Indian stocks slumped as Thursday's Union Budget 2014-15 lacked major policy reforms and roadmap for reduction of subsidies. The barometer index, the S&P BSE Sensex, was provisionally down 338.15 points or 1.33%, off close to 515 points from the day's high and up about 55 points from the day's low. The Sensex provisionally closed above the psychological 25,000 mark after slipping below that mark for a brief period. The Sensex and 50-unit CNX Nifty, both, hit 2-1/2-week low. There was a sharper decline in small-cap and mid-cap indices. The BSE Mid-Cap index fell almost 3%. The BSE Small-Cap index was off over 3%. The market breadth indicating the overall health of the market was weak, with more than three losers for every gainer on BSE.
Capital goods stocks tumbled. Bank stocks also declined. Index heavyweight Reliance Industries (RIL) dropped.
As per provisional figures, the S&P BSE Sensex was down 338.15 points or 1.33% to 25,034.60. The index slumped 394.42 points at the day's low of 24.978.33 in late trade, its lowest level since 23 June 2014. The index jumped 175.58 points at the day's high of 25,548.33 in morning trade.
The CNX Nifty was down 103.20 points or 1.36% at 7,464.55, as per provisional figures. The index hit a low of 7,447.20 in intraday trade, its lowest level since 23 June 2014. The index hit a high of 7,625.85 in intraday trade.
The total turnover on BSE amounted to Rs 3749 crore, lower than Rs 5134.93 crore on Thursday, 10 July 2014.
The market breadth indicating the overall health of the market was weak, with more than three losers for every gainer on BSE. On BSE, 2,213 shares fell and 714 shares rose. A total of 79 shares were unchanged.
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The BSE Mid-Cap index was off 256.94 points or 2.81% at 8,875.24. The BSE Small-Cap index was off 331.86 points or 3.31% at 9,688.11. Both these indices underperformed the Sensex.
Among the 30 Sensex shares, 19 declined and the remaining shares rose.
Index heavyweight Reliance Industries (RIL) dropped 3.23% to Rs 966. The stock hit high of Rs 1,001.45 and low of Rs 963.85.
Capital goods stocks tumbled. Bharat Heavy Electricals (Bhel) (down 9.52%), ABB (India) (down 2.79%), Crompton Greaves (down 9.76%), and Siemens (down 3.33%), declined.
L&T shed 5.01% to Rs 1,572.35. The finance minister said that in Union Budget 2014-15, the government will provide Rs 37880 crore for road construction by National Highways Authority of India. A total of 8,500 KMs of roads will be added in this financial year. The Budget has provided Rs 14389 crore for rural road development projects in 2014-15 under the Pradhan Mantri Gram Sadak Yojana.
Bank stocks edged lower for the second day in a row. Among PSU banks, Union Bank of India (down 6.39%), State Bank of India (SBI) (down 4.96%), Punjab National Bank (down 4.01%), Bank of Baroda (down 5.17%) and Bank of India (down 6.5%), edged lower.
Expressing concerns over the rising non performing assets (NPA) of Public Sector Banks (PSBs) the finance minister in Union Budget 2014-15, announced setting-up of six new Debt Recovery Tribunals at Chandigarh, Bangaluru, Ernakulum, Dehradun, Silliguri and Hyderabad.
He also said that there is a requirement to infuse Rs 2.4 lakh crore as equity by 2018 in the public sector banks. To meet this huge capital requirement, additional resources have to be raised. By selling the shares through retail, the citizens will get direct shareholdings in these banks even as the government will continue to have majority shareholding. Jaitley said that government will also examine the proposal to give autonomy to the banks while making them accountable.
Among private sector banks, IndusInd Bank (down 0.18%), ICICI Bank (down 2.53%), Axis Bank (down 2.35%) and HDFC Bank (down 1.52%), edged lower..
The finance minister said that banks will be permitted to raise long term funds for lending to infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and Priority Sector Lending. On the assets side, banks will be encouraged to extend long term loans to infrastructure sector with flexible structuring to absorb potential adverse contingencies, sometimes known as the 5/25 structure.
The finance minister said that after making suitable changes to current framework, a structure will be put in place for continuous authorization of universal banks in the private sector in the current financial year. He said RBI will create a framework for licensing small banks and other differentiated banks. Jaitley said differentiated banks serving niche interests, local area banks and payment banks etc. are contemplated to meet credit and remittance needs of small businesses, unorganized sector, low income households, farmers and migrant workforce among others.
Kotak Mahindra Bank fell 0.97% to Rs 856.75. The stock hit high of Rs 882.50 and low of Rs 847.15. The Reserve Bank of India has on Thursday, 10 July 2014, notified that shares of the bank can now be purchased through primary market and stock exchanges by Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) as the restrictions placed on the purchase of shares of the bank have been withdrawn with immediate effect after the share holdings by FIIs/RFPIs under Portfolio Investment Scheme in Kotak Mahindra Bank have gone below the prescribed threshold limit stipulated under the extant FDI Policy.
IT major Infosys gained 1% to Rs 3,325.40 after announcing its Q1 result. The stock was volatile. The stock hit high of Rs 3,429.35 and low of Rs 3,305. The company's consolidated net profit as per International Financial Reporting Standards (IFRS) fell 3.5% to Rs 2886 crore on 0.8% decline in revenue to Rs 12770 crore in Q1 June 2014 over Q4 March 2014. The result was announced before market hours today, 11 July 2014. Infosys said it added 61 clients during the quarter.
Infosys expects its consolidated revenue to grow 7%-9% in dollar terms in the year ending 31 March 2015 (FY 2015). The guidance is unchanged compared to the one the company had given at the time of announcement of Q4 March 2014 results in April this year. The guidance in rupee terms has also been kept unchanged from that given in April as the company has assumed rupee dollar conversion rate of 60 which is exactly the same conversion rate given in April guidance. The company expects its revenue to grow 5.6%-7.6% in rupee terms in FY 2015.
A bout of initial volatility was witnessed as key benchmark indices regained positive terrain after slipping into the red for a brief period after opening higher. Volatility continued as key benchmark indices once again regained positive terrain after slipping into the negative terrain from positive terrain in morning trade. Volatility continued as key benchmark indices slipped into the red and hit fresh intraday low in mid-morning trade. Key benchmark indices extended losses and hit fresh intraday low in early afternoon trade. Selling intensified in afternoon trade as key benchmark indices extended losses to hit fresh intraday low. Key benchmark indices further extended losses and hit fresh intraday low. Indian stocks extended losses in late trade. The Sensex and 50-unit CNX Nifty, both, hit 2-1/2-week low.
Indian stocks fell for the fourth day in a row today, 11 July 2014. On Thursday, worries about the fragility of Europe's banking system weighed on Indian stocks which registered small losses after witnessing high intraday volatility after the presentation of the Union Budget 2014-15.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 60.13, compared with its close of 60.19/20 on Thursday, 10 July 2014.
Finance Minster Arun Jaitley made a number of announcements in Union Budget 2014-15 on Thursday, 10 July 2014, such as a proposal to increase in foreign direct investment in insurance and defence manufacturing, a sharp increase in plan expenditure, measures to boost long term financing for infrastructure by banks and provided clarity on taxation with respect to foreign portfolio investors. But, market expectations that the Finance Minster would scrap the law on retrospective taxation were not met. Government spending on plan expenditure was substantially increased to support growth.
Industrial output is seen rising 3.8% in May 2014, higher than 3.4% growth in April, as per the median estimates of a poll of economists carried out by Capital Market. The government will unveil industrial production data for May 2014 today, 11 July 2014.
European stocks edged higher on Friday, 11 July 2014, rebounding from concern the region's so-called peripheral countries are slipping back into trouble. Key benchmark indices in UK, France and Germany were up by 0.11% to 0.42%.
European stocks had dropped on Thursday, 10 July 2014, after Portugal's Espirito Santo International missed a payment on some short-term debt. Trading in shares of Banco Espirito Santo SA (BES) and Espirito Santo Financial Group SA was halted on Thursday and remained suspended today. BES today disclosed it has an exposure of 1.18 billion euros ($1.6 billion) to the Espirito Santo conglomerate through loans and securities. BES also said that its capital buffer is 2.1 billion euros above the minimum regulatory level for European banks.
Asian stocks edged lower in choppy trade on Friday, 11 July 2014, amid concern that Europe's debt problems haven't been resolved. Key benchmark indices in Hong Kong, Taiwan, Indonesia, South Korea and Japan fell 0.02% to 1.28%. Key benchmark indices in China and Singapore were up 0.42% to 0.74%.
Trading in US index futures indicated that the Dow could gain 35 points at the opening bell on Friday, 11 July 2014. US stocks fell on Thursday, 10 July 2014, on concerns that trouble at a European bank might spread.
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