A range bound movement was witnessed as key benchmark indices retained positive zone in mid-morning trade. The barometer index, the S&P BSE Sensex, was currently up 147.31 points or 0.52% at 28,409.32. The market breadth indicating the overall health of the market was strong.
Banks stocks rose on renewed buying. Sesa Sterlite rose on reports that the company expects to restart iron ore mining in Goa within two weeks.
Earlier the Sensex hit its highest level in more than six weeks and the 50-unit CNX Nifty hit its highest level in almost 7 weeks in mid-morning trade as these two benchmark indices extended their initial gains.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 433.72 crore yesterday, 19 January 2015, as per provisional data.
In the foreign exchange market, the rupee edged lower against the dollar.
Brent crude futures edged lower as China's economic growth failed to spur confidence demand will be enough to eliminate a global supply glut. Deregulation of diesel price announced by the Indian government in October 2014 and a sharp decline in global crude oil prices over the past few months will help reduce the government's fuel subsidy burden and help contain its fiscal deficit. The steep slide in global crude oil prices will also help India in containing its current account deficit and fuel price inflation. India imports 80% of its crude oil requirement. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.
The Indian government has used the steep fall in global crude oil prices to raise excise duty on petrol and diesel four times since November last year which will help the government raise recourses.
In overseas markets, Asian stocks rose after the latest data showed China's GDP grew 7.3% in Q4 December 2014, a tad higher than market expectaions.
At 11:20 IST, the S&P BSE Sensex was up 147.31 points or 0.52% at 28,409.32. The index jumped 178.09 points at the day's high of 28,440.10 in mid-morning trade, its highest level since 8 December 2014. The index rose 62.84 points at the day's low of 28,324.85 in opening trade.
The CNX Nifty was up 42.25 points or 0.49% at 8,592.95. The index hit a high of 8,605.40 in intraday trade, its highest level since 4 December 2014. The index hit a low of 8,574.50 in intraday trade.
The BSE Mid-Cap index was up 84.22 points or 0.79% at 10,765.24. The BSE Small-Cap index was up 100.37 points or 0.88% at 11,500.23. Both these indices outperformed the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 1,504 shares advanced and 926 shares declined. A total of 121 shares were unchanged.
Banking stocks rose after the Reserve Bank of India (RBI) yesterday, 19 January 2015, said that it has decided to allow commercial banks to review the base rate methodology after three years from date of its finalization instead of the current periodicity of five years. Accordingly, banks may change their base rate methodology after completion of prescribed period with the approval of their Board of Directors/Asset Liability Management Committee (ALCO), the RBI said in a notification issued to commercial banks. Banks will, however, not be allowed to change their methodology during the review cycle.
The RBI further said that for the purpose of computing the base rate, commercial banks will have the freedom to calculate cost of funds either on the basis of average cost of funds or on marginal cost of funds or any other methodology in vogue, which is reasonable and transparent provided it is consistent and made available for supervisory review/scrutiny as and when required, the RBI said.
RBI also said that banks should have a board approved policy delineating the components of spread charged to a customer. It should be ensured that any price differentiation is consistent with bank's credit pricing policy, the RBI said. The central bank further said that a bank's internal pricing policy must spell out the rationale for, and range of, the spread in the case of a given category of borrower, as also, the delegation of powers in respect of loan pricing.
RBI further said that the spread charged to an existing borrower should not be increased except on account of deterioration in the credit risk profile of the customer or change in the tenor premium. Any such decision regarding change in spread on account of change in credit risk profile should be supported by a full-fledged risk profile review of the customer, the RBI said.
Among public sector banks, Union Bank of India (up 2.19%), Syndicate Bank (up 1.99%), Allahabad Bank (up 1.75%), State Bank of India (up 1.63%), Vijaya Bank (up 1.50%), Central Bank (up 1.47%), Punjab and Sind Bank (up 1.31%), IDBI Bank (up 1.26%), Punjab National Bank (up 1.16%), Canara Bank (up 1.14%), Bank of India (up 1%), UCO Bank (up 0.98%), Andhra Bank (up 0.91%), Bank of Baroda (up 0.91%), Corporation Bank (up 0.85%), Dena Bank (up 0.84%), Indian Bank (up 0.59%), United Bank of India (up 0.59%) and Bank of Maharashtra (up 0.57%), edged higher.
Among private sector banks, Axis Bank (up 1.68%), City Union Bank (up 1.28%), Yes Bank (up 1.10%), HDFC Bank (up 0.78%), ICICI Bank (up 0.50%), Kotak Mahindra Bank (up 0.43%) and ING Vysya Bank (up 0.25%), edged higher. IndusInd Bank (down 0.14%) and Federal Bank (down 0.61%), edged lower.
Sesa Sterlite rose 1.99%. According to reports, the company expects to restart iron mining in Goa within two weeks as it waits for environment clearance and clarity on dumping waste outside the lease area. The Goa state government last week revoked its 2012 order that had halted the over 60-year-old-mining industry in the state. The new order will pave the way for the resumption of mining activities in Goa, pending the lifting of the ban imposed by the Ministry of Environment and Forests, according to media reports.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.855, compared with its close of 61.705 during the previous trading session.
Brent crude futures edged lower as China's economic growth failed to spur confidence demand will be enough to eliminate a global supply glut. Brent for March settlement was off 4 cents cent at $48.80 a barrel. The contract declined $1.33 a barrel or 2.65% to settle at $48.84 a barrel in the previous trading session.
Meanwhile, the International Monetary Fund (IMF) has downgraded global growth outlook for this year and the next as it downgraded its outlook for more than a dozen of the world's largest economies. The IMF said global growth would be 0.3 percentage point lower this year and next than it had previously expected. It now expects the world economy to expand 3.5% this year and 3.7% in 2016. Sliding oil prices will give global growth a brief jolt, but the benefits won't be strong enough to keep the world economy out of a deepening long-term rut, the IMF said.
Asian markets rose today, 20 January 2015, after China reported its economy had not slowed as far as many had feared, a rare glint of brightness amid gloom over the global outlook. Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan were up by 0.39% to 1.80%. Indonesia's Jakarta Composite was off 0.50%.
China's National Bureau of Statistics said the economy grew 7.4% last year and 7.3% in the October-December 2014 quarter. Beijing had targeted 7.5% growth for last year.
Trading in US index futures indicated that the Dow could advance 38 points at the opening bell today, 20 January 2015. The US stock market was closed yesterday, 19 January 2015, for Martin Luther King, Jr. Day holiday.
In Europe, the governing council of the European Central Bank (ECB) is scheduled to undertake monetary policy review on Thursday, 22 January 2015. The ECB may introduce a large-scale bond-buying program on 22 January 2015.
Meanwhile, uncertainties over the status of Greece including its possible exit from the eurozone are likely to persist until the early election in the country on 25 January 2015. Greece is set to hold snap elections on 25 January 2015 after it failed to elect a new president in a third round of voting late last year. The Greek leftist opposition party Syriza leads opinion polls ahead of national elections on 25 January 2015. Syriza has demanded debt relief from the eurozone and promised to roll back the austerity and reform measures that the country has undertaken in exchange for the international bailout that the government negotiated in 2012.
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