Key benchmark indices extended initial gains and hit fresh intraday high in morning trade as the rupee edged higher against the dollar and as bond prices rose. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their highest level in more than three weeks. The Sensex was up 154.87 points or 0.73%, up about 155 points from the day's low and off close to 35 points from the day's high. The market breadth, indicating the overall health of the market, was strong. All the thirteen sectoral indices on BSE were in the green.
Bank stocks gained on renewed buying. Realty stocks gained for the second day in a row. Tyre stocks edged higher, with CEAT hitting record high and JK Tyre & Industustries hitting 52-week high.
The market edged higher in early trade. The Sensex extended initial gains and hit fresh intraday high in morning trade. The Sensex and the 50-unit CNX Nifty, both, hit their highest level in more than three weeks.
At 10:20 IST, the S&P BSE Sensex was up 154.87 points or 0.73% to 21,295.35. The index jumped 190.84 points at the day's high of 21,331.32 in morning trade, its highest level since 9 December 2013. The index rose 0.10 points at the day's low 21,140.58 in early trade.
The CNX Nifty was up 45.70 points or 0.73% to 6,347.35. The index hit a high of 6,358.30 in intraday trade, its highest level since 10 December 2013. The index hit a low of 6,300.65 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,329 shares gained and 441 shares fell. A total of 115 shares were unchanged.
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Among the 30-share Sensex pack, 28 stocks gained and only two declined. HDFC (up 1.6%), GAIL (India) (up 1.27%) and Sesa Sterlite (up 0.92%) gained.
Bank stocks gained on renewed buying. ICICI Bank (up 1.42%), HDFC Bank (up 1.2%), and AXIS Bank (up 2.16%) gained.
Among PSU banks, Bank of India (up 1.85%), Bank of Baroda (up 1.58%), Union Bank of India (up 1.6%), State Bank of India (SBI) (up 0.78%) Canara Bank (up 1.68%) and Punjab National Bank (up 1.37%) gained.
Realty stocks gained for the second day in a row. DLF (up 1.29%), HDIL (up 1.71%), Sobha Developers (up 1.14%) and Unitech (up 1.27%) rose. Top lenders announced reduction in home loan rates for new borrowers last month. Lower interest rates may help perk up demand for properties. Purchases of both residential and commercial property are largely driven by finance.
Tata Power Company rose 0.11%. Reliance Infrastructure gained 0.73%. Rejecting the contention of private power distributors, the Delhi government on Wednesday, 1 January 2014, ordered a CAG audit of their finances. The decision comes after Delhi Chief Minister Arvind Kejriwal rejected the contention of the discoms that the matter was sub judice. Kejriwal had early this week announced that the power tariffs in Delhi will be slashed by 50% for up to 400 units. The Delhi government will provide the subsidy and the money will be directly paid to the distribution companies. The cut in electricity tariffs, part of the AAP manifesto for the 4 December state assembly election, will entail a cost of Rs 61 crore over next three months.
Tyre stocks gained. Apollo Tyres (up 1.78%) and MRF (up 0.47%) edged higher.
CEAT was locked at 5% upper circuit at Rs 353.45, a record high for the counter.
JK Tyre & Industries was up 3.7% at Rs 179.40. The scrip hit 52-week high of Rs 182.40 in intraday trade.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 61.825, compared with its close of 61.90/91 on Wednesday, 1 January 2014.
Bond prices edged higher. The yield 10-year federal paper, 8.83% GS 2023, was hovering at 8.8015%, lower than its close of 8.8445% on Wednesday, 1 January 2014. Bond yield and bond prices are inversely related.
Markit Economics will unveil HSBC India Manufacturing PMI, which gauges the business activity of India's factories, for December 2013 today, 2 January 2014. The HSBC Manufacturing PMI, compiled by Markit, rose to 51.3 in November from October's 49.6. The PMI reading was the highest since March and marked its first time above the watershed level of 50 that divides growth from contraction in four months.
The next major trigger for the market is Q3 December 2013 corporate earnings. The Q3 earnings season will begin around mid-January 2014 and continue till mid-February 2014. Investors and analysts will closely watch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year and/or the next year.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
Asian stocks edged lower on Thursday, 2 January 2014, after gauges of manufacturing in China declined. Key benchmark indices in China, Hong Kong, Taiwan and South Korea were off 0.03% to 1.83%. Key benchmark indices in Singapore and Indonesia were up 0.17% to 0.77%. Japanese stock markets were closed for holiday.
China's manufacturing purchasing managers' index came in at 51 for December, the National Bureau of Statistics and the nation's logistics federation said yesterday, 1 January 2014. A separate manufacturing PMI report from HSBC Holdings Plc and Markit Economics today showed the gauge coming in at 50.5, from 50.8 in November.
Singapore's economy contracted more than expected in the fourth quarter as manufacturing activity weakened, data showed on Thursday, casting some doubt on market expectations for a slight pick-up in growth over 2014. According to advance estimates from Singapore's Ministry of Trade and Industry, GDP contracted an annualised and seasonally adjusted 2.7% in the final quarter of 2013 from the July-September period. That reversed a 2.2% expansion in the third quarter.
Trading in US index futures indicated that the Dow could advance 55 points at the opening bell on Thursday, 2 January 2014. The US stock market was closed on Wednesday, 1 January 2014, for New Year's Day holiday.
The US Federal Reserve said after a two-day monetary policy review on 18 December 2013 that it will cut its monthly bond purchases to $75 billion from $85 billion starting in January 2014 amid an improved outlook for the job market in the world's largest economy. The US central bank is poised to continue winding down its stimulus measures gradually over the next year.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014.
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