Volatility ruled the roost as key benchmark indices trimmed losses after the Reserve Bank of India (RBI) today, 3 May 2013, cut its key policy rate viz. the repo rate by 25 basis points to 7.25% from 7.5% to provide support to a fragile economic recovery in the face of gradual moderation of headline inflation. The barometer index, the S&P BSE Sensex, was down 102.82 points or 0.52%, off close to 100 points from the day's high and up about 80 points from the day's low. Index heavyweight and cigarette major ITC hovered in red. Another index heavyweight Reliance Industries (RIL) reversed initial losses. The market breadth, indicating the overall health of the market, was negative. Interest rate sensitive banking and realty stocks declined after the RBI said after the monetary policy review that that the balance of risks stemming from its assessment of the growth-inflation dynamic provides little space for further monetary easing.
The market edged lower in early trade. The market hovered in the negative terrain in morning trade. The market trimmed losses after hitting fresh intraday day low in mid-morning trading after RBI's announcement of repo rate cut after monetary policy review.
Foreign institutional investors (FIIs) bought shares worth a net Rs 1429.94 crore on Thursday, 2 May 2013, as per provisional data from the stock exchanges.
The RBI cut the repo rate by 25 basis points (bps) to 7.25% and kept the cash reserve ratio (CRR) for banks unchanged at 4%. The central bank said that with upside risks to inflation still significant in the near term in view of sectoral demand supply imbalances, ongoing correction in administered prices and pressures stemming from MSP increases, monetary policy cannot afford to lower its guard against the possibility of resurgence of inflation pressures. The RBI said that recent monetary policy action, by itself, cannot revive growth. It needs to be supplemented by efforts towards easing the supply bottlenecks, improving governance and stepping up public investment, alongside continuing commitment to fiscal consolidation.
The RBI said WPI inflation is expected to be range-bound around 5.5% during 2013-14, with some edging down in the first half on account of past policy actions, although there could be some increase in the second half, largely reflecting base effects. By March 2013, WPI inflation at 6% turned out to be lower than the RBI's indicative projection of 6.8%, mainly due to a sharp deceleration in non-food manufactured products inflation in the second half of the year. The RBI said it will endeavour to condition the evolution of inflation to a level of 5% by March 2014, using all instruments at its command.
During 2013-14, economic activity is expected to show only a modest improvement over last year, with a pick-up likely only in the second half of the year. Accordingly, the baseline GDP growth for 2013-14 is projected at 5.7%, RBI said.
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The RBI said a high current account deficit poses the biggest risk "by far" to the Indian economy.
At 11:20 IST, the S&P BSE Sensex was down 102.82 points or 0.52% to 19,632.95. The index fell 4.14 points at the day's high of 19,731.63 in early trade. The index declined 183.22 points at the day's low of 19,552.55 in mid-morning trade.
The CNX Nifty was down 50.80 points or 0.85% to 5,948.45. The index hit a high of 6,000.30 in intraday trade. The index hit a low of 5,930.15 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 904 shares fell and 603 shares rose. A total of 79 shares were unchanged.
Among the 30-share Sensex pack, 22 stocks fell while rest of them rose. Tata Motors, Bajaj Auto and HDFC shed by 1.57% to 2.8%. Bharti Airtel, NTPC and Infosys rose by 0.88% to 1.36%.
Index heavyweight Reliance Industries (RIL) rose 0.38% to Rs 805.80. The scrip hit high of Rs 806.95 and a low of Rs 798 so far during the day. The company said on Tuesday, 30 April 2013, that its telecom unit Reliance Jio Infocomm (India) has joined a consortium of telecom companies building an 8,000 kilometre submarine cable system to link Malaysia and Singapore with the Middle East. The Bay of Bengal Gateway (BBG) cable system, which will have connections to India and Sri Lanka, is expected to carry commercial traffic by end of 2014, RIL said.
At the time of announcement of its Q4 results, RIL in mid-April 2013 said that the company is working towards next wave of projects to exploit the undeveloped discovered resources in KG-D6 gas field targeted over the next 3-5 years. RIL has submitted an Integrated Block Development Plan (IBDP) for four discoveries in NEC -25 block (D-32, D-40, D-9 and D-10) proposing for a phased manner development. First gas is expected by mid-2019 subject to timely approvals.
Index heavyweight and cigarette major ITC fell 0.72% to Rs 331.05 on profit booking. The scrip hit high of Rs 333.30 and a low of Rs 330.10 so far during the day. The stock had hit record high of Rs 335.90 in intraday on Tuesday, 30 April 2013. The Centre raised the excise duty on cigarettes by about 18% on all cigarettes except cigarettes of length not exceeding 65 mm in Union Budget 2013-14.
Interest rate realty stocks declined after the RBI said after the monetary policy review that that the balance of risks stemming from its assessment of the growth-inflation dynamic provides little space for further monetary easing. Purchases of both residential and commercial property are largely driven by finance. DLF, HDIL, D B Realty, Sobha Developers and Unitech shed by 0.58% to 3.65%.
Bank stocks fell after the RBI said that there is little room to ease monetary policy further. Shares of India's biggest commercial bank in terms of branch network, State Bank of India (SBI), fell 2.12%.
Canara Bank dropped 2.24%, with the stock declining for the second straight day triggered by weak Q4 results. The bank's net profit fell 12.51% to Rs 725.38 crore on 4.81% increase in total income to Rs 9471.57 crore in Q4 March 2013 oveQ4 March 2012. The result was announced during trading hours on Thursday, 2 May 2013.
Among other PSU bank stocks, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank shed by 0.98% to 2.17%.
HDFC Bank dropped 0.57%. HDFC Bank's net profit rose 30.06% to Rs 1889.84 crore on 21.08% increase in total income to Rs 11127.54 crore in Q4 March 2013 over Q4 March 2012. Net profit rose 30.18% to Rs 6726.28 crore on 24.54% increase in total income to Rs 41917.49 crore in the year ended March 2013 over the year ended March 2012. The result was announced on 23 April 2013.
ICICI Bank declined 1.73%. The bank's net profit rose 21% to Rs 2304 crore on 10.26% rise in total income to Rs 12573.52 crore in Q4 March 2013 over Q4 March 2012. Net interest income increased 22% to Rs 3803 crore in Q4 March 2013 from Rs 3105 crore in Q4 March 2012. The cost-to-income ratio reduced to 40% in Q4 March 2013 from 41.6% in Q4 March 2012. The bank announced Q4 results on 26 April 2013.
Kotak Mahindra Bank rose fell 0.11% to Rs 716.10 on profit booking. The stock had hit record high of Rs 725 in intraday trade on Thursday, 2 May 2013. The bank's net profit rose 46.9% to Rs 436.21 crore on 28.67% rise in total income to Rs 2572.23 crore in Q4 March 2013 over Q4 March 2012. The bank announced its Q4 results during market hours on Thursday, 2 May 2013.
The focus of the market is on Q4 results. Grasim and Jaiprakash Associates will unveil their Q4 results tomorrow, 4 May 2013. HDFC and Lupin unveil Q4 results on 8 May 2013. Ranbaxy announces Q1 March 2013 results on the same day. Asian Paints and Punjab National Bank unveil Q4 results on 9 May 2013. NTPC announces Q4 results on 10 May 2013. Bank of Baroda unveils Q4 results on 13 May 2013. Dr Reddy's Laboratories announces Q4 results on 14 May 2013. Bajaj Auto announces Q4 results on 16 May 2013. BPCL announces Q4 results on 29 May 2013. M&M announces Q4 results on 30 May 2013.
India's factories lost momentum in April as output grew at its weakest pace in over four years, but a jump in export orders augured well for the coming months, a survey showed on Thursday, 2 May 2013. The HSBC Manufacturing Purchasing Managers' Index (PMI), fell for the second straight month in April, dipping to 51 from 52 in March. The reading for April was the lowest since November 2011.
The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The government hopes to reduce the fiscal deficit to 3% by March 2017.
Asian stocks rose for the first time in three days on Friday as Macquarie Group reported higher earnings and investors awaited the release of US job data. Key benchmark indices in China, Hong Kong, Taiwan and South Korea rose by 0.08% to 1.79%. Key benchmark indices in Japan, Indonesia and Singapore fell by 0.63% to 0.81%.
China's service industries expanded at a slower pace last month, adding to the drag on growth in the world's second-biggest economy after manufacturing lost momentum. The non-manufacturing Purchasing Managers' Index fell to 54.5 from 55.6 in March, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in a statement today in Beijing.
Trading in US index futures indicated a flat opening of US stocks on Friday, 3 May 2013. US stocks rose on Thursday, sending the Standard & Poor's 500 index to a record high, as the European Central Bank cut its key interest rate and American jobless claims unexpectedly fell. Applications for US unemployment insurance payments fell 18,000 to 324,000 in the week ended April 27, the fewest since January 2008, Labor Department figures showed yesterday.
In Europe, the European Central Bank lowered its benchmark rate to a record low yesterday and President Mario Draghi signaled another reduction is possible. European policy makers cut the main refinancing rate to a record-low 0.5% yesterday from 0.75%, and reduced the marginal lending rate to 1% from 1.5%.
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