After seeing high intraday volatility in mid-morning trade after the outcome of the Reserve Bank of India's (RBI) monetary policy review, key benchmark indices lost ground in early afternoon trade. The barometer index, the S&P BSE Sensex, fell below the psychological 29,000 level. The Sensex and the 50-unit CNX Nifty hit over 1-1/2-week low. The market breadth indicating the overall health of the market turned negative from positive. The BSE Mid-Cap and Small-Cap indices, both, slipped into the red from green. The Sensex was currently off 172.35 points or 0.59% at 28,949.92.
Punjab National Bank slumped after reporting muted growth in Q3 net profit. Realty stocks declined after the Reserve Bank of India kept its key policy rate viz. the repo rate unchanged after a monetary policy review today, 3 February 2015. Shares of public sector oil marketing companies declined on surge in crude oil prices.
The Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review today, 3 February 2015. The central bank announced a reduction in the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points with effect from the fortnight beginning 7 February 2015 in order to create space for banks to expand credit to the productive sectors so as to support investment and growth in the economy.
Foreign portfolio investors sold shares worth a net Rs 629.97 crore yesterday, 2 February 2015, as per provisional data.
In the overseas makets, Asian stocks were mixed. US stocks ended sharply higher yesterday, 2 February 2015, after a late rally driven by hopes for a Greek debt deal and as energy shares bounced with oil prices.
In the foreign exchange market, the rupee edged higher against the dollar in choppy trade.
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Brent crude oil futures extended gains registered during the previous trading session.
At 12:15 IST, the S&P BSE Sensex was down 172.35 points or 0.59% at 28,949.92. The index fell 221.20 points at the day's low of 28,901.07 in early afternoon trade, its lowest level since 22 January 2015. The index jumped 130.79 points at the day's high of 29,253.06 in early trade.
The CNX Nifty was down 58.25 points or 0.66% at 8,739.15. The index hit a low of 8,729.40 in intraday trade, its lowest level since 22 January 2015. The index hit a high of 8,837.30 in intraday trade.
The BSE Mid-Cap index was off 24.02 points or 0.22% at 10,775.11. The BSE Small-Cap index was down 21.08 points or 0.18% at 11,435.76. The decline in both these indices was lower than Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market turned negative from positive in early afternoon trade. On BSE, 1,315 shares declined and 1,179 shares advanced. A total of 103 shares were unchanged.
Punjab National Bank (PNB) tumbled 5.49% at Rs 181.45. PNB's net profit rose 2.53% to Rs 774.56 crore on 8.24% growth in total income to Rs 12904.85 crore in Q3 December 2014 over Q3 December 2013. The result was announced during market hours today, 3 February 2015.
PNB's ratio of gross non-performing assets (NPAs) to gross advances stood at 5.97% as on 31 December 2014 compared with 5.65% as on 30 September 2014 and 4.96% as on 31 December 2013. The ratio of net NPAs to net advances stood at 3.82% as on 31 December 2014 compared with 3.26% as on 30 September 2014 and 2.8% as on 31 December 2013.
The bank's provisions and contingencies declined 7.68% to Rs 1467.77 crore in Q3 December 2014 over Q3 December 2013. Provision coverage ratio as on 31 December 2014 stood at 57.27%.
PNB's Capital Adequacy Ratio (CAR) as per Basel III stood at 11.54% as on 31 December 2014 compared with 11.79% as on 30 September 2014 and 11.02% as on 31 December 2013.
Realty stocks declined after the Reserve Bank of India kept its key policy rate viz. the repo rate unchanged after a monetary olicy review today, 3 February 2015. Sobha (down 0.16%), DLF (down 1.68%), Unitech (down 3.63%%), Housing Development & Infrastructure (HDIL) (down 2.68%), Anant Raj (down 4.05%),and Prestige Estates (down 1.18), and Indiabulls Real Estate (down 2.19%), edged lower. Godrej Properties (up 1.78%), Mahindra Lifespace Developers (up 0.11%), and Oberoi Realty (up 0.14%) edged higher.
Purchases of both residential and commercial property are largely driven by finance.
Automobile stocks edged lower after the Reserve Bank of India kept its key policy rate viz. the repo rate unchanged after a monetary policy review today, 3 February 2015. Maruti Suzuki India (down 0.82%), Eicher Motors (down 1.4%), Mahindra & Mahindra (down 2.02%) edged lower. Tata Motors (up 2.41%) edged higher.
Among two-wheeler stocks, Bajaj Auto (down 3.36%) edged lower. TVS Motor Company (up 2.86%) edged higher.
Hero MotoCorp fell 0.93% at Rs 2,808. Hero MotoCorp reported 0.4% fall in sales to 5.58 lakh units in January 2015 over January 2014. The despatches were severely impacted during the two-day long transporters' strike during January 2015, Hero MotoCorp said. The announcement was made after market hours yesterday, 2 February 2015.
Shares of public sector oil marketing companies (PSU OMCs) declined on surge in crude oil prices. BPCL (down 0.41%) and HPCL (down 2.21%) edged lower. Higher crude oil prices could increase under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already decontrolled pricing of petrol and diesel.
Indian Oil Corporation (IOC) fell 0.94% at Rs 336.95. IOC after market hours yesterday, 2 February 2015, said that its board of directors at its meeting held on 29 January 2015 approved two projects. The first project involves laying of Paradip-Hyderabad Product Pipeline. The product pipeline is proposed for evacuation of the products from the upcoming Paradip Refinery to storage depots in Andhra Pradesh and Telangana. The pipeline having a length of 1,150 KM would have a capacity of 4.5 MMTPA. The pipeline with allied facilities is estimated to cost Rs 2789 crore and would be completed in a period of 36 months after receipt of statutory clearances, IOC said.
The second project involves construction of 0.6 MMTPA LPG Import Facility at Paradip and augmentation of Paradip-Haldia-Durgapur LPG Pipeline. In order to meet the deficit of LPG supply in eastern sector, IOC would construct 0.6 MMTPA LPG Import facility at Paradip at an estimated cost of Rs 690 crore, IOC said. In addition, the existing Paradip-Haldia-Durgapur LPG pipeline would be augmented and extended to Patna and Muzaffarpur to ensure smooth supply of LPG in the region. The pipeline augmentation and extension is estimated to cost Rs 1823 crore. The project would be completed within 36 months from the date of statutory approvals, the company said.
In the foreign exchange market, the rupee edged higher against the dollar in choppy trade. The partially convertible rupee was hovering at 61.74, compared with its close of 61.80 during the previous trading session.
Brent crude oil futures extended gains registered during the previous trading session. Brent for March settlement was up 41 cents at $55.16 a barrel. The contract had jumped $1.76 a barrel or 3.32% to settle at $54.75 a barrel during the previous trading session.
The Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review today, 3 February 2015. The RBI announced a reduction in the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points with effect from the fortnight beginning 7 February 2015 in order to create space for banks to expand credit to the productive sectors so as to support investment and growth in the economy. The RBI has decided to replace the export credit refinance (ECR) facility with the provision of system level liquidity with effect from 7 February 2015. In pursuance of the Dr. Urjit R. Patel Committee's recommendation to move away from sector-specific refinance, the ECR limit has been gradually lowered since June 2014. Continuing with this rationalisation, it has been decided to merge the facility with system level liquidity provision with effect from 7 February 2015, the RBI said. The central bank said it will continue to meet system wide liquidity needs as per the revised liquidity adjustment framework announced on 22 August 2014.
The RBI said that the upside risks to inflation stem from the unlikely possibility of significant fiscal slippage, uncertainty on the spatial and temporal distribution of the monsoon during 2015 as also the low probability but highly influential risks of reversal of international crude prices due to geo-political events. Heightened volatility in global financial markets, including through the exchange rate channel, also constitute a significant risk to the inflation assessment, RBI Governor Dr. Raghuram G. Rajan said in a statement. The RBI said that as per its assessment, inflation is likely to be around the target level of 6% by January 2016. As regards the path of inflation in 2015-16, the Reserve Bank of India will keenly monitor the revision in the consumer price index (CPI), which will rebase the index to 2012 and incorporate a more representative consumption basket along with methodological improvements.
The outlook for growth has improved modestly on the back of disinflation, real income gains from decline in oil prices, easier financing conditions and some progress on stalled projects. These conditions should augur well for a reinvigoration of private consumption demand, but the overall impact on growth could be partly offset by the weaker global growth outlook and short-run fiscal drag due to likely compression in plan expenditure in order to meet consolidation targets set for the year. The RBI has retained its baseline projection for growth using the old GDP base at 5.5% for 2014-15. The RBI has forecast real GDP growth at 6.5% for 2015-16, with risks broadly balanced. The revised GDP statistics (base 2011-12) released on 30 January 2015 along with advance estimates for 2014-15 expected on 9 February 2015 will need to be carefully analysed and could result in revisions to the RBI's growth projections for 2015-16, the central bank said.
The RBI said that despite a generalised fall in the cost of funds, commercial banks have yet to pass through these effects, as also the effects of the RBI's policy rate cut announced on 15 January 2015, into the spectrum of lending rates.
Given that there have been no substantial new developments on the disinflationary process or on the fiscal outlook after 15 January 2015 -- the day when the RBI cut repo rate by 25 basis points in an unscheduled monetary policy review, it is appropriate for the RBI to await them and maintain the current interest rate stance, Rajan said.
The RBI further said that the global financial markets remain vulnerable to uncertainty surrounding monetary policy normalization in advanced economies (AEs) as well as possibly weaker growth in China and oil exporting emerging market economies.
Asian stocks were mixed today, 3 February 2015. Key indices in China, Hong Kong, Taiwan, and Indonesia were up 0.14% to 1.66%. Key indices in Japan, South Korea, and Singapore were off 0.04% to 1.27%.
The Reserve Bank of Australia (RBA) cut its key policy rate by a quarter percentage point after a monetary policy review today, 3 February 2015, citing weak inflation and a stronger-than-desired currency. The move put the cash rate at a historic low of 2.25%. In comments accompanying the move, RBA Governor Glenn Stevens said that the consumer price index recorded the lowest increase for several years in 2014 and it appears likely that inflation will remain consistent with the target over the next one to two years given weak growth in labor costs. Meanwhile, Stevens repeated the RBA view that the Australian dollar remained above most estimates of its fundamental value, particularly given the significant declines in key commodity prices.
Trading in US index futures indicated that the Dow could fall 60 points at the opening bell today, 3 February 2015. US stocks ended sharply higher yesterday, 2 February 2015 after a late rally driven by hopes for a Greek debt deal and as energy shares bounced with oil prices.
In Europe, Greece's new government has proposed ending a standoff with its international creditors by swapping its outstanding debt for new growth-linked bonds, Finance Minister Yanis Varoufakis was quoted as saying yesterday, 2 February 2015.
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