Sensex trims gains after hitting fresh intraday high in late trade

Volatility ruled the roost as the key benchmark indices trimmed gains after hitting fresh intraday high in late trade. The the barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, trimmed gains after the hitting five-week high. The S&P BSE Sensex, was provisionally up 87.68 points or 0.42%, off 65.84 points from the day's high and up 85.01 points from the day's low. Indian stocks edged higher today, 28 February 2014, after BJP's prime ministerial candidate for this year's Lok Sabha elections Mr. Narendra Modi's reformist agenda and promised policy implementation in a speech on Thursday, 27 February 2014, and on dovish remarks from Federal Reserve Chairwoman Janet Yellen before the Senate Banking Committee on Thursday, 27 February 2014. The market sentiment was also boosted by data showing that foreign funds remained net buyers of Indian stocks on Wednesday, 26 February 2014.

Index heavyweight Reliance Industries (RIL) dropped in choppy trade after Arvind Kejriwal's Aam Aadmi Party (AAP) intensified its attack on RIL Chairman and Managing Director (CMD) Mukesh Ambani, accusing him of being involved in a Rs 6530-crore money-laundering operation. Pharma stocks edged higher on renewed buying, with Cadila Healthcare, Lupin and Dr. Reddy's Laboratories hitting record high. Shares of power finance companies gained. Fertiliser shares declined.

The market breadth, indicating the overall health of the market was negative.

A bout of volatility was witnessed as key benchmark indices trimmed gains after an initial rally. The Sensex moved past the psychological 21,000 mark. Key benchmark indices retained positive zone in early afternoon trade. Key benchmark indices trimmed intraday gains in early afternoon trade. Key benchmark indices moved in a narrow range in positive zone in afternoon trade. A bout of volatility was witnessed as the key benchmark indices recovered from lower level after trimming intraday gains in mid-afternoon trade as European stocks rose in early trade there. Volatility ruled the roost as the key benchmark indices trimmed gains after hitting fresh intraday high in late trade. The the barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, trimmed gains after the hitting five-week high.

The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Wednesday, 26 February 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 511.15 crore on Wednesday, 26 February 2014, as per provisional data from the stock exchanges. The stock market was closed on Thursday, 27 February 2014, on account of Mahashivratri.

As per provisional closing, the S&P BSE Sensex was up 87.68 points or 0.42% to 21,074.67. The index jumped 153.52 points at the day's high of 21,140.51 in late trade, its highest level since 24 January 2014. The index rose 2.67 points at the day's low of 20,989.66 in early trade.

The CNX Nifty was up 30.40 points or 0.49% to 6,269.20. The index hit a high of 6,282.70 in intraday trade, its highest level since 24 January 2014. The index hit a low of 6,228.10 in intraday trade.

The BSE Mid-Cap index rose 30.15 points or 0.46% at 6,499.08, outperforming the Sensex. The BSE Small-Cap index rose 6.95 points or 0.11% at 6,443.22, underperforming the Sensex.

The market breadth, indicating the overall health of the market was negative. On BSE, 1,343 shares dropped and 1,326 shares rose. A total of 164 shares were unchanged.

The total turnover on BSE amounted to Rs 2643 crore, higher than Rs 1823.42 crore on Wednesday, 26 February 2014.

Index heavyweight and cigarette major ITC fell 0.78% to Rs 326 in volatile trade. The stock hit a high of Rs 331.55 and low of Rs 325.

Index heavyweight Reliance Industries (RIL) dropped in choppy trade after Arvind Kejriwal's Aam Aadmi Party (AAP) intensified its attack on RIL Chairman and Managing Director (CMD) Mukesh Ambani, accusing him of being involved in a Rs 6530-crore money-laundering operation. The stock was off 1.67% at Rs 797. The stock hit a high of Rs 814 and low of Rs 794.

RIL on Thursday, 27 February 2014, said that allegations that foreign direct investments in certain Indian companies by Biometrix, a Singapore-based company, are "laundered monies" invested in India are completely false. These false and baseless allegations are being repeatedly made in the media and in judicial proceedings and have been already responded to, RIL said. The allegations made by Prashant Bhushan on Thursday, 27 February 2014, are highly defamatory, false, irresponsible and devoid of any merit or substance whatsoever, RIL said. These false allegations have been repeatedly made and their regurgitation in the media is fuelling an orchestrated, politically-motivated campaign against the company, RIL said.

The investments by Biometrix were open, transparent and perfectly legitimate transactions in full compliance with the extant regulations, RIL said. These investments in the Indian companies were made by Biometrix out of loans raised from ICICI Bank, Singapore branch, RIL said. ICICI Bank has confirmed this fact to the regulators, RIL said. Regulatory authorities have fully investigated the matter and have found no substance in the allegations of money laundering, RIL said. The insinuation that this money was from "gold plating" from KG-D6 is completely irresponsible and false, RIL said.

The allegations that ill-gotten laundered money or profits have either been made or that these have been deposited in the accounts of RIL Chairman and Managing Director (CMD) Mr. Mukesh Ambani through Singapore or otherwise are false, RIL said. The allegations relating to surrender of D-29 and D-30 blocks and transfer of Mr Chaubey are also false and irresponsible, RIL said. The company is refraining from making any further comment at this stage since the allegations relating to Biometrix are a part of judicial proceedings, RIL said.

Pharma stocks edged higher on renewed buying. Sun Pharmaceutical Industries (up 2.52%), Glenmark Pharmaceuticals (up 3.15%), Cipla (up 2.4%) and Wockhardt (up 4.31%) gained

Cadila Healthcare rose 3.99% to Rs 1,048 after striking a record high of Rs 1,053.15 in intraday trade.

Lupin gained 3.91% to Rs 998 after striking a record high of Rs 1,001 in intraday trade.

Dr. Reddy's Laboratories rose 2.17% to Rs 2,895.55 after hitting record high of Rs 2,939.80 in intraday trade.

Shares of power finance companies gained. Power Finance Corporation jumped 6.88%.

Rural Electrification Corporation (REC) rose 2.92%. REC after market hours on Wednesday, 26 February 2014, said that it has filed an amendment in the Shelf Prospectus dated 26 August 2013 for increasing the shelf limit to Rs 6000 crore from Rs 5000 crore, with the office of Registrar of Companies (RoC), NCT of Delhi and Haryana on 25 February 2014. The company has also filed Prospectus Tranche-ll for raising an amount of Rs 250 crore with an option to retain over-subscription upto Rs 809.3958 crore aggregating upto Rs 1059.3958 crore through public issue of tax free secured redeemable non-convertible bonds of face value of Rs 1000 crore, in the nature of debentures, during the fiscal year 2014, with the RoC, NCT of Delhi and Haryana on 25 February 2014. Further the Company has informed that, the public issue of tax free secured redeemable non-convertible bonds, in the nature of debentures of REC will open on 28 February 2014 for subscription and is scheduled to close on 14 March 2014.

In a separate announcement, REC announced sale and transfer of equity shares of NRSS XXXI(A) Transmission and NRSS XXXI(B) Transmission held by REC Transmission Projects Company (RECTPCL) to Power Grid Corporation of India and Essel Infraprojects, respectively.

REC announced that its wholly owned subsidiary, RECTPCL, was appointed by the Ministry of Power (MoP) as the bid process coordinator inter alia for the purpose of selection of bidder as transmission service provider to establish transmission system for northern region system strengthening scheme, NRSS- XXXI(Part A) and (Part B) through tariff based competitive bidding process.

Accordingly, RECTPCL formed two project specific special purpose vehicles (SPVs) namely NRSS- XXXI(A) Transmission and NRSS- XXXI(B) Transmission, as its wholly owned subsidiary companies, with authorized and paid up capital of Rs 5 lakh divided into 50,000 equity shares of Rs 10 each to be transferred to the successful bidder selected through tariff based competitive bidding process.

Further, the board of directors of REC in its meeting held on 14 February 2014 approved the sale and transfer of 50,000 equity shares each of NRSS XXXI(A) Transmission and NRSS XXXI(B) Transmission, presently held by RECTPCL and its nominees, to the selected bidder, substantially upon the terms and conditions of the share purchase agreements to be executed between the RECTPCL, concerned SPVs and respective successful bidders, subject to obtaining necessary approval from the Ministry of Power, Government of India.

In response to the request for proposal for this project, RECTPCL received financial bids and based on the recommendations of the bid evaluation committee, the board of directors of RECTPCL in its meeting held on 25 February, 2014, approved the name of Power Grid Corporation of India as successful bidder for issuance of letter of intent to establish transmission system for northern region system strenghthening scheme, NRSS XXXl(Part A) and Essel lnfraprojects as successful bidder for issuance of letter of intent to establish transmission system for northern region system strenghthening scheme, NRSS- XXXl(Part B)

Fertiliser shares declined. National Fertilizers (down 2.71%), Rashtriya Chemicals and Fertilizers (down 0.16%), GSFC (down 1.22%), Deepak Fertilisers & Petrochemicals Corporation (down 2.85%) declined. Chambal Fertilisers & Chemicals was unchanged at Rs 38.15.

The Cabinet Committee on Economic Affairs today, 28 February 2014, approved the proposal of the Department of Fertilizers regarding modified New Pricing Scheme-III (NPS-III) for existing urea units. The implementation of the Modified NFS-III will compensate existing urea units for increase in fixed costs, etc, and thereby facilitate their continuing operations and regular supply of urea to farmers, a government statement said.

The Cabinet Committee on Economic Affairs also approved a proposal of the Department of Fertilizers regarding amendments to the New Investment Policy 2012 (NIP-2012) in the urea sector. The amendments are necessitated by the suggestion of Dr. Saumitra Choudhuri, Member Planning Commission and the response of various companies received by the Department of Fertilizers (DoF) after the notification of NIP-2012, the government said. Amendments in NIP-2012 will allow market forces to operate for new urea units. It is expected that this would attract investments in urea sector for required indigenous capacity addition and increased production of urea domestically, the government said. This would facilitate actual implementation of NIP- 2012, it added.

In the foreign exchange market, the rupee edged lower against the dollar on dollar demand from oil firms to meet month-end payment commitments. The partially convertible rupee was hovering at 62.06, compared with its close of 61.98/99 on Wednesday, 26 February 2014. The foreign exchange market was closed on Thursday, 27 February 2014, on account of Mahashivratri.

Indian government bond prices rose after dovish remarks from Federal Reserve Chairwoman Janet Yellen before the Senate Banking Committee on Thursday, 27 February 2014. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.8559%, lower than its close of 8.9158% on Wednesday, 26 February 2014. The bond and money markets were closed on Thursday, 27 February 2014, on account of Mahashivratri. Bond yield and bond prices move in opposite direction.

The Ministry of Corporate Affairs on Thursday, 27 February 2014, said that the government has issued notifications to give effect to Section 135 and Schedule VII of the Companies Act, 2013, which relate to CSR (Corporate Social Responsibility) related spending by companies. Mr. Sachin Pilot, Minister for Corporate Affairs, said that the concerned rules have been finalised after extensive consultations with all stakeholders. He elaborated that the rules provide for the manner in which CSR Committee shall formulate and monitor the CSR Policy, manner of undertaking CSR activities, role of the board of directors therein and format of disclosure of such activities in the board's report. The new CSR rules will be effective from 1 April, 2014.

The Ministry of Corporate Affairs said that some important new activities under CSR have been added, which include promoting preventive health care and sanitation and making available safe drinking water, setting up homes and hostels for women and orphans, setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups, ensuring ecological balance, protection of flora and fauna, animal welfare, agro-forestry, conservation of natural resources and maintaining quality of soil, air and water, livelihood enhancement projects among others. The new activities under CSR also include rural development projects.

Narendra Modi, the BJP's prime ministerial candidate, said on Thursday, 27 February 2014, that India's traders and grocery store owners must learn to compete with large modern stores and online retailers. "We should not worry about the challenges from global trade," he told a gathering of the Confederation of All India Traders. Rather, he said, small traders should emphasise on quality of their products to compete better and could enter into contracts with big online retailers to create "virtual malls in small shops".

With the general elections fast approaching, Modi also laid out his economic views separately at a conference on the Indian economy on Thursday, 27 February 2014. "Speedy, yet sustainable economic growth that is inclusive of all is the need of the hour," he told a crowd of businessmen, bankers, economists and diplomats. As India is vast, he said there are no tailor-made solutions for the problems of the entire country. "The government must identify the strengths of each state and devise strategies accordingly," he said. Modi, chief minister of Gujarat, said he also favoured introducing a nationwide goods and services tax (GST), a long-pending reform expected to bring a uniform market, reduce costs of businesses and increase government revenue.

Modi answered only two questions from members of the audience, one of which was related to energy security. He said he preferred using the country's own natural resources such as solar energy and wind energy to energy imports.

Reserve Bank of India (RBI) Governor Raghuram Rajan on Wednesday, 26 February 2014, defended his decision to repeatedly raise interest rates when he said that reducing inflation is the best way to foster stable growth. "We cannot wait until the public's expectations of inflation get more entrenched, and the inflationary spiral gains momentum," Mr. Rajan said in a speech, defending RBI's decision to raise key policy rate three times by a combined 0.75 percentage points since he took over as head of the central bank in September 2013.

Mr. Rajan indicated that he agreed with the recommendations of a central bank panel which had suggested the RBI start using a consumer price inflation target to determine monetary policy. The panel suggested that RBI should bring down the consumer price inflation rate to 8% by January 2015 and to 6% by January 2016. After that it should aim to keep it within two percentage points of 4%, the panel said.

Mr. Rajan said the gradual raising of interest rates now rather than later is the best way to slowly squeeze inflation out of the economy. "Rather than administer shock therapy to a weak economy, the RBI prefers to dis-inflate over time rather than abruptly, while being prepared to do what is necessary if the economy deviates from the projected inflation path," Mr. Rajan said. He said keeping inflation in check will also bolster the rupee and business confidence. "Greater public faith that inflation will be low will add stability to our currency, and prevent the kind of gyrations we saw last summer," he said.

Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Citing price pressures, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.

The India government will unveil data on gross domestic product (GDP) for Q3 December 2013 after trading hours today, 28 February 2014. The GDP grew at improved pace of 4.8% in Q2 September 2013, from 4.4% growth recorded in Q1 June 2013.

European stocks reversed initial gains on Friday, 28 February 2014, as investors awaited reports on American housing, consumer spending and economic growth. Key benchmark indices in UK, France and Germany were down by 0.06% to 0.26%.

Euro-zone inflation was unchanged in February, easing pressure on the European Central Bank to take further action to support the financial system and growth when its governing council meets next Thursday. Consumer prices grew 0.8% in February from a year earlier in the euro zone, the European Union's statistics office Eurostat said Friday, well below the ECB's target of just below 2%.

Asian stocks edged higher on Friday, 28 February 2014, after dovish remarks from Federal Reserve Chairwoman Janet Yellen before the Senate Banking Committee on Thursday, 27 February 2014. Key benchmark indices in Singapore, Hong Kong, Indonesia, China and South Korea were up 0.04% to 1.12%. In Japan, the Nikkei 225 was off 0.55%. The stock market in Taiwan was closed for Peace Memorial Day.

A meeting of China's lawmakers to set economic policy and growth targets begins next week in Beijing. The National People's Congress annual gathering begins on 5 March 2014.

Trading in US index futures indicated that the Dow could drop 15 points at the opening bell on Friday, 28 February 2014. US markets edged higher on Thursday, 27 February 2014, with the benchmark S&P 500 closing at a fresh record as investors welcomed dovish remarks from Federal Reserve Chairwoman Janet Yellen before the Senate Banking Committee.

Yellen told senators it was difficult to tell how much of the recent decline in US economic growth was due to weather, adding the central bank might consider a pause in its reduction of bond buying if the weakness persists. The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion

In latest US economic news, the number of people applying for unemployment benefits rose last week to match the highest level of 2014, suggesting that progress in a gradually recovering US labor market has slackened off. However, the average of new claims over the past month, usually a more reliable gauge than the up-and-down weekly number, was unchanged at 338,250.

Orders for US durable goods fell 1% in January as demand tapered off for most big-ticket items except military hardware, the government said Thursday.

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