Firmness continued on the bourses in mid-morning trade. The barometer index, the S&P BSE Sensex, was currently up 143.25 points or 0.54% at 26,573.10. The market breadth indicating the overall health of the market was strong. The BSE Mid-Cap index was up 1.03%, outperforming the Sensex. Indian stocks rose on speculation interest rates will be cut as lower oil prices cool inflation. Meanwhile, the Narendra Modi government yesterday, 20 October 2014, announced that it will auction 74 coal-mining licenses to private companies in the next three to four months after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993.
The market sentiment was upbeat after provisional data released by the stock exchanges after trading hours yesterday, 20 October 2014, showed that foreign portfolio investors (FPIs) bought shares worth a net Rs 1040.08 crore on that day.
Meanwhile, investors are watching political developments in Maharashtra as the BJP is set to form the government in the state after the party emerged as the single largest party after assembly election in the state. The BJP won 122 seats in the 288-member assembly, falling few seats short of the 145 seats required for a simple majority. Its ally Rashtriya Samaj Paksha won one.
Bank stocks rose for the second day in a row as a sharp cut in diesel price on Saturday, 18 October 2014, is expected to bring down freight rates which in turn could reduce consumer price inflation. Realty shares were in demand.
Earlier, key indices had extended initial gains in morning trade that took the Sensex and the 50-unit CNX Nifty to their highest level in almost two weeks.
In the foreign exchange market, the rupee edged higher against the dollar.
Brent crude prices edged higher after a mixed bag of Chinese economic data.
At 11:20 IST, the S&P BSE Sensex was up 143.25 points or 0.54% at 26,573.10. The index jumped 185.56 points at the day's high of 26,615.41 in morning trade, its highest level since 9 October 2014. The index rose 43.11 points at the day's low of 26,472.96 in early trade.
The CNX Nifty was up 44.15 points or 0.56% at 7,923.55. The index hit a high of 7,934.50 in intraday trade, its highest level since 9 October 2014. The index hit a low of 7,889.85 in intraday trade.
The BSE Mid-Cap index was up 97.02 points or 1.03% at 9,473.10. The BSE Small-Cap index was up 77.15 points or 0.74% at 10,440.60. Both theses indices outperformed the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 1,368 shares rose while 806 shares declined. A total of 76 shares were unchanged.
Among the 30 Sensex shares, 21 rose and the remaining shares fell.
Coal India (down 2.11%), ONGC (down 1.61%), Sun Pharmaceuticals Industries (down 0.88%), Mahindra & Mahindra (down 0.87%), Dr Reddy's Laboratories (down 0.7%), ITC (down 0.54%), Infosys (down 0.23%) and Reliance Industries (down 0.16%) edged lower from the Sensex pack.
Bank stocks rose for the second day in a row as a sharp cut in diesel price on Saturday, 18 October 2014, is expected to bring down freight rates which in turn could reduce consumer price inflation. Lower consumer price inflation could provide room for the Reserve Bank of India (RBI) to cut interest rates.
Soon after the government on Saturday, 18 October 2014, announced deregulation of diesel prices, PSU OMCs cut diesel prices. Indian Oil Corporation (IOCL) on Saturday, 18 October 2014, said it has cut diesel price by Rs 3.37/litre (including VAT) in Delhi with corresponding decrease in other price in other states from the midnight of 18/19 October 2014. The movement of prices in international oil market and rupee dollar exchange rate shall continue to be closely monitored and developing trends of the market will be reflected in future price changes in diesel prices, IOCL said.
Among state-run banks, IDBI Bank (up 2.98%), Bank of India (up 2.44%), Canara Bank (up 2%), Punjab National Bank (up 1.86%), Union Bank of India (up 1.71%), Bank of Baroda (up 1.62%) and State Bank of India (up 1.39%) edged higher.
Among private sector companies, Federal Bank (up 1.73%), ICICI Bank (up 1.73%), Yes Bank (up 1.65%), Axis Bank (up 1.51%), IndusInd Bank (up 1.17%), HDFC Bank (up 1.02%) and Kotak Mahindra Bank (up 0.64%) edged higher.
The Reserve Bank of India (RBI) is scheduled to undertake its fifth bi-monthly monetary policy review on 2 December 2014. The annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India eased to 6.46% in September 2014, from 7.73% in August 2014.
Realty shares were also in demand on rate-cut hopes. Sobha Developers (up 4.24%), Oberoi Realty (up 3.62%), Godrej Properties (up 3.41%), Phoenix Mills (up 3.09%), Anant Raj (up 1.93%), Indiabulls Real Estate (up 1.78%), Unitech (up 1.42%), Housing Development & Infrastructure (HDIL) (up 1.31%), (up 1.31%), Peninsula Land (up 1.07%), Parsvnath Developers (up 1.01%), D B Realty (up 0.66%) and DLF (up 0.26%), edged higher.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 61.295, compared with its close of 61.365 during the previous trading session.
Brent crude prices edged higher after a mixed bag of Chinese economic data. Brent for December settlement was up 19 cents at $85.59 a barrel. The contract had lost 76 cents or 0.9% to settle at $85.40 a barrel yesterday, 20 October 2014.
Ashima Goyal, a member of the Reserve Bank of India's (RBI) technical advisory committee reportedly said yesterday, 20 October 2014, that the Reserve Bank of India may consider easing monetary policy as early as March after global crude prices fell to a four-year low this month. Real interest rates are becoming more and more positive, which would be severely disinflationary, and that means the RBI has to cut rates, Goyal said. The RBI's technical advisory committee makes policy recommendations to RBI Governor Raghuram Rajan.
Meanwhile, the Narendra Modi government yesterday, 20 October 2014, announced that it will auction 74 coal-mining licenses to private companies in the next three to four months after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993. The licenses will be auctioned to private-sector companies only for captive use. Finance Minister Arun Jaitley said allowing private-sector companies to mine coal to sell to others is something the government may consider in the future.
Mr. Jaitley said state-run, coal-consuming companies that want to mine for their own use won't have to compete against the private sector for coal licenses, especially in key industries such as power. The government will allocate government companies licenses without an auction.
Asian stocks edged lower today, 21 October 2014, after a mixed bag of Chinese economic data, including the slowest GDP growth in five years, and a drop in housing prices, but a better-than-expected gain for September industrial production. Key benchmark indices in China, Indonesia, Hong Kong, Taiwan, Japan and South Korea were off 0.11% to 2%. Singapore's Straits Times was up 0.2%.
China's economy in the third quarter grew at its slowest pace in five years as it battles a slumping real-estate market and weak domestic demand and industrial production. China posted a 7.3% year-over-year quarterly growth rate, according to the National Bureau of Statistics on Tuesday. That marked the lowest level since the first quarter of 2009, in the midst of the global financial crisis, when growth fell to 6.6%. The 7.3% third-quarter growth rate was down from 7.5% in the second quarter.
Value-added industrial output in China rose by a larger-than-expected 8% in September from a year earlier, accelerating from a 6.9% year-over-year increase in August, the statistics bureau said. Industrial production also increased 0.91% in September from August, when it rose 0.2% from the preceding month, it said.
Trading in US index futures indicated that the Dow could fall 60 points at the opening bell today, 21 October 2014. US equity investors began the week on an optimistic, albeit cautious, note on Monday, 20 October 2014, with gains in broader markets led by defensive sectors such as consumer staples and utilities.
The Federal Open Market Committee (FOMC) next undertakes a monetary policy review at a two-day meeting on 28-29 October 2014.
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