A bout of volatility was witnessed as key benchmark indices weakened once again soon after trimming intraday losses in mid-afternoon trade. The barometer index, the S&P BSE Sensex, was down 79.85 points or 0.33%, off close to 170 points from the day's high and up about 40 points from the day's low. The market breadth, indicating the overall health of the market was positive. The BSE Small-Cap index was up more than 1%.
Auto stocks were mixed. IT stocks were also mixed. Tata Steel extended intraday gains ahead of Q4 results.
A bout of volatility was witnessed as key benchmark indices slipped into the red after opening higher. Intraday volatility continued as key benchmark indices slipped into the red once again after moving into positive zone from negative zone for a brief period in mid-morning trade. Key benchmark indices extended losses and hit fresh intraday low in early afternoon trade. Key benchmark indices hovered in negative zone in afternoon trade as European stocks edged lower in early trade there. A bout of volatility was witnessed as key benchmark indices weakened once again soon after trimming intraday losses in mid-afternoon trade.
Foreign institutional investors (FIIs) bought shares worth a massive Rs 2026.23 crore in a single trading session on Tuesday, 13 May 2014, as per provisional data from the stock exchanges.
At 14:20 IST, the S&P BSE Sensex was down 79.85 points or 0.33% to 23,791.38. The index lost 117.87 points at the day's low of 23,753.36 in afternoon trade. The index rose 93.44 points at the day's high of 23,964.67 in morning trade.
The CNX Nifty was down 10.60 points or 0.15% to 7,098.15. The index hit a low of 7,080.90 in intraday trade. The index hit a high of 7,142.25 in intraday trade.
The BSE Mid-Cap index was up 67.71 points or 0.89% at 7,686.33. The BSE Small-Cap index was up 80.77 points or 1.04% at 7,843.69. Both these indices outperformed the Sensex.
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The market breadth, indicating the overall health of the market, was positive. On BSE, 1,534 shares gained and 1,296 shares fell. A total of 110 shares were unchanged.
Among the 30-share Sensex pack, 17 stocks gained and rest of them fell. Dr Reddy's Laboratories (down 3.05%), HDFC (down 1.77%), and Bharat Heavy Electricals (Bhel) (down 1.71%) edged lower from the Sensex pack.
Tata Steel surged 5.06% to Rs 448.50 ahead of its Q4 results today, 14 May 2014. The stock hit 52-week high of Rs 449.80 in intraday trade.
Auto stocks were mixed. Ashok Leyland (up 0.39%), Bajaj Auto (up 3.01%), Hero MotoCorp (up 0.47%) and Tata Motors (up 0.5%) gained. Mahindra & Mahindra (down 3.51%), Maruti Suzuki India (down 0.8%) and TVS Motor Company (down 2%) declined.
IT stocks were also mixed. Tech Mahindra gained 0.19% ahead of its Q4 results today, 14 May 2014.
TCS rose 0.61%. Infosys (down 0.5%), HCL Technologies (down 2.17%) and Wipro (down 0.43%) declined.
The next major trigger for the market is outcome of Lok Sabha elections. The counting of votes will take place on Friday, 16 May 2014, and the results are expected on the same day. Various exit polls on Monday, 12 May 2014, predicted that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) would win a majority in the Lok Sabha elections which concluded on Monday, 12 May 2014. If exit polls prove correct, NDA's prime ministerial candidate Narendra Modi will become India's next Prime Minister. The term of the current Lok Sabha ends on 1 June and the new House has to be constituted by 31 May.
Modi is perceived as being more business-friendly and decisive by the business community. As chief minister for the fast-growing state of Gujarat, Modi has built a reputation for getting things done. While campaigning for the Lok Sabha elections, Modi has pledged to reinvigorate the country's manufacturing sector, create more jobs and overhaul the country's inadequate infrastructure. Investors are hoping that the BJP-led government will be better at getting things done and more business-friendly than the current Congress-party-led coalition government.
Investors are hoping that when the results of the Lok Sabha elections are out on Friday, 16 May 2014, a stable government which will complete its full term of five years in office comes to power. A party or a pre-poll alliance will need 272 MPs to form government at the Centre, which is a simple majority in 543-member Lok Sabha. Investors are expecting measures for revival of the economy, business-friendly policies and good governance from the new government that comes to power after the elections. Investors expect policy measures from the new government to put India on a high-growth path on a sustainable basis.
The BJP in its Lok Sabha polls manifesto has promised more business-friendly policies if the party comes to power after elections. The BJP has said that measures for the revival of the economy are its priority if the party comes to power after elections. India's GDP growth has slowed to a decade low of below 5%. The GDP grew 4.7% in Q3 December 2013.
The rate of inflation based on the wholesale price index is expected to remain at 5.7% in April 2014, at the same level it was in March 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil data on inflation based on the wholesale price index (WPI) for April 2014 at about 12:00 noon tomorrow, 15 May 2014.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June 2014. The RBI left its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review on 1 April 2014, as consumer-price inflation eased to a two-year low and as the rupee firmed up against the dollar. .
European stocks edged lower on Wednesday, 14 May 2014, as investors weighed the latest round of inflation data and earnings reports. Key benchmark indices in UK, Germany and France were off 0.05% to 0.24%.
In data news, EU harmonized German inflation came in at 1.1% in April, which was broadly in line with market expectations.
France's consumer price index was unchanged on a month-on-month basis in April, marking a slowdown from March when prices rose 0.4%. Still, on a year-on-year basis, consumer price increases accelerated to 0.7% in April from 0.6% in March.
The upcoming European court review on the legality of the European Central Bank's (ECB) latest bond buying scheme doesn't tie the central bank's hands, an executive board member said Wednesday. "I am very optimistic that the interaction between the ECB and the Court of Justice will lead to 'a good result,'" Yves Mersch, ECB Executive Board member, said in a speech in Berlin. "Until then, we are not limited in our actions," he added, according to a copy of his speech provided by the ECB.
In February, Germany's constitutional court harshly criticized the bond-purchase program, known as "Outright Monetary Transactions," as a power grab, and referred questions to the European Court of Justice in Luxembourg--a first for the German court. The ECB created its OMT bond plan at the height of the bloc's sovereign-debt crisis in the summer of 2012. It came weeks after ECB President Mario Draghi promised to do "whatever it takes" to preserve the euro. The program is widely seen as having succeeded in calming markets, even though it has never been deployed.
The head of the International Monetary Fund warned Tuesday that inflation rates in the euro zone and other leading economies are too low and pose a risk in the outlook for the global economy. In terms of risks that we see on the horizon, one is the sustainably low--too low--inflation, particularly in the euro area but more generally in the advanced economies, said IMF Managing Director Christine Lagarde during a news conference with Chancellor Angela Merkel and the leaders of the world's main economic organizations in Berlin.
Asian stocks rose on Wednesday, 14 May 2014, as US equity gauges held at record highs on Tuesday, 13 May 2014. Key benchmark indices in Indonesia, South Korea, Taiwan, Singapore and Hong Kong were up 0.64% to 1.41%. Key benchmark indices in China and Japan were off 0.14% each.
China's central bank called on the nation's biggest lenders to accelerate the granting of mortgages, a sign that developers' price cuts and incentives alone won't boost a slumping housing market and economy. The People's Bank of China told 15 banks yesterday to improve efficiency of service, give timely approval and distribution of mortgages to qualified buyers. It also urged lenders to give priority to families buying their first homes and strengthen their monitoring of credit risks.
Trading in US index futures indicated that the Dow could fall 8 points at the opening bell on Wednesday, 14 May 2014. US stocks ended mostly higher Tuesday, with the Dow Jones Industrial Average and the S&P 500 index ending at record highs.
US retail sales increased 0.1% in April following a revised 1.5% jump in March that marked the biggest gain in four years, Commerce Department figures showed in Washington.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 17-18 June 2014. The Fed on 30 April 2014 said after a monetary policy review that it will keep the benchmark interest-rate target at almost zero for a "considerable time" after its bond-buying program ends. The FOMC also reduced monthly debt purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in "measured steps" if the economy continues to improve.
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