Firmness continued on the bourses in mid-morning trade after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015. The barometer index, the S&P BSE Sensex, was currently up 529.14 points or 1.93% at 27,875.96. The market breadth indicating the overall health of the market was strong. The BSE Mid-Cap index was up 1.09%.
Realty stocks surged after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015.
State-run United Bank of India announced a 25 basis points reduction in its base rate after the RBI's surprise repo rate cut. The bank cut its base rate to 10% from 10.25% with effect from 1 February 2015.
Earlier, the Sensex hit its highest level in more than a week and the 50-unit CNX Nifty hit its highest level in more than five weeks at the onset of the trading session's after the Reserve Bank of India's (RBI) surprise rate cut announcement.
Foreign portfolio investors sold shares worth a net Rs 69.74 crore yesterday, 14 January 2015, as per provisional data.
In overseas markets, most Asian stocks rose as a rebound by Japanese energy companies and exporters outweighed disappointing US retail sales. US stocks fell in choppy trading session yesterday, 14 January 2015, after surprisingly weak December retail sales data, which cast doubt on the pace of economic growth in the world's biggest economy.
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In the foreign exchange market, the rupee strengthened past 62 against the dollar after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015.
Brent crude futures edged lower after staging a rebound during the previous trading session.
At 11:18 IST, the S&P BSE Sensex was up 529.14 points or 1.93% at 27,875.96. The index jumped 600.77 points at the day's high of 27,947.59 in early trade, its highest level since 5 Janaury 2015. The index rose 356.88 points at the day's low of 27,703.70 in early trade.
The CNX Nifty was up 155.50 points or 1.88% at 8,433.05. The index hit a high of 8,453.60 in intraday trade, its highest level since 8 December 2014. The index hit a low of 8,380.55 in intraday trade.
The BSE Mid-Cap index was up 114.25 points or 1.09% at 10,586.16. The BSE Small-Cap index was up 108.54 points or 0.97% at 11,309.62. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 1,510 shares advanced and 821 shares declined. A total of 103 shares were unchanged.
Bharat Heavy Electricals (Bhel) rose 1.38% after the company said during market hours that it has bagged a contract worth Rs 1202 crore from Karnataka Power Corporation for setting up a combined cycle power plant in Karnataka on engineering, procurement and construction basis, involving supply and commissioning of a fuel-efficient state-of-the-art advanced-class gas turbine (GT). Karnataka Power Corporation is owned by the Karnataka state government. Significantly, with this order, Bhel has contracted 242 GTs including 22 advanced-class GTs. Bhel said that another 3,100 megawatts of projects are presently under construction by the company at Bellary, Yeramarus and Edlapur in Karnataka.
Realty stocks surged after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015. Oberoi Realty (up 2.95%), Housing Development and Infrastructure (HDIL) (up 7.06%), Unitech (up 3.53%), DLF (up 2.81%), Anant Raj (up 2.5%), D B Realty (up 3.77%), Godrej Properties (up 4.48%), Prestige Estates (up 2.09%), Sobha (up 1.6%), and Sunteck Realty (up 3.02%), edged higher.
Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance.
PC Jeweller jumped 6.14% after the company announced that has been designated as nominated agency under paragraph 4A.4 of Foreign Trade Policy 2009-14 (RE-2012), by the Additional Director General of Foreign Trade (CLA), Ministry of Commerce & Industry, Department of Commerce, New Delhi, vide certificate dated 7 January 2015. This permission makes the company eligible for direct import of precious metals (gold/silver/platinum) for domestic business, the company said.
United Bank of India jumped 5.83% after the state-run bank said during market hours that the Asset Liability Management Committee of the bank has announced reduction in the base rate of the bank from 10.25% to 10% effective from 1 February 2015.
Bajaj Finserv rose 3.94% after consolidated net profit rose 23.6% to Rs 347.37 crore on 36.7% increase in total income to Rs 1905.34 crore in Q3 December 2014 over Q3 December 2013. The result hit the market after trading hours yesterday, 14 January 2015. Bajaj Finserv said that the company intends to transfer by way of sale, at an arm's length price, its wholly-owned subsidiary viz. Bajaj Financial Solutions together with its wholly-owned subsidiary, to Bajaj Finance, also a subsidiary of the company, to carry on, through the former the business of housing finance. The said sale has been approved by the board of directors in their meeting held yesterday, 14 January 2015, Bajaj Finserv said.
In the foreign exchange market, the rupee strengthened past 62 against the dollar after the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled review today, 15 January 2015. The partially convertible rupee was hovering at 61.7875, compared with its close of 62.19 during the previous trading session.
Brent crude futures edged lower after staging a rebound during the previous trading session. Brent for February settlement, which expires today, 15 January 2015, was off 59 cents at $48.10 a barrel. The contract had jumped $2.10 a barrel or 4.5% to settle at $48.69 a barrel during the previous trading session. Brent for March settlement was off 40 cents at $49.45 a barrel.
The RBI said inflationary pressures as measured by changes in the consumer price index have been easing since July 2014. To some extent, lower than expected inflation has been enabled by the sharper than expected decline in prices of vegetables and fruits since September, ebbing price pressures in respect of cereals and the large fall in international commodity prices, particularly crude oil. Crude prices, barring geo-political shocks, are expected to remain low over the year, RBI Governor Dr. Raghuram G Rajan said in a statement while announcing a surprise cut in repo rate today, 15 January 2015. Weak demand conditions have also moderated inflation excluding food and fuel, especially in the reading for December, Rajan said. Rajan further said that the government has reiterated its commitment to adhering to its fiscal deficit target. These factors have significantly reduced the momentum of inflation, compensating for the widely anticipated ending of favourable base effects, Rajan said. Households' inflation expectations have adapted and both near-term and longer-term inflation expectations have eased to single digits for the first time since September 2009. These developments have provided headroom for a shift in the monetary policy stance, Rajan said.
Inflation outcomes have fallen significantly below the 8% targeted by January 2015, the RBI said. On current policy settings, inflation is likely to be below 6% by January 2016, Rajan said. The RBI Governor said that key further easing of monetary policy are data that confirm continuing disinflationary pressures. Also critical would be sustained high quality fiscal consolidation as well as steps to overcome supply constraints and assure availability of key inputs such as power, land, minerals and infrastructure. The latter would be needed to ensure that potential output rises above the projected pick-up in growth in coming quarters so as to contain inflation, Rajan said.
The RBI's next monetary policy review is scheduled on 3 February 2015.
Most Asian stocks rose today, 15 January 2015, as a rebound by Japanese energy companies and exporters outweighed disappointing US retail sales. Key benchmark indices in China, Indonesia, Singapore, Hong Kong, Taiwan and Japan were up 0.13% to 1.37%. Key benchmark indices in South Korea and Taiwan fell 0.1% to 0.16%.
China's shadow banking industry staged a comeback in December as equity investors and local governments contributed to a surge in credit, underscoring challenges for a central bank trying to revive growth without exacerbating risks. Aggregate financing was 1.69 trillion yuan ($273 billion), the People's Bank of China said in Beijing today, 15 January 2015.
Trading in US index futures indicated that the Dow could gain 80 points at the opening bell today, 15 January 2015. US stocks fell yesterday, 14 Janaury 2015, as a deepening commodities rout and an unexpected drop in American retail sales fueled concern over growth..
US retail sales dropped 0.9% in December, the biggest slide since January 2014, following a 0.4% gain in November that was smaller than previously estimated, according to the Commerce Department.
Meanwhile in Europe, uncertainties over the status of Greece including its possible exit from the eurozone are likely to persist until the early election in the country later this month. Greece is set to hold snap elections on 25 January 2015 after it failed to elect a new president in a third round of voting late last year. The Greek leftist opposition party Syriza leads opinion polls ahead of national elections on 25 January 2015. Syriza has demanded debt relief from the eurozone and promised to roll back the austerity and reform measures that the country has undertaken in exchange for the international bailout that the government negotiated in 2012.
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