Key benchmark indices trimmed gains in mid-afternoon trade. The barometer index, the S&P BSE Sensex, was up 158.89 points or 0.65%, off 54.85 points from the day's high and up 109.13 points from the day's low. The market breadth indicating the overall health of the market was quite strong, with more than 3 gainers for every loser on BSE. The BSE Small-Cap index and Mid-Cap indices were up more than 2% each. Both these indices outperformed the Sensex. Gains in Asian and European stocks and upmove in US stocks on Wednesday, 21 May 2014, underpinned sentiment on the domestic bourses.
Coal India surged to hit 52-week high on reports that the newly elected PM designate Narendra Modi is exploring to break up the company and opening up the sector to foreign investment. Power generation stocks rose on renewed buying. Shares of power finance companies also edged higher, with Power Finance Corporation hitting 52-week high. Sugar stocks edged higher on renewed buying.
Key benchmark indices edged higher amid initial volatility. The Sensex extended initial gains in morning trade. A bout of volatility was witnessed as the key benchmark indices regained strength after paring intraday gains in mid-morning trade. Firmness continued on the bourses in afternoon trade. Key benchmark indices trimmed intraday gains in mid-afternoon trade.
At 14:15 IST, the S&P BSE Sensex was up 158.89 points or 0.65% to 24,456.91. The index jumped 226.74 points at the day's high of 24,524.76 in early afternoon trade, its highest level since 20 May 2014. The index rose 49.76 points at the day's low of 24,347.78 in early trade.
The CNX Nifty was up 44.65 points or 0.62% to 7,297.55. The index hit a high of 7,319.55 in intraday trade, its highest level since 20 May 2014. The index hit a low of 7,258.15 in intraday trade.
The BSE Mid-Cap index was up 172.69 points or 2.07% at 8,515.05. The BSE Small-Cap index was up 194.94 points or 2.23% at 8,953.22. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was quite strong, with more than 3 gainers for every loser on BSE. On BSE, 2,205 shares gained and 698 shares fell. A total of 98 shares were unchanged.
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Among the 30-share Sensex pack, 17 stocks gained and rest of them declined.
Coal India jumped 5.12% to Rs 391.20 on reports that the newly elected PM designate Narendra Modi is exploring to break up the company and opening up the sector to foreign investment. The stock hit 52-week high of Rs 401 in intraday trade. Modi reportedly wants to fix the coal sector quickly to ensure unbroken electricity supply across the country. Coal India generates more than half of India's power.
There is a possibility of converting various units of Coal India into independent companies, and making respective state governments equity holders to help speed up land acquisition and other such processes, reports suggested. Apart from using modern mining technologies to boost efficiencies and convert challenging mines into modern mines, the government will also explore international private-sector partnership in a significant way, reports added.
Power generation stocks rose on renewed buying. NTPC (up 4.22%), Reliance Power (up 4.81%), Reliance Infrastructure (up 2.33%), Tata Power Company (up 2.49%), JSW Energy (up 2.8%), CESC (up 2.7%), Adani Power (up 2.97%) edged higher.
Shares of power finance companies edged higher. Rural Electrification Corporation was up 2.29% at Rs 334.70.
Power Finance Corporation was up 2.05% at Rs 300.50. The stock hit 52-week high of Rs 306.80 in intraday trade.
Motherson Sumi Systems lost 2.39% to Rs 279.75 in volatile trade. The stock hit a high of Rs 306.50 so far during the day, which is a record high for the counter. The stock hit a low of Rs 273 so far during the day. Motherson Sumi Systems' consolidated net profit surged 54.59% to Rs 303 crore on 25.59% growth in sales to Rs 8289 crore in Q4 March 2014 over Q4 March 2013. The Q4 result was announced during market hours today, 22 May 2014.
Motherson Sumi Systems' consolidated net profit jumped 71.91% to Rs 765 crore on 20.34% growth in sales to Rs 30358 crore in the year ended 31 March 2014 (FY 2014) over the year ended 31 March 2013 (FY 2013). EBITDA surged 50.23% to Rs 2868 crore in FY 2014 over FY 2013.
Sugar stocks extended recent gains. Bajaj Hindusthan (up 15.99%), Dhampur Sugar Mills (up 9.18%), Sakthi Sugars (up 4.8%), Balrampur Chini Mills (up 6.96%), Shree Renuka Sugars (up 7.42%), Simbhaoli Sugar Mills (up 4.72%) and Dwarikesh Sugar Industries (up 4.91%) gained.
In the foreign exchange market, the rupee edged higher against the dollar as equities rose. The partially convertible rupee was hovering at 58.48, compared with its close of 58.775/785 on Wednesday, 21 May 2014.
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.
After Bharatiya Janata Party (BJP) led National Democratic Alliance's (NDA) landslide victory in the recently concluded Lok Sabha election, investors are expecting measures from the incoming government to revive the Indian economy. There are expectations that Narendra Modi will be in a position to replicate the economic success he enjoyed in Gujarat state when he takes over as the country's Prime Minister. With Modi at the helm of affairs, Gujarat's economy expanded by 10.1% a year, on average and adjusting for inflation, from 2001 and 2012, compared with 7.7% growth a year for India's economy as a whole. India's GDP growth slowed sharply at 4.7% in Q3 December 2013. Investors hope that a BJP-led government would be able to accelerate policy reforms and overhaul the country's poor infrastructure. Investors will now be keenly watching policy announcements from the new government to drive a turnaround in the investment cycle.
Ever since NDA's victory in the election last week, speculation has been rife about the likely allocation of key ministerial portfolios in the Modi-led NDA government.
Modi will be sworn in as India's next Prime Minister on Monday, 26 May 2014, evening at the Rashtrapati Bhawan.
The first budget of the new government is expected by July 2014. An interim budget was presented by P. Chidambaram in February this year. Essentially, in the nature of a vote on account, the interim budget was intended to get Parliament approval for expenditure to be incurred during the first few months of fiscal year 2014-15 due to Lok Sabha elections.
European stocks edged higher on Thursday, 22 May 2014, as minutes from the latest Federal Reserve meeting showed policy makers expect the inflation rate to remain below their target, and as Chinese manufacturing data beat estimates. Key benchmark indices in France, Germany and UK rose 0.12% to 0.24%.
Markit's euro-zone composite PMI fell to a two-month low of 53.9 in May 2014, from 54 in April 2014. The PMI stayed above the 50 level that indicates growth. Markit said the data indicate the euro zone is having its best quarter in three years and that "ongoing improvement in business conditions was evident in both manufacturing and services".
The country-specific readings showed further divergence between powerhouse Germany and France, which has struggled with economic headwinds recently. The French composite PMI slipped into contraction at 49.3, while Germany stayed at 56.1 in May.
Asian stocks edged higher on Thursday, 22 May 2014, after Federal Reserve meeting minutes showed policy makers see a muted risk of inflation from continued US stimulus and a China manufacturing gauge rose to a five-month high in May. Key benchmark indices in Taiwan, Hong Kong, Japan, Indonesia and South Korea were up 0.51% to 2.11%. China's Shanghai Composite fell 0.18%. Singapore's Straits Times index was unchanged.
The China manufacturing purchasing managers' index released today by HSBC Holdings Plc and Markit Economics delivered a provisional reading of 49.7 for May, rising from 48.1 in April. Readings below 50 indicate contraction.
Trading in US index futures indicated that the Dow could advance 27 points at the opening bell on Thursday, 22 May 2014. US stocks rebounded on Wednesday from the previous day's losses and ended the session with solid gains, led by advances in the consumer discretionary and energy sectors. The main benchmarks extended gains after the release of the minutes from the Federal Open Market Committee meeting, which showed officials considering options on exiting from ultra-loose monetary policy and a decision to remain flexible.
Minutes from the April 29-30 meeting showed that Fed officials are monitoring progress toward the goal of full employment in the US as they consider the timing of the first interest-rate increase since 2006. The minutes also showed policy makers agreed that early communication of their exit strategy on stimulus and interest rates would enhance the clarity and credibility of monetary policy. The Fed reiterated in the minutes that it will keep the key interest rate target near zero for a "considerable time" once it concludes the bond program. The Fed minutes also showed that policy makers expect inflation to remain well below the Fed's long-term target of 2%.
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.
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