Firmness continued on the bourses in afternoon trade. The barometer index, the S&P BSE Sensex, was up 248.68 points or 1.21%, off close to 55 points from the day's high and up about 290 points from the day's low. The market breadth, indicating the overall health of the market, was strong. All the thirteen sectoral indices on BSE were in the green. The market cheered the Reserve Bank of India (RBI)'s surprise decision to keep its main lending rate viz. the repo rate unchanged at 7.75% after mid-quarter monetary policy review today, 18 December 2013. It was widely expected that the central bank will raise repo rate by 25 basis points to rein in inflation after recent data showed that both consumer prices and wholesale prices accelerated last month.
Tata Consultancy Services (TCS) rose after the company announced that MyState, an ASX-listed diversified financial Group in Australia, has implemented TCS BaNCS for core banking. Most metal stocks gained. Adani Ports & Special Economic Zone (APSEZ) rose after the company said it has completed the Rs 400-crore steam coal import terminal at Visakhapatnam port, eight months ahead of schedule marking an entry on the east coast of India.
The Sensex, and the 50-unit CNX Nifty, both, hit their lowest level in more than 2-1/2 weeks after opening with a downward gap. A bout of volatility was witnessed in early trade as the key benchmark indices reversed initial losses. Key benchmark indices trimmed gains after hitting fresh intraday high in morning trade. Key benchmark indices surged and hit fresh intraday high after the Reserve Bank of India (RBI) surprised markets by keeping its main lending rate viz. the repo rate unchanged at 7.75% after mid-quarter monetary policy review. The RBI's decision hit the market at around 11:00 IST. Firmness continued on the bourses in afternoon trade.
The market sentiment was boosted by data showing that foreign funds remained buyers of Indian stocks on Tuesday, 17 December 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 249.93 crore on Tuesday, 17 December 2013, as per provisional data from the stock exchanges.
At 13:20 IST, the S&P BSE Sensex was up 248.68 points or 1.21% to 20,860.82. The index jumped 305.43 points at the day's high of 20,917.57 in mid-morning trade, its highest level since 12 December 2013. The index fell 43.44 points at the day's low of 20,568.70 in opening trade, its lowest level since 29 December 2013.
The CNX Nifty was up 79 points or 1.29% to 6,218.05. The index hit a high of 6,236 in intraday trade, its highest level since 12 December 2013. The index hit a low of 6,129.95 in intraday trade, its lowest level since 29 December 2013.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,335 shares gained and 881 shares fell. A total of 173 shares were unchanged.
Among the 30-share Sensex pack, 26 stocks gained and rest of them declined. Bhel (up 3.14%), SBI (up 2.91%) and L&T (up 2.97%) gained.
IT stocks edged higher. Tech Mahindra rose 0.05%.
Infosys rose 0.1% to Rs 3459.50. The stock had hit 52-week high of Rs 3483.20 in intraday trade on Tuesday, 17 December 2013.
Shares of HCL Technologies rose 0.74% to Rs 1,182. The stock turned ex-dividend today, 18 December 2013, for final dividend of Rs 6 per share for the year ended 30 June 2013. The stock had hit record high of Rs 1,197 in intraday trade on Tuesday, 17 December 2013.
Tata Consultancy Services (TCS) rose 0.46%. The company during market hours announced that MyState, an ASX-listed diversified financial Group in Australia, has implemented TCS BaNCS for core banking. The implementation realises further benefits of the merger between MyState and The Rock, a major provider of financial and insurance services to the Central Queensland region. MyState, with an integrated, scalable core banking platform, can now further support its growth opportunities through improved products and services, and simpler, faster business processes and operations, TCS said.
Wipro dropped 0.06% to Rs 517.10. The stock had hit 52-week high of Rs 530 in intraday trade on Tuesday, 17 December 2013.
Most metal stocks gained. Hindalco Industries (up 0.9%), Hindustan Zinc (up 1.86%), Bhushan Steel (up 0.09%), Tata Steel (up 1.32%), Sail (up 1.3%), and Hindustan Copper (up 1.19%) gained. Sesa Sterlite declined 0.84%. National Aluminum Company was flat. JSW Steel shed 0.01%.
Adani Ports & Special Economic Zone (APSEZ) rose 0.6% after the company said during market hours that it has completed the Rs 400-crore steam coal import terminal at Visakhapatnam port, eight months ahead of schedule marking an entry on the east coast of India. The Adani Vizag Coal Terminal, a subsidiary of APSEZ, had entered into a concession agreement with Vishakhapatnam Port Trust to set up a steam coal handling facility project with a capacity of 6.4 million tonnes a year in March 2011 with a completion deadline of August 2014.
Karan Adani, Executive Director of APSEZ said: "This is a proud moment for the Group for setting a record in completion of the Adani Vizag steam coal terminal project eight months ahead of schedule. The facilities created at the port can handle steam coal volumes of up to 9 million tonnes. The Visakhapatnam port is strategic for coal imports to feed the local industries and power plants of the states of Andhra Pradesh, Odisha, Chhattisgarh and Maharashtra. This development again reiterates Adani's commitment for setting up world class port infrastructure in the country".
APSEZ also operates ports in Mundra, Hazira and Dahej, in Gujarat and is setting up coal handling facilities in Mormugao in Goa and at Kandla in Gujarat.
Bond prices surged as the Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review contrary to market expectations of a 25 basis point increase. The yield on 10-year federal paper 8.83% GS 2023 was hovering at 8.7855%, lower than its close of 8.9141% on Tuesday, 17 December 2013. Bond yield and bond prices are inversely related.
In the foreign exchange market, the rupee edged higher against the dollar as the Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review contrary to market expectations of a 25 basis point increase. The partially convertible rupee was hovering at 61.88, compared with its close of 62.01/02 on Tuesday, 17 December 2013.
The Reserve Bank of India (RBI) said that today's policy decision was a close call. Even though the RBI maintains status quo today, it can help guide market expectations through a clearer description of its policy reaction function: if the expected softening of food inflation does not materialise and translate into a significant reduction in headline inflation in the next round of data releases, or if inflation excluding food and fuel does not fall, the Reserve Bank of India will act, including on off-policy dates if warranted, so that inflation expectations stabilise and an environment conducive to sustainable growth takes hold. The Reserve Bank's policy action on those dates will be appropriately calibrated, the central bank said in a statement.
The RBI said that current inflation is too high. However, given the wide bands of uncertainty surrounding the short term path of inflation from its high current levels, and given the weak state of the economy, the inadvisability of overly reactive policy action, as well as the long lags with which monetary policy works, there is merit in waiting for more data to reduce uncertainty, the RBI said. There are obvious risks to waiting for more data, including the possibility that tapering of quantitative easing by the US Federal Reserve may disrupt external markets and that the Reserve Bank of India may be perceived to be soft on inflation. The Reserve Bank of India will be vigilant, it said.
Recent readings suggest that headline inflation, both retail and wholesale, have increased, mainly on account of food prices. While consumer price index (CPI) and wholesale price index (WPI) inflation excluding food and fuel have been stable, despite a steady and necessary increase in administered prices towards market levels, the high level of CPI inflation excluding food and fuel leaves no room for complacency. There is, however, reason to wait before determining the course of monetary policy. There are indications that vegetable prices may be turning down sharply, although trading mark-ups could impede the full pass-through into retail inflation. In addition, the disinflationary impact of recent exchange rate stability should play out into prices. The RBI also said that the negative output gap, including the recent observed slowdown in services growth, as well as the lagged effects of effective monetary tightening since July, should help contain inflation.
Retail inflation measured by the consumer price index (CPI) has risen unrelentingly through the year so far, pushed up by the unseasonal upturn in vegetable prices, double-digit housing inflation and elevated levels of inflation in the non-food and non-fuel categories. While vegetable prices seem to be adjusting downwards sharply in certain areas, the feed-through to much-too-high headline CPI inflation remains to be seen, the RBI said. Wholesale inflation has also gone up sharply from Q2 onwards, with upside pressures evident across all constituent components, the RBI said.
High inflation at both wholesale and retail levels risks entrenching inflation expectations at unacceptably elevated levels, posing a threat to growth and financial stability, the RBI said. There are also signs of a resumption of high rural wage growth, suggesting second round effects that cannot be ignored. High and persistent inflation also increases the risks of exchange rate instability.
While volatility in financial markets has receded, it could pick up again following the inevitable taper of quantitative easing in the US, given the large dependence of EMEs on external financing, the RBI said. In India, the pick-up in real GDP growth in Q2 of 2013-14, albeit modest, was driven largely by robust growth of agricultural activity, supported by an improvement in net exports. However, the weakness in industrial activity persisting into Q3, still lacklustre lead indicators of services and subdued domestic consumption demand suggest continuing headwinds to growth. Tightening government spending in Q4 to meet budget projections will add to these headwinds. In this context, the revival of stalled investment, especially in the projects cleared by the Cabinet Committee on Investment, will be critical.
The RBI also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liability (NDTL) after monetary policy review today, 18 December 2013. With the normalization of exceptional monetary measures, liquidity conditions have improved, as reflected in the steady decline in the access to the MSF. Capital inflows under the Reserve Bank's swap facilities for banking capital and non-resident deposits augmented domestic liquidity significantly from the end of November. Over the first two weeks of December, banks refrained from utilising the limits under the overnight LAF repo and export credit refinance, and, in fact, excess liquidity was parked with the Reserve Bank of India through reverse repo. Liquidity is being managed with a view to ensuring that there is adequate credit flow to the productive sectors of the economy, the RBI said.
The narrowing of the trade deficit since June through November, on positive export growth and contraction in both oil and non-oil imports, should bring the current account deficit (CAD) down to a more sustainable level for the year as a whole, the RBI said.
Robust inflows into the swap windows opened by the Reserve Bank during August-November have contributed significantly to rebuilding foreign exchange reserves thus covering possible external financing requirements and providing stability to the foreign exchange market. Looking ahead, these favourable developments should help to build resilience to external shocks, the RBI said.
Asian stocks edged higher on Wednesday, 18 December 2013, as investors await a Federal Reserve decision on its stimulus program. Key benchmark indices in Hong Kong, Japan, Indonesia and South Korea rose by 0.02% to 2.02%. Key benchmark indices in China, Taiwan and Singapore fell by 0.05% to 0.14%.
China attracted $8.5 billion in foreign direct investment in November--up 2.35% on year, the Ministry of Commerce said in a statement on Wednesday. The figure was more than October's $8.42 billion which was up 1.24% on year. FDI in the January-November period rose 5.48% on year to $105.5 billion. Non-financial overseas direct investment rose 28.3% on year in the January-November period to $80.2 billion.
Japanese exports rose 18.4% from a year earlier in November 2013, data today, 18 December 2013, showed. That marked the ninth consecutive month of increase, as manufacturers benefited from a weaker yen brought about by Prime Minister Shinzo Abe's pro-growth strategies. A recovery in exports is important for the country's economy ahead of a planned sales-tax increase in April.
The Bank of Japan (BoJ), which buys more than 7 trillion yen ($67.6 billion) of Japanese Government Bonds (JGBs) every month in its bid to stoke inflation, holds a two-day monetary policy meeting which begins tomorrow, 19 December 2013.
Trading in US index futures indicated that the Dow could advance 41 points at the opening bell on Wednesday, 18 December 2013. US stocks closed a volatile session lower on Tuesday, 17 December 2013, as markets digested a slew of economic data and focused on the Federal Reserve's upcoming decision on the fate of the stimulus program.
The Federal Open Market Committee's (FOMC) two-day policy meeting on interest rates in the United States concludes today, 18 December 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated.
Powered by Capital Market - Live News
