplus of $18.46 billion.
Australian employers boosted payrolls in April, underscoring an improving economic outlook that prompted the central bank to adopt a neutral policy stance. The number of people employed rose by 14,200 from a month earlier, the statistics bureau said in Sydney. The jobless rate held at 5.8%.
Most US stocks rose on Wednesday after comments from Federal Reserve Chair Janet Yellen signaled continued support for the US economy.
Yellen told US lawmakers the economic stimulus that has fueled global asset gains is still required because employment and inflation are well short of the central bank's goals.
The Labor Department said that US nonfarm productivity fell at its fastest pace in a year in the first quarter because of severe weather. That led to the largest gain in unit labor costs in more than a year. Productivity fell at a 1.7% annual rate in the quarter, the Labor Department said.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 17-18 June 2014. The Fed on 30 April 2014 said after a monetary policy review that it will keep the benchmark interest-rate target at almost zero for a "considerable time" after its bond-buying program ends. The FOMC also reduced monthly debt purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in "measured steps" if the economy continues to improve.
In Europe, a monthly meeting of the Monetary Policy Committee of the Bank of England's (BoE) for monetary policy review is scheduled today, 8 May 2014.
The European Central Bank (ECB) will hold monetary policy meeting today, 8 May 2014, in Brussels, Belgium.
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