A bout of volatility was witnessed as key benchmark indices trimmed intraday losses in mid-morning trade. The barometer index, the S&P BSE Sensex, was down 177.59 points or 0.72%, up about 115 points from the day's low and off close to 240 points from the day's high. The market breadth indicating the overall health of the market was weak, with more than 2 losers for every gainer on BSE. The BSE Small-Cap index was off more than 1.6%. The BSE Mid-Cap index was off 1.2%. Weakness in Asian stocks hit sentiment on the domestic bourses adversely.
Realty stocks extended Monday's sharp losses. Capital goods stocks also declined.
The Sensex slipped into the red after opening higher. Key benchmark indices extended initial losses and hit fresh intraday low in morning trade. A bout of volatility was witnessed as key benchmark indices trimmed intraday losses in mid-morning trade.
Foreign institutional investors (FIIs) sold shares worth a net Rs 84.13 crore on Monday, 26 May 2014, as per provisional data from the stock exchanges.
The market may remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month May 2014 series to June 2014 series. The near month May 2014 derivatives contract expire on Thursday, 29 May 2014.
At 11:25 IST, the S&P BSE Sensex was down 177.59 points or 0.72% to 24,539.29. The index declined 294.55 points at the day's low of 24,422.33 in mid-morning trade, its lowest level since 22 May 2014. The index rose 60.43 points at the day's high of 24,777.31 in early trade.
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The CNX Nifty was down 38.05 points or 0.52% to 7,321. The index hit a low of 7,274.75 in intraday trade. The index hit a high of 7,372.95 in intraday trade.
The BSE Mid-Cap index was off 101.72 points or 1.2% at 8,383.34. The BSE Small-Cap index was off 145.23 points or 1.63% at 8,778.42. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was weak, with more than 2 losers for every gainer on BSE. On BSE, 1,682 shares fell and 809 shares rose. A total of 93 shares were unchanged.
Among the 30-share Sensex pack, 24 stocks fell and rest of them rose. GAIL (India) (down 6.35%), Sesa Sterlite (down 2.63%) and Mahindra & Mahindra (M&M) (down 3.36%) edged lower from the Sensex pack.
Realty stocks extended Monday's sharp losses. Sobha Developers (down 4.83%), Unitech (down 6.22%) and Housing Development & Infrastructure (down 1.25%) declined.
DLF shed 2.47%. The company on 23 May 2014 announced that DLF Emporio, a subsidiary of DLF, has successfully placed India's first Commercial Mortgage Backed Security (CMBS) issuance of Rs 525 crore, with a coupon rate of 10.90% per annum (p.a.) and legal maturity of 7.5 years. DLF Emporio owns and operates approximately 3 lakh square feet (sq. ft) of a Luxury Mall in New Delhi, India. The CMBS issue is rated CRISIL AA (SO). This is a landmark issuance, being the first of its kind in the country at a competitive pricing. This shall pave way for more such issuances in future, DLF said in a statement.
Capital goods stocks also declined. ABB (India) (down 2.52%), Bharat Heavy Electricals (Bhel) (down 5.3%), BEML (down 9.04%), Punj Lloyd (down 4.15%), Siemens (down 2.85%) and Thermax (down 3.03%) dropped.
L&T was up 0.7% to Rs 1,555.05. The stock was volatile. The stock hit high of Rs 1,567 and low of Rs 1,522.80 so far during the day. L&T during trading hours today, 27 May 2014, said that its subsidiary L&T Special Steels and Heavy Forgings (LTSSHF) has entered into a five-year technology transfer agreement with The Japan Steel Works (JSW) which covers transfer of critical technology for steel melting and heavy forgings made from ingots weighing 200 MT, for hydrocarbon, thermal power, steel and cement sectors.
On the macro front, India's current account deficit (CAD) narrowed sharply to $1.2 billion (0.2% of GDP) in Q4 March 2014, from $18.1 billion (3.6% of GDP) in Q4 March 2013, which was also lower than $4.2 billion (0.9% of GDP) in Q3 December 2013. The lower CAD was primarily on account of a decline in the trade deficit as decline in imports was sharper than that in exports.
On a BoP basis, merchandise exports declined by 1.3% to $ 83.7 billion in Q4 March 2014 as against an increase of 5.9% in Q4 March 2013.
Narendra Modi was sworn in India's 15th Prime Minister on Monday, 26 May 2014. The Union Council of Ministers includes Rajnath Singh as Home Minister and Sushma Swaraj as Minister for External Affairs. Arun Jaitley was allocated Finance Ministry, corporate affairs and will also have additional charge of Defence. Nitin Gadkari will be a minister of road transport, highways and shipping. Ravi Shankar Prasad will take charge of Communications and Information Technology, Law and Justice Ministry. Venkaiah Naidu takes charge as minister of Urban Development, Housing and Urban Poverty Alleviation and Parliamentary Affairs. Shri D.V. Sadananda Gowda was allotted Ministry of railways. Uma Bharati was allotted Water Resources, River Development and Ganga Rejuvenation Ministry, Ashok Gajapathi Raju Pusapati was allotted Civil Aviation Ministry, Ananthkumar was allotted Chemicals and Fertilizers. Gopinath Munde was allotted Rural Development, Panchayati Raj and Drinking Water and Sanitation Ministry. Ramvilas Paswan was allotted Consumer Affairs, Food and Public Distribution Ministry. Kalraj Mishra was allotted Micro, Small and Medium Enterprises. Maneka Gandhi was allotted Women and Child Development Ministry. Anant Geete was allotted Heavy Industries and Public Enterprises Ministry. Harsimrat Kaur Badal was allotted Food Processing Industries Ministry. Dharmendra Pradhan has got Petroleum and Natural Gas ministry with independent charge.
After taking charge of the Finance Ministry, Arun Jaitley said at a news conference today, 27 May 2014, that a balancing act will have to be done to restore growth while curbing inflation and taking steps toward fiscal consolidation. "I think political change itself sends strong signals to the global community as also to domestic investors. Over the next few months by expediting decision making processes, I'm sure we'll be able to build on that," Jaitley said.
Investors are expecting measures from the new government to revive the Indian economy. India's GDP growth slowed sharply at 4.7% in Q3 December 2013. Investors expect the new government to accelerate policy reforms and overhaul the country's poor infrastructure.
Modi is favored by business leaders because of his record in Gujarat, which he's led since 2001. With Modi at the helm of affairs, Gujarat's economy expanded by 10.1% a year, on average and adjusting for inflation, from 2001 and 2012, compared with 7.7% growth a year for India's economy as a whole.
Modi has pledged to fight inflation by cracking down on food hoarders, creating a national agriculture market and improving rural infrastructure.
The first budget of the new government is expected by July 2014. An interim budget was presented by P. Chidambaram in February this year. Essentially, in the nature of a vote on account, the interim budget was intended to get Parliament approval for expenditure to be incurred during the first few months of fiscal year 2014-15 due to Lok Sabha elections.
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.
Asian stocks edged lower in choppy trade on Tuesday, 27 May 2014. Key benchmark indices in China, Singapore, Hong Kong and South Korea were off 0.09% to 0.59%. Key benchmark indices in and Taiwan and Japan were up 0.17% to 0.64%.
Trading in US index futures indicated that the Dow could gain 49 points at the opening bell on Tuesday, 27 May 2014. US stock market was closed on Monday, 26 May 2014, on account of Memorial Day.
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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