A bout of volatility was witnessed as key benchmark indices moved into positive zone from negative zone in mid-morning trade. The market breadth, indicating the overall health of the market turned positive from negative. The market sentiment was boosted by data showing that foreign funds made substantial purchases of Indian stocks on Tuesday, 11 March 2014. The barometer index, the S&P BSE Sensex, was up 80.50 points or 0.37%, up about 140 points from the day's low and off close to 60 points from the day's high.
IT stocks were in demand. Index heavyweight and cigarette maker ITC extended initial gains. Most auto stocks edged lower.
Key benchmark indices edged lower amid initial volatility on weak Asian stocks. Key benchmark indices languished in the negative terrain in morning trade. A bout of volatility was witnessed as key benchmark indices moved into positive zone from negative zone in mid-morning trade.
The market sentiment was boosted by data showing that foreign funds made substantial purchases of Indian stocks on Tuesday, 11 March 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 1,471.23 crore on Tuesday, 11 March 2014, as per provisional data from the stock exchanges.
At 11:20 IST, the S&P BSE Sensex was up 80.50 points or 0.37% to 21,906.92. The index jumped 139.53 points at the day's high of 21,965.95 in mid-morning trade. The index shed 58.28 points at the day's low of 21,768.14 in early trade, its lowest level since 7 March 2014.
The CNX Nifty was up 14.85 points or 0.23% to 6,526.75. The index hit a high of 6,546.15 in intraday trade. The index hit a low of 6,487.30 in intraday trade, its lowest level since 7 March 2014.
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The BSE Mid-Cap index was up 25.32 points or 0.38% at 6,728.73, outperforming the Sensex. The BSE Small-Cap index was up 21.15 points or 0.32% at 6,685.84, underperforming the Sensex.
The market breadth, indicating the overall health of the market turned positive from negative in mid-morning trade. On BSE, 1,189 shares rose and 1,049 shares fell. A total of 114 shares were unchanged.
Sun Pharmaceutical Industries (up 3.18%), ICICI Bank (up 1.49%) and Dr. Reddy's Laboratories (up 1.19%) edged higher from the Sensex pack.
IT stocks were in demand. HCL Technologies (up 0.69%), Infosys (up 0.42%), TCS (up 1.77%), Tech Mahindra (up 1.41%) and Wipro (up 1.57%) gained.
Index heavyweight and cigarette maker ITC rose 2.28% to Rs 341.35. The stock hit high of Rs 341.50 and low of Rs 333.70 so far during the day.
Most auto stocks edged lower. Tata Motors (down 0.74%), and M&M (down 0.11%) edged lower. Ashok Leyland rose 3.12%.
Maruti Suzuki India (MSIL) dropped 1.58% on reports a group of investors of the company has ratcheted up pressure on India's top carmaker to abandon a plan for its Japanese parent to build a new plant to make cars for the Indian firm, saying it would hurt shareholders.
Suzuki Motor Co, which owns 56.21% of Maruti, in January announced plans to invest $488 million on a new plant in India and shelved an earlier plan for Maruti to set up the factory itself. A group of 16 big fund managers said in a letter to Maruti management, dated March 5, that the plan would shift manufacturing activity away from the Indian company and turn it into a "shell company" of its parent, report added.
"The decision of the MSIL board is ill-conceived in its entirety and results in outsourcing of the core manufacturing activity that is fundamental and critical for MSIL," the letter said, referring to Maruti Suzuki. "This clearly is not in the best interest of MSIL and its shareholders and is in fact significantly detrimental to them," the investors said, in a rare case of shareholder activism in India.
A smaller group of shareholders sent a previous letter last month, saying they were concerned that the contract for the plant in Gujarat state meant the Japanese carmaker, rather than Maruti, would reap the benefits of rising domestic sales. Under the plan, Maruti will buy vehicles produced by Suzuki at the new plant and sell them in the open market. Maruti currently produces and sells its own cars.
Maruti will continue to produce cars at its existing factories in Manesar and Gurgaon in north India, which have a capacity of 1.5 million vehicles per year, but incremental production would be sourced from the Suzuki plant. The second letter was signed by HDFC Asset Management, DSP BlackRock Investment Managers, Axis Asset Management and Birla Sun Life Mutual Fund, among others, report said.
Shares of most two wheeler makers declined. TVS Motor Company (down 0.47%) and Bajaj Auto (down 0.61%) declined. Hero MotoCorp rose 1.24%.
In the foreign exchange market, the rupee edged lower against the dollar on global risk-off sentiment. The partially convertible rupee was hovering at 61.11, compared with its close of 60.94/95 on Tuesday, 11 March 2014.
The Reserve Bank of India on Tuesday, 11 March 2014, said it will conduct a 21-day term repo variable rate auction for a notified amount of Rs 50000 crore on Friday, 14 March 2014, so as to address the anticipated tightening in liquidity conditions in the banking system on account of advance tax payments by corporates commencing mid-March 2014 and with a view to providing flexibility to the banking system in its liquidity management towards March-end 2014. The reversal will be on 4 April 2014, the central bank said. The auction will be conducted as per the revised guidelines issued on 13 February 2014, the RBI said. There will be no term repo auction on 18 March 2014 when the existing 28-day term repo of Rs 30004 crore matures, the RBI said.
Industrial production is expected to remain in contraction mode in January 2014. Industrial production is seen contracting 0.5% in January 2014, as per the median estimate of a poll of economists carried out by Capital Market. Industrial output fell 0.6% in December 2013, after contracting a revised 1.3% in November 2013. The government will unveil industrial production data for January 2014 after market hours today, 12 March 2014.
Inflation based on the combined consumer price index (CPI) of urban and rural India is projected at 8.2% in February 2014, further easing from 8.79% in January 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil data on inflation based on the combined consumer price index (CPI) for urban and rural India for February 2014 after market hours today, 12 March 2014.
Inflation based on the wholesale price index (WPI) is seen easing at 4.9% in February 2014, from 5.05% in January 2014, as per the median estimate of a poll of economists carried out by Capital Market. The data on inflation based on the wholesale price index (WPI) for February 2014 is due at 12:00 IST on Friday, 14 March 2014.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Citing price pressures, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
The next major trigger for the stock market is the outcome of the upcoming Lok Sabha elections. Lok Sabha elections will be held between 7 April 2014 and 12 May 2014 in nine phases. The counting of votes will be take place on 16 May 2014. The term of the current Lok Sabha expires on June 1 and the new House has to be constituted by May 31. Along with the Lok Sabha election, Andhra Pradesh (AP), including the regions comprising Telangana, Odisha and Sikkim will go to polls to elect new assemblies. AP, Odisha and Sikkim assemblies come to end on June 2, June 7 and May 7 respectively.
Asian stocks fell on Wednesday, 12 March 2014, on concerns that China's economy may be faltering. Key benchmark indices in China, Indonesia, South Korea, Hong Kong, Taiwan, Singapore and Japan were off 0.34% to 2.34%.
China's central bank governor said on Tuesday that the country's deposit rates are likely to liberalised in one to two years - the most explicit timeframe to date for what would be the final step in freeing up banks to set their own interest rates. The move will let financial markets decide the price of loans, which economists say will go a long way to prevent the wasteful investment funded by artificially cheap credit that has led to a massive buildup in debt. "Deposit rate liberalisation is on our agenda. Personally I think it's very likely to be realised within one to two years," said Zhou Xiaochuan, the head of the People's Bank of China.
Trading in US index futures indicated that the Dow could drop 7 points at the opening bell on Wednesday, 12 March 2014. US stocks edged lower for the second day in a row on Tuesday without any big economic news or blowout company earnings to respond to. The Labor Department said Tuesday that employers posted 3.9 million job openings in January, up 1.5% from December, a sign that hiring should remain steady in coming months. However, the increase fell short of what the market was expecting.
US wholesale inventories rose in January while wholesale sales fell, the Commerce Department reported on Tuesday.
Small-business sentiment, released before the market open, slumped in February. According to the National Federation of Independent Business, its small-business index dropped by more than expected, on concerns over sales, the economy and employment driving the downturn.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion.
The recovery in developed economies is on track although slowing activity in big emerging markets means global growth will be only moderate at best in the near term, the OECD said on Tuesday. Exceptionally bad winter weather in North America and a sales tax hike in Japan are also disrupting the pace of recovery, the Paris-based Organisation for Economic Cooperation and Development said. Against that backdrop, the OECD urged the European Central Bank and the Bank of Japan to keep up their monetary stimulus, if not increase it, while it said the US Federal Reserve was right to begin winding down its bond-buying programme.
The stand off between the West and Russia over Ukraine crisis continues. Germany told Russia it must switch course in Crimea by next week or risk more sanctions as Ukraine's deposed president warned of a possible civil war. The European Union will discuss harsher penalties on March 17 barring "obvious changes in Russia's actions," German Foreign Minister Frank-Walter Steinmeier said in Estonia. A planned March 16 referendum in Crimea on whether to join Russia should be halted, he said. Toppled President Viktor Yanukovych told reporters in Russia that lawlessness is spreading in Ukraine, fomented by the "fascists and ultranationalists" who are in charge in Kiev.
Russia stood by deposed Ukrainian President Viktor Yanukovych and called possible US aid to the new government in Kiev illegal. Ukraine's interim prime minister Arseniy Yatsenyuk meets US President Barack Obama in Washington today, 12 March 2014, as the US House of Representatives passed a resolution seeking sanctions against Russia.
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