Key benchmark indices hovered in positive terrain in early afternoon trade. The barometer index, the S&P BSE Sensex was currently up 96.32 points or 0.37% at 26,456.43. The market breadth indicating the overall health of the market was positive. Key indices rose as gains in Asian stocks boosted sentiment. The market sentiment was also boosted by provisional data showing that foreign funds were net buyers of Indian during the previous trading session. Speculation of an upward revision of India's sovereign outlook by global rating agency S&P resurfaced after data on Thursday, 21 August 2014, showed foreign funds bought Indian bonds worth a staggering Rs 16071.97 crore (net) in a single trading session on Wednesday, 20 August 2014.
PSU bank stocks gained for the second day in a row on reports the Finance Minister Arun Jaitley has approved a draft Cabinet note, which proposes to create a holding company structure for state-run banks towards meeting their long-term capital needs. Shares of private sector banks also gained.
Key indices extended initial gains and hit fresh intraday high in mid-morning trade, with 50-unit CNX Nifty scaling fresh record high on positive global cues.
Asian stocks rose after reports on US housing to manufacturing showed the world's largest economy is strengthening.
At 12:16 IST, the S&P BSE Sensex was up 96.32 points or 0.37% at 26,456.43. The index jumped 148.16 points at the day's high of 26,508.27 in mid-morning trade, its highest level since 19 August 2014. The index gained 59.42 points at the day's low of 26,419.53 in opening trade.
The CNX Nifty was up 13.50 points or 0.33% to 7,917.10. The index hit a high of 7,929.05 in intraday trade, a lifetime high for the index. The index hit a low of 7,903.60 in intraday trade.
The market breadth indicating the overall health of the market was positive. On BSE, 1,387 shares gained and 1,207 shares fell. A total of 108 shares were unchanged.
The BSE Mid-Cap index was up 31.39 points or 0.34% at 9,351.94. The BSE Small-Cap index was up 16.71 points or 0.16% at 10,315.21. Both these indices underperformed the Sensex.
PSU bank stocks gained for the second day in a row on reports the Finance Minister Arun Jaitley has approved a draft Cabinet note, which proposes to create a holding company structure for state-run banks towards meeting their long-term capital needs. Shares of private sector banks also gained. State Bank of India (SBI) (up 3.11%), Canara Bank (up 2.55%), Union Bank of India (up 4.16%), Indian Bank (up 2.22%), Bank of India (up 2.35%), Punjab National Bank (up 2.92%) Syndicate Bank (up 2.49%), Indian Overseas Bank (up 1.83%), Andhra Bank (up 1.93%), and Oriental Bank of Commerce (up 2.5%) gained.
As per reports, the finance ministry has approved draft Cabinet note, which proposes to create a holding company structure for state-run banks, which will consolidate the entire ownership of PSU banks into one company and will raise money in order to recapitalise various public sector banks.
Among private sector banks, ICICI Bank (up 0.24%), HDFC Bank (up 0.81%), IndusInd Bank (up 0.61%), Yes Bank (up 1.37%), Federal Bank (up 1.92%), Kotak Mahindra Bank (up 0.98%) and Axis Bank (up 1.1%), gained.
ONGC rose 1.29% on reports that a foreign brokerage has maintained buy on the stock stating that the company is a reform play and had maximum potential to gain.
Ranbaxy Laboratories fell 1.06% on reports the company may have to pay Rs 242 crore fine imposed by the State of Texas. According to reports, Ranbaxy has been in negotiation with the US state over settlement of this issue for quite some time now. While final details are awaited, reports said the fine could be broadly split into two components. One of this, about 38%, could relate to some additional dues that the state may have claimed on account of Ranbaxy's previous slippages from the US-prescribed manufacturing practices, which led to its coughing up $500 million as fine in the US in May last year. However, a second component of about 61% of the settlement sum could be flowing from an assessment by the US state, which shows that the drug maker has overcharged the state of Texas on one or more drugs under its public-funded Medicaid programme, reports added.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 412.77 crore on Thursday, 21 August 2014, as per provisional data from the stock exchanges.
Speculation of an upward revision of India's sovereign outlook by global rating agency S&P resurfaced after data on Thursday, 21 August 2014, showed foreign funds bought Indian bonds worth a staggering Rs 16071.97 crore (net) in a single trading session on Wednesday, 20 August 2014. This is the largest-ever single day purchase of Indian debt by foreign funds. S&P's current outlook on India is negative and the expectations are that it will be raised to stable as lower crude oil pries will help India in containing its fiscal deficit, current account deficit and fuel price inflation.
Meanwhile, the Reserve Bank of India (RBI) has tightened norms related to lending against shares. In a notification issued on Thursday, 21 August 2014, the RBI said that non-banking finance companies (NBFCs) with asset size of Rs 100 crore and above shall maintain loan to value (LTV) ratio of 50% with regard to lending against shares. RBI further said that lending against shares by NBFCs will be restricted to Group 1 securities as collateral for loans of value more than Rs 5 lakh. The RBI also said that all NBFCs with asset size of Rs 100 crore and above shall report on-line to stock exchanges, information on the shares pledged in their favour by borrowers for availing loans.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 60.43 compared with its close of 60.6725 on Thursday, 21 August 2014.
The Reserve Bank of India in its Annual Report for the year ended 30 June 2014 released after trading hours on Thursday, 21 August 2014, said that the recent decline in oil prices could partly offset the pressure from food prices. The central bank said that while the disinflationary momentum that set in since December 2013 has taken inflation to a lower trajectory, downside risks to growth and upside risks to inflation arise from the sub-normal monsoon and the geopolitical situation in the Middle East. Though the balance of risks around the medium-term inflation path, and especially the target of 6% CPI inflation by January 2016 are still to the upside, the RBI remains committed to supporting the disinflationary process, the RBI said. To secure a sustainable growth of at least 7% over the medium term, microeconomic policies that improve activity levels and productivity will be needed so that they can work in tandem with a supportive macroeconomic regime with a reasonably positive real interest rate, low inflation, moderate CAD and low fiscal deficit, the RBI said.
According to RBI, an increase in interest rates in the United States may trigger a reversal in carry trade flows to emerging market and developing economies (EMDEs) and trigger higher volatility in the foreign exchange, equity and bond markets in EMDEs.
Prime Minister Narendra Modi on Thursday, 21 August 2014, said India is urbanizing rapidly, and he sees this not as a challenge but as an opportunity for economic development. The Prime Minister was addressing a gathering in Nagpur after laying the foundation stone for Nagpur metro.
Asian stocks rose today, 22 August 2014, after reports on US housing to manufacturing showed the world's largest economy is strengthening. Key benchmark indices in Taiwan, Hong Kong, China, Singapore and South Korea were up 0.27% to 1.37%. Key benchmark indices in Japan and Indonesia were off 0.3% to 0.36%.
Trading in US index futures indicated that the Dow could gain 16 points at the opening bell on Friday, 22 August 2014. US stocks advanced Thursday, 21 August 2014, with the S&P 500 logging its fourth straight daily gain and closing at a record high after a flurry of encouraging economic reports.
A report in the US yesterday showed fewer Americans than forecast applied for unemployment benefits last week. Data yesterday also showed existing home sales rose last month to the most since September, while the Conference Board's gauge of the economic outlook for the next three to six months increased 0.9%. Separately, the Markit Economics preliminary index of US manufacturing in August jumped to the highest level since April 2010.
Federal Reserve Chairwoman Janet Yellen will give a speech today, 22 August 2014, at the annual Fed summit in Jackson Hole, Wyo. Yellen is reportedly expected to acknowledge during the conference that while economic data has generally been supportive, she remains concerned about slack in the labor market.
The minutes from the two-day meeting of the Federal Open Market Committee in late July released on 20 August 2014, showed some officials arguing the groundwork should be laid for raising interest rates sooner than expected. At that meeting, the Fed trimmed its monthly bond-buying program by an additional $10 billion. The US central bank has kept its benchmark rate at almost zero since December 2008.
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