Key benchmark indices edged lower in choppy trade as IT major TCS' third quarter results fell short of market expectations and as private sector bank HDFC Bank reported a decline in net interest margin in Q3 December 2013. Shares of TCS tumbled. HDFC Bank dropped in choppy trade. The market breadth, indicating the overall health of the market, was weak. The barometer index, the S&P BSE Sensex, lost 201.56 points or 0.95%, up about 45 points from the day's low and off about 205 points from the day's high. The BSE Small-Cap index lost 1.63% and the BSE Mid-Cap index shed 1.32%.
Indian stocks fell for the second day in a row today, 17 January 2014. From a recent high of 21,289.49 on 15 January 2014, the Sensex has declined 225.87 points or 1.06% in two trading sessions. The Sensex has fallen 107.06 points or 0.5% in this month so far (till 17 January 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,614.91 points or 20.71%. From a record high of 21,483.74 hit on 9 December 2013, the Sensex is off 420.12 points or 1.95%.
Coming back to today's trade, realty stocks reversed intraday gains. Index heavyweight and cigarette maker ITC edged lower in choppy trade after announcing Q3 result. Shares of private sector banks declined. AXIS Bank extended Thursday's losses as the bank's bad loans rose in Q3 December 2013. HDFC Bank dropped in choppy trade as the private sector bank's net interest margin declined to 4.2% in Q3 December 2013, from 4.3% in Q3 December 2012. Coal India dropped as the stock turned ex-dividend today, 17 January 2014, for dividend of Rs 29 per share for the year ending March 2014. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade ahead of its Q3 results.
Key benchmark indices edged lower amid initial volatility on weak Asian stocks. After regaining positive terrain for a brief period, the key benchmark indices once again slipped into the red in morning trade. Key benchmark indices extended losses and hit fresh intraday low in mid-morning trade. The Sensex further extended losses and hit fresh intraday low in early afternoon trade. Selling intensified in afternoon trade as key benchmark indices extended losses and hit fresh intraday low. The Sensex trimmed losses in mid-afternoon trade as European stocks edged higher in early trade there. The Sensex extended losses and hit fresh intraday low in late trade.
The S&P BSE Sensex lost 201.56 points or 0.95% to settle at 21,063.62, its lowest closing level since 14 January 2014. The Sensex slumped 249.57 points at the day's low of 21,015.61 in late trade. The index rose 4.93 points at the day's high of 21,270.11 in morning trade.
The CNX Nifty lost 57.25 points or 0.91% to settle at 6,261.65, its lowest closing level since 14 January 2014. The index hit a low of 6,246.35 in intraday trade. The index hit a high of 6,327.10 in intraday trade.
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The BSE Small-Cap index shed 107.19 points or 1.63% at 6,476.76. The BSE Mid-Cap index lost 87.06 points or 1.32% at 6,487.03. Both these indices underperformed the Sensex.
Indoco Remedies (down 20%), Sonata Software (down 7.49%), Sharon Bio-medicine (down 6.24%), HCL Infosystems (don 6.05%), Essel Propack (down 6.02%), Heritage Foods (down 5.94%), Firstsource Solutions (down 5.8%), Usha Martin (down 5.8%), HSIL (down 5.59%) and Marksans Pharma (down 5.54%), were the top losers from the BSE Small-Cap index.
MCX (India) (down 6%), Hexaware Technologies (down 5.93%), Puravankara Projects (down 5.54%), Arvind (down 5.15%), P I Industries (down 5.13%), CMC (down 5.07%), Gujarat Flurochemicals (down 4.93%), TV18 Broadcast (down 4.85%), and IRB Infrastructure Developers (down 4.79%), were the top losers from the BSE Mid-Cap index.
The total turnover on BSE amounted to Rs 3122 crore, higher than Rs 2003.89 crore on Thursday, 16 January 2014.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,748 shares fell and 885 shares rose. A total of 149 shares were unchanged.
Coal India dropped 10.14% to Rs 272 as the stock turned ex-dividend today, 17 January 2014, for dividend of Rs 29 per share for the year ending March 2014. Before turning ex-dividend, the stock offered a dividend yield of 9.58% based on the closing price of Rs 302.70 on Thursday, 16 January 2014.
Index heavyweight Reliance Industries (RIL) edged lower in volatile trade ahead of its Q3 results. The stock shed 0.15% at Rs 883.80. The scrip hit high of Rs 896.80 and low of Rs 880.75. A media report suggested that RIL is eyeing Petronas' 11% stake in $20-billion Venezuela project. RIL clarified to the stock exchanges during trading hours today that it continues to look for opportunities to grow its business internationally and cannot make any specific comment on the media report.
Index heavyweight and cigarette maker ITC edged lower in choppy trade after reporting Q3 result. The scrip shed 0.21% at Rs 325. The scrip hit high of Rs 328.20 and low of Rs 322.50. The company's net profit rose 16.25% to Rs 2385.34 crore on 13.4% increase in total income to Rs 9117.91 crore in Q3 December 2013 over Q3 December 2012. The company announced the results during market hours.
ITC said gross revenue grew by 12.9% to Rs 12223.44 crore in Q3 December 2013 over Q3 December 2012, driven by the new FMCG businesses and the Paperboards, Paper and Packaging segment. Within the FMCG segment, ITC said that the branded packaged foods businesses posted robust growth in revenues and enhanced market standing across categories by leveraging a portfolio of differentiated and innovative products.
Overall, the new FMCG businesses recorded a robust growth of 16.4% in revenue despite a marked slowdown in consumption expenditure, ITC said. The segment also recorded a profit of Rs 10 crore during Q3 December 2013 on the back of enhanced scale and improvement in profitability, ITC said.
ITC said its hotels business recorded a significant improvement in profitability aided by superior performance by ITC Grand Chola.
ITC said that its agri business profits rose 19% in Q3 December 2013, driven by higher realisation and superior mix.
Bank stocks declined. AXIS Bank extended Thursday's losses as the bank's bad loans rose in Q3 December 2013. The stock shed 2.37%. AXIS Bank's net profit rose 19.06% to Rs 1604.11 crore on 9.94% increase in total income to Rs 9433.55 crore in Q3 December 2013 over Q3 December 2012. The result was announced during trading hours on Thursday, 16 January 2014.
The bank's gross non-performing assets increased to Rs 3008.20 crore as on 31 December 2013, from Rs 2734.47 crore as on 30 September 2013 and Rs 2275.30 crore as on 31 December 2012. The ratio of net non-performing assets to net advances stood at 0.42% as on 31 December 2013, compared with 0.37% as on 30 September 2013 and 0.33% as on 31 December 2012. The ratio of gross non-performing assets (NPA) to gross advances stood at 1.25% as on 31 December 2013, compared with 1.19% as on 30 September 2013 and 1.10% as on 31 December 2012.
Provisions and contingencies fell 47.65% to Rs 202.49 crore in 31 December 2013 over Q3 December 2012. Provisions and contingencies declined 70.54% on sequential basis
ICICI Bank dropped 2.4%.
HDFC Bank dropped in choppy trade as the private sector bank's net interest margin declined to 4.2% in Q3 December 2013, from 4.3% in Q3 December 2012. The stock shed 0.19% at Rs 672.65. The scrip hit high of Rs 678.40 and low of Rs 659.20. The bank's net profit rose 25.1% to Rs 2325.70 crore on 17.75% growth in total income to Rs 12738.95 crore in Q3 December 2013 over Q3 December 2012. The bank announced Q3 results during market hours.
HDFC Bank's net interest income (NII) rose 16.4% to Rs 4634.80 crore in Q3 December 2013 over Q3 December 2012. The net interest margin or NIM declined to 4.2% in Q3 December 2013, from 4.3% in Q3 December 2012. HDFC Bank's's non-interest income rose 11.4% to Rs 2148.30 crore in Q3 December 2013 over Q3 December 2012.
With asset quality remaining stable during the quarter, provisions and contingencies declined 4% to Rs 388.80 crore in Q3 December 2013 over Q3 December 2012, HDFC Bank said.
Total deposits rose 22.9% YoY to Rs 349215 crore as on 31 December 2013. Adjusted for foreign currency non-resident (FCNR) deposits raised during the quarter, the total deposits growth rate would have been 15.5% and CASA ratio would be 43.7%, HDFC Bank said.
Advances grew 22.9% YoY to Rs 296742 crore as of 31 December 2013. The domestic loan growth was contributed by both retail and wholesale segments, with retail loans growing by 13.6% and wholesale loans by 22.1%, resulting in a domestic loan mix between retail and wholesale of 54:46. Total advances in overseas branches as of 31 December 2013 were at 8% of the total advances as against 3.8% as of 31 December 2012, HDFC Bank said in a statement.
The bank's Capital Adequacy Ratio (CAR) as at 31 December 2013 as per Basel III guidelines stood at 14.7%, as against a regulatory requirement of 9%. Of this, Tier-I CAR was 9.9%. These CAR ratios are based on net worth numbers which do not take into account the profits for nine months ended 31 December 2013. Had the same been included, the total CAR and Tier-I CAR would have been 16.2% and 11.5% respectively, HDFC Bank said.
Gross non-performing assets (NPAs) were at 1% of gross advances as on 31 December 2013, as against 1.1% as on 30 September 2013 and 1% as on 31 December 2012. Net NPAs were at 0.3% of net advances as on 31 December 2013. Total restructured loans (including applications under process for restructuring) were at 0.2% of gross advances as on 31 December 2013, as against 0.3% as of 31 December 2012.
Among PSU bank stocks, State Bank of India, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank dropped 0.97% to 3.01%.
Corporation Bank shed 0.44%. The bank on Thursday, 16 January 2014, said it has signed a Memorandum of Understanding (MoU) with Geojit BNP Paribas Financial Services to offer trading account facilities to its retail customers. This has been done consequent upon withdrawal of trading account facilities by HSBC Invest Direct to retail customers of the bank, Corporation Bank said.
The Reserve Bank of India on 15 January 2014 announced new rules for setting incremental provisioning and capital requirements for bank exposures to entities with unhedged foreign currency exposures. The provisioning rule requirements will be calculated as per the ratio of likely loss due to foreign exchange movement to a company's earnings before interest and depreciation (EBID), the RBI circular said on Wednesday, 15 January 2014. "These guidelines have been framed keeping in view the domestic borrowers' vulnerability to the foreign currency exposure," the central bank said. Banks have to monitor unhedged forex exposures on a monthly basis and calculate the incremental provisioning and capital needs at least once a quarter. However, during periods of high rupee volatility, it may be done at monthly intervals, the RBI said. The new rules take effect from 1 April 2014.
Realty stocks reversed intraday gains. DLF (down 3.96%), HDIL (down 3.86%), Sobha Developers (down 2.28%) and Unitech (down 2.16%) declined.
Most capital goods stocks declined. ABB (down 0.77%), BEML (down 4.12%), L&T (down 0.16%) and Punj Lloyd (down 1.96%) fell. But, Bhel rose 1.3%.
Bajaj Auto rose 1.37% to Rs 1,934, with the stock extending Thursday's 0.66% rise triggered by the two-wheeler major reporting record net profit in Q3 December 2013. The company's net profit rose 10.48% to a record Rs 904.55 crore on 4.67% decline in total income to Rs 5353.08 crore in Q3 December 2013 over Q3 December 2012. The result was announced during trading hours on Thursday, 16 January 2014.
Exports rose 23.5% to Rs 2123 crore in Q3 December 2013 over Q3 December 2012.
Operating earnings before interest, taxation, depreciation and amortization (EBITDA) before mark-to-market gain/loss rose 0.64% to Rs 1092 crore in Q3 December 2013 over Q3 December 2012. Operating EBITDA margin before mark-to-market gain/loss, edged up to 21.1% in Q3 December 2013, from 19.8% in Q3 December 2012.
Total automobile sales fell 11.88% to 9.93 lakh units in Q3 December 2013 over Q3 December 2012. Bajaj Auto said that sales during festive period, though reasonable, were not robust. Subsequently, in November and December, industry sales continued to remain sluggish, Bajaj Auto said.
Bajaj Auto said that the quarter witnessed a marked increase in input costs of steel, aluminium and other imported components.
Cash and cash equivalents as on 31 December 2013 stood at Rs 6920 crore, higher than Rs 6516 crore as on 30 September 2013, Bajaj Auto said in a statement.
GAIL (India) rose 0.23%. The company said in its clarification with respect to a news item captioned "GAIL mulls time-swap deal to advance import" that the referred piece of information is a business information shared to a media query during the sidelines of an important Industry Conference based on a very preliminary stage discussion within the company. As regards information relating to US Shale Gas business, GAIL has undertaken long term agreements with US based companies like Carrizo s Eagle Ford Shale acreage and Cheniere Energy Partner from Sabine Pass Liquefaction, a subsidiary of Chenier, besides LNG deal with Dominion Resources, GAIL (India) said.
TCS dropped as the company's third quarter results fell short of market expectations. The stock lost 5.67%. The company's consolidated net profit rose 15.1% to Rs 5333 crore on 1.5% increase in revenue to Rs 21294 crore in Q3 December 2013 over Q2 September 2013. Operating profit grew 0.5% to Rs 6337 crore in Q3 December 2013 over Q2 September 2013. Operating margin was reported at 29.8% in Q3 December 2013. TCS announced the third quarter results after trading hours on Thursday, 16 January 2014.
Commenting on the Q3 performance, Chief Executive Officer and Managing Director, N Chandrasekaran, TCS said: "Strong international demand for our services and discipline in execution has helped TCS maintain its momentum and post robust growth in volumes as well as realisation. Our diversified market presence and services portfolio have helped us overcome seasonal weakness and soft demand in the Indian market. Based on initial discussions with our customers we believe 2014 will be a stronger year for us than 2013, as customers execute their business plans in a relatively stable environment. With Digital technologies rapidly changing the way an enterprise operates in multiple dimensions, our continuous investments positions us well to help customers reimagine their business".
Rajesh Gopinathan, Chief Financial Officer, TCS said: "We have been able to maintain our profitability by operating in a disciplined manner while sustaining our investments in customer-facing initiatives globally. We have also been able to significantly increase our cash generation due to efficient working capital management".
TCS said growth in Q3 December 2013 was driven by industries like Life Science & Healthcare, Manufacturing, Media, Travel & Hospitality and Telecom. The company's broad based presence across markets and services helped overcome seasonal weakness in some markets. Europe led growth, driven by the continuous investments being made in that market, while North America and UK also grew during the quarter, TCS said in a statement. Among growth markets, Latin America, APAC and MEA registered strong growth. India business suffered from volatility and declined sequentially, TCS said. Among service lines, Business Process Services, Enterprise Solutions, Global Consulting were the leaders.
HCL Technologies fell 0.77% to Rs 1381.15 on profit booking after Thursday's sharp gains triggered by the company reporting good Q2 result before trading hours on Thursday, 16 January 2014. The stock reversed direction after hitting record high of Rs 1,398.70 in intraday trade today, 17 January 2014. The company's consolidated net profit rose 5.7% to Rs 1496 crore on 2.8% increase in revenue to Rs 8184 crore in Q2 December 2013 over Q1 September 2013. The results are as per US Generally Accepted Accounting Principles (US GAAP).
Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 1.6% to Rs 2126 crore in Q2 December 2013 over Q1 September 2013. EBITDA margin declined to 26% in Q2 December 2013, from 26.3% in Q1 September 2013.
HCL Technologies' consolidated net profit as per US GAAP rose 7.1% to $241.6 million on 4% growth in revenue at $1.3213 billion in Q2 December 2013 over Q1 September 2013. EBITDA rose 2.8% to $343.3 million in Q2 December 2013 over Q1 September 2013. EBITDA margin edged lower to 26% in Q2 December 2013, from 26.3% in Q1 September 2013.
Tech Mahindra dropped 4.99%.
Wipro shed 3.15% to Rs 552.45 ahead of its Q3 results today, 17 January 2014. The stock reversed direction after hitting 52-week high of Rs 575.35 in intraday trade.
Infosys rose 0.09% to Rs 3,728.05, with the stock extending recent gains triggered by the company raising its revenue growth guidance for the year ending 31 March 2014. The stock hit record high of Rs 3,759.90 in intraday trade. At the time of announcement of Q3 December 2013 earnings, Infosys, on 10 January 2014, raised its revenue growth guidance in both rupee and dollar terms for the year ending 31 March 2014. The company expects consolidated revenue in rupee terms to grow 24.4% to 24.9% for the year ending 31 March 2014 (FY 2014). This guidance is based on rupee dollar conversion rate of 61.81 for the rest of the financial year. The company expects consolidated revenue in dollar terms to grow 11.5% to 12% in FY 2014.
Mindtree tumbled 5% after consolidated net profit declined 31.2% to Rs 88.50 crore on 2.7% growth in revenue to Rs 790.60 crore in Q3 December 2013 over Q2 September 2013. The Q3 result was announced after market hours on Thursday, 16 January 2014.
In dollar terms, Mindtree's consolidated net profit declined 31.5% to $14.20 million on 2.5% growth in revenue to $127.10 million in Q3 December 2013 over Q2 September 2013.
Mindtree reported a forex loss of Rs 27.20 crore in Q3 December 2013 compared with a net forex gain of Rs 20 crore in Q2 September 2013.
The company added 397 employees on a gross basis in Q3 December 2013.
Commenting on the results, Krishnakumar Natarajan, CEO & Managing Director, Mindtree said, "We are seeing good business momentum and traction with our clients. Our strong deal pipeline, improved client metrics, proven leadership, global right-sourcing delivery model, and ability to attract and retain talent demonstrate our confidence for a promising future. We will continue to invest in technology-led solutions as our clients are favourably responding to it by making Mindtree a significant part of their strategic initiatives".
Shares of PSU OMCs rose. BPCL (up 2.77%) and HPCL (up 4.85%) gained.
Indian Oil Corporation (IOC) rose 5.87% after Oil Minister Veerappa Moily was quoted by media as saying on Thursday, 16 January 2014, that a panel of ministers has approved sale of a 10% government stake in IOC through a block deal on the stock exchanges. State exploration firms ONGC and Oil India will buy the stake, Oil Secretary Vivek Rae was quoted as saying. The transaction is likely within the next week or so, Rae said.
ONGC rose 0.17%. Oil India declined 0.92%.
Metal and mining stocks reversed intraday gains. Jindal Steel & Power (down 0.08%), Hindalco Industries (down 1.42%), Tata Steel (down 0.91%), Sail (down 1.11%), National Aluminum Company (down 0.81%), Hindustan Copper (down 2.67%), JSW Steel (down 2.32%) declined. Sesa Sterlite (up 0.25%) and NMDC (up 0.41%) gained.
Hindustan Zinc declined 0.77%. The company's net profit rose 7% to Rs 1723 crore on 9% growth in net sales to Rs 3410 crore in Q3 December 2013 over Q3 December 2012. The company announced the results during market hours.
Hindustan Zinc said its top line growth during the quarter was driven by higher zinc sales volume and rupee depreciation, partially offset by lower silver and acid prices.
Hindustan Zinc's earnings before interest, taxation, depreciation and amortization (EBITDA) rose 21% to Rs 1828 crore in Q3 December 2013 over Q3 December 2012. The increase in EBITDA was driven by higher integrated sales volume and rupee depreciation, partially offset by lower silver price and higher costs in rupee terms.
With regard to its expansion projects, Hindustan Zinc said that the mine development is progressing well at all its underground projects. Kayad mine has become operational during the quarter. The company's project capex will be in line with its guidance of $250 million per year, Hindustan Zinc said in a statement.
As of 31 December 2013, the company had cash and cash equivalents of Rs 24095 crore, out of which Rs 19111 crore was invested in debt mutual funds, Rs 1972 crore in bonds and Rs 3000 crore were in fixed deposits with banks. The company added that it follows a conservative investment policy and invests in high quality debt instruments.
Commenting on the Q3 results, Mr. Agnivesh Agarwal, Chairman, Hindustan Zinc, said, "The emerging global demand-supply dynamics is leading to a consistent deficit scenario as anticipated. We remain focused on driving growth while maintaining our cost leadership".
Pharma stocks gained. Cipla (up 1.27%), Dr Reddy's Laboratories (up 0.46%), and Sun Pharmaceutical Industries (up 0.15%) gained.
Ranbaxy Laboratories dropped 2.42%. The company clarified during market hours that company does not disclose individual business transactions as a part of its normal course of business. Ranbaxy, as part of its strategy, evaluates alternate viable sourcing of materials from time to time and takes decisions based on the best value that can be derived in the interest of the company, Ranbaxy said. Media reports had suggested that the company is likely to announce a tie-up with a multinational company for sourcing active pharmaceutical ingredient (API) for its blood pressure drug -- Diovan.
Rallis India lost 0.2%. The company's consolidated net profit surged 38% to Rs 30 crore on 17% growth in net sales to Rs 396 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Thursday, 16 January 2014.
Profit from operations (before exceptional items, other income and forex loss/(gain)) rose 18% to Rs 46 crore in Q3 December 2013 over Q3 December 2012.
Commenting on the performance, Mr. V Shankar, MD and CEO, Rallis India said, "I am pleased that we have reached new highs in this quarter both in revenues and profits. While the domestic business stood its ground with the strengthening relationship through the farmer programmes, international business grew well due to robust demand of the key products. Our continued focus on connecting with farmers through Rallis Kisan Kutumba initiatives, strong brands and value creating initiatives in agri space led to robust revenue growth and exceeding the full year profit of previous year by 11% in the nine months".
Further Mr. Shankar said, "There were shifts in farmer preferences for crops and Rallis, with the help of a strong understanding of the field level changes, moved with agility to cater to the changing needs. Our focus on the new initiatives such as More Pulses programme, Samrudh Krishi, etc, continued with vigour. Our new products in the Plant Growth Promoter segment did well and our key brands recorded good growth".
Rallis India said that the three cyclones affected standing crops in certain areas and also led to drop in yields. Rabi sowings registered an increase of 5.4% and should translate into an increased foodgrain and pulses production, the company said. The good rainfall during these months have increased soil moisture content which should augur well going forward into the Rabi season, Rallis India said in a statement.
Aksh Optifibre rose 8.28% after the company said it has been awarded a Rs 200 crore plus order for Package B of ambitious National Optic Fibre Network backbone project. The company made this announcement after market hours on Thursday, 16 January 2014. Aksh Optifibre said it has been awarded a Rs 200 crore plus order for Package B of ambitious National Optic Fibre Network (NOFN) backbone project. The project is aimed at providing connectivity to over 250,000 gram panchayats across the country for better e-governance, e-health services and educational services, Aksh Optifibre said.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.
On the political front, Congress President Sonia Gandhi said at a meeting of the All India Congress Committee (AICC) today, 17 January 2014, that the Congress party is ready and prepared for the 2014 Lok Sabha battle. "This election will be a battle for India as was conceived by our forefathers," Sonia Gandhi said. She also said the decision of the Congress Working Committee (CWC) on not naming Rahul Gandhi as the party's prime ministerial candidate for the 2014 Lok Sabha elections is final. Congress Vice President Rahul Gandhi will lead the party's campaign for the 2014 Lok Sabha elections.
Sonia Gandhi also said that it was because of the Congress that changes and reforms were brought. Highlighting the Congress's achievements, Sonia Gandhi spoke about the MNREGA scheme and the Right to Information Act. She also praised Prime Minister Manmohan Singh for withstanding criticism. "The Prime Minister has achieved all its targets steadily," she said.
European stocks advanced on Friday, 17 January 2014, as investors awaited reports on US housing starts and industrial production. Key benchmark indices in France, Germany and UK were up 0.35% to 0.64%.
Asian stocks edged lower in choppy trade on Friday, 17 January 2014, as US bank earnings disappointed and investors waited for Chinese economic data due next week. Key benchmark indices in China, Japan, Indonesia, South Korea and Taiwan were off 0.01% to 0.93%. Key benchmark indices in Singapore and Hong Kong were up 0.22% to 0.64%.
China's central bank has vowed to maintain liquidity at appropriate levels while urging financial institutions to enhance their ability to manage liquidity. The authorities will use various liquidity management tools and will adjust liquidity levels if needed, Zhang Xiaohui, head of the People's Bank of China's (POBC) monetary policy department, wrote in an article published in China Finance magazine. The PBOC has been maintaining a relatively hawkish stance toward liquidity since a cash crunch occurred in the nation's financial system last June, refraining from injecting funds into the system in an effort to curb high debt levels in the economy. The central bank will also study measures to allow financial institutions to issue certificates of deposit to individuals and nonfinancial enterprises, Ms. Zhang wrote in the same article published in the magazine, which is run by the central bank. She didn't give a time frame.
China began allowing banks to issue negotiable certificates of deposit in the interbank market late last year, in a move seen as setting the stage for liberalizing deposit rates.
Trading in US index futures indicated that the Dow could advance 49 points at the opening bell on Friday, 17 January 2014. US stocks ended lower on Thursday, 16 January 2014, snapping a two-day rally, after disappointing results from Best Buy Co. Inc., Citigroup Inc. and Goldman Sachs Group Inc. The Nasdaq Composite edged higher.
In economic news, the number of Americans who applied last week for unemployment benefits fell slightly and is now back to a level that prevailed shortly before the Thanksgiving holiday. Separately, US consumer prices rose a seasonally adjusted 0.3% in December, led by higher energy and shelter costs, the Labor Department said.
Fed Bank of Atlanta President Dennis Lockhart, who doesn't vote on monetary policy this year, said yesterday that he expects inflation that's been "too low" will accelerate toward the Fed's 2% target.
During an interview with Liaquat Ahamed, Fed Chairman Ben Bernanke defended the response to the financial crisis and said stock market valuations are within historic range. Commenting about the central bank's bond purchases, known as quantitative easing, he said: "The problem with QE is that it works in practice but it doesn't work in theory." Meanwhile, in a paper delivered at a Brookings Institution seminar on US monetary policy, San Francisco Fed President John Williams warned of "nagging concerns that large-scale asset purchases carry with them particular risks to the economy or the health of the financial system that we still don't fully understand." He also said the central bank's new forward-guidance tool seems "overly simplified and prone to misinterpretation."
The Senate cleared for President Barack Obama's signature a bipartisan $1.1 trillion bill to finance the US government through Sept. 30, making a debt ceiling increase the next potential fiscal showdown. The Democratic-controlled Senate voted 72-26 in favor of the spending measure a day after the Republican-led House passed it, 359-67. The bipartisan cooperation marks a turnaround from the Tea Party-fueled discord that caused a 16-day partial government shutdown in October.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
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