Investors cheered the Reserve Bank of India's (RBI) surprise announcement of a cut in its main lending rate as key equity benchmark indices extended intraday gains in afternoon trade. The barometer index, the S&P BSE Sensex, moved past the psychological 28,000 level. The Sensex hit its fresh highest level in more than a week and the 50-unit CNX Nifty hit its fresh highest level in more than five weeks. The Sensex was currently up 655.77 points or 2.4% at 28,002.59. The market breadth indicating the overall health of the market was strong. The BSE Mid-Cap index was up 1.31%. The BSE Small-Cap index gained 1.02%. Trading in US equity index futures indicated a firm opening of US stocks later in the global day 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.
Shares of oil exploration & production (E&P) firms rose. BPCL advanced after Madhya Pradesh Chief Minister Shivraj Singh Chauhan met Minister for Chemical and Fertilizers Anant Kumar and Dharmendra Pradhan, Minister of State (I/C), Petroleum and Natural Gas yesterday, 14 January 2015, to discuss the expansion of capacity of a refinery set up under a joint venture between BPCL and Oman Oil Corporation at Bina in Madhya Pradesh. Bajaj Auto advanced after announcing Q3 December 2014 results. D B Corp dropped in volatile trade after announcing Q3 results. Cement shares extended gains registered during the previous trading session.
Foreign portfolio investors sold shares worth a net Rs 69.74 crore yesterday, 14 January 2015, as per provisional data.
In overseas markets, Asian stocks rose after India cut interest rates. 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.
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.
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At 13:15 IST, the S&P BSE Sensex was up 655.77 points or 2.4% at 28,002.59. The index jumped 692.61 points at the day's high of 28,039.43 in afternoon 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 197.20 points or 2.38% at 8,474.75. The index hit a high of 8,483.65 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 137.24 points or 1.31% at 10,609.15. The BSE Small-Cap index was up 114.81 points or 1.02% at 11,315.89. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 1,586 shares advanced and 1,006 shares declined. A total of 130 shares were unchanged.
Bajaj Auto rose 2.21% at Rs 2,415.90. The stock hit a high of Rs 2,417.85 and a low of Rs 2,359.25 so far during the day. The company's net profit fell 4.86% to Rs 861 crore on 7.45% growth in turnover to Rs 5752 crore in Q3 December 2014 over Q3 December 2013. The result was announced during market hours today, 15 January 2015.
Shares of oil exploration & production (E&P) firms edged higher. Reliance Industries (up 2.66%), Oil India (up 0.58%), Cairn India (up 1.72%), and ONGC (up 0.9%) edged higher.
BPCL advanced after Madhya Pradesh Chief Minister Shivraj Singh Chauhan met Minister for Chemical and Fertilizers Anant Kumar and Dharmendra Pradhan, Minister of State (I/C), Petroleum and Natural Gas yesterday, 14 January 2015, to discuss the expansion of capacity of a refinery set up under a joint venture between BPCL and Oman Oil Corporation at Bina in Madhya Pradesh. The stock was up 1.2% at Rs 660. The capacity of the refinery is proposed to be enhanced from 6 MMTPA to 7.8 MMTPA by 2018 at estimated cost of Rs 3500 crore, in the first phase. The capacity of the refinery is proposed to be enhanced to 15 MMTPA in second phase at an estimated cost of Rs 18000-20000 crore for which pre feasibility studies will be undertaken in 3 months, the Ministry of Petroleum & Natural Gas said in a statement yesterday, 14 January 2015. During the meeting the state government was requested to provide additional incentives like interest free loan and exemption from CST and entry tax etc. for the proposed expansions, the statement said.
D B Corp fell 0.25% at Rs 397. The stock hit a high of Rs 401.80 and a low of Rs 395.50 so far during the day. The company's consolidated net profit rose 11.3% to Rs 105.10 crore on 6.1% growth in total revenue to Rs 557.40 crore in Q3 December 2014 over Q3 December 2013. The result was announced during market hours today, 15 January 2015.
Cement shares extended gains registered during the previous trading session. UltraTech Cement (up 3.65%), ACC (up 1.91%), and Ambuja Cements (up 1.93%) and Shree Cement (up 4.03%) edged higher.
Grasim Industries rose 2.61% at Rs 3,665. Grasim Industries has exposure to cement industry through its subsidiary UltraTech Cement.
The Ministry of Mines early this week said that the government has promulgated the Mines and Minerals (Development and Regulation) (Amendment) Ordinance, 2015 on 12 January 2015. The Mines and Minerals (Development and Regulation) (Amendment) Ordinance, 2015 amends certain provisions of the MMDR Act, 1957. The Ministry of Mines said that the promulgation of the ordinance became necessary to address the emergent problems in the mining industry. Essentially, through the Mines and Minerals (Development and Regulation) (Amendment) Ordinance, 2015, the government intends to remove discretion in grant of mineral concessions. Henceforth, all mineral concessions would be through auctions, thereby bringing in greater transparency and removing of discretion. Unlike in the 1957 Act, there would be no renewal of any mining concession. The tenure of the mineral concession has been increased from the existing 30 years to 50 years. Thereafter, the mining lease would be put up for auction (and not for renewal as in the earlier system).
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 61.70, 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 $1.18 a barrel at $47.51 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 $1.10 a barrel at $48.76 a barrel.
The Reserve Bank of India (RBI) surprised financial markets by announcing a cut in its main lending rate viz. the repo rate by 25 basis points in an unscheduled monetary policy review today, 15 January 2015. 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 in a statement. 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 further easing of monetary policy will be dependent on data that confirms 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.
Asian stocks rose today, 15 January 2015, after India cut interest rates. Key benchmark indices in China, Indonesia, Singapore, Hong Kong, South Korea, and Japan were up 0.03% to 3.52%. Taiwan's Taiwan Weighted was off 0.16%.
In Japan, Bank of Japan Governor Haruhiko Kuroda reportedly said that a falloff in demand after an increase in the sales tax in April was diminishing, an indication that the economy may be getting over the sluggishness that pushed it into recession.
In China, the latest data showed that Chinese banks issued 697.3 billion yuan ($112.5 billion) worth of new loans in December, down from 852.7 billion yuan in November. Total social financing, a broader measurement of credit in the economy, rose to 1.69 trillion yuan in December from 1.15 trillion yuan in November. China's foreign exchange reserves stood at $3.84 trillion at the end of December, down from $3.89 trillion at the end of September.
Trading in US index futures indicated that the Dow could gain 147 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.
In Europe, European Central Bank (ECB) President Mario Draghi said in an interview to Germany's Die Zeit newspaper published yesterday, 14 January 2015, that the bank didn't have many options left to expand its monetary policy, an indication that officials are moving toward the launch of purchases of government bonds issued by eurozone countries.
The European Court of Justice yesterday, 14 January 2015, issued an interim decision that allows the European Central Bank to go ahead with a bond-buying program known as Outright Monetary Transactions (OMT) with certain conditions.
Meanwhile 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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