Volatility ruled the roost as key benchmark indices trimmed losses in mid-morning trade after the Reserve Bank of India (RBI) said after a monetary policy review that if the current inflation momentum and changes in inflationary expectations continue, and fiscal developments are encouraging, a change in the monetary policy stance is likely early next year, including outside the policy review cycle. The RBI kept its main lending rate viz. the repo rate unchanged at 8% and also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL). The barometer index, the S&P BSE Sensex, was currently off 45.03 points or 0.16% at 28,514.59. The market breadth indicating the overall health of the market was negative.
Interest rate sensitive bank and realty stocks declined in volatile trade as the Reserve Bank of India kept its main lending rate viz. the repo rate unchanged at 8% after the monetary policy review.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 12.36 crore yesterday, 1 December 2014, as per provisional data.
In overseas markets, Asian stocks rose as a rebound in the crude oil price gave resource-related sectors a breather. US stocks fell yesterday, 1 December 2014, as disappointing economic data from China and Europe triggered a bout of selling in global equity markets.
In the foreign exchange market, the rupee strengthened past 62 against the dollar.
Brent crude oil futures dropped as investors weighed OPEC's decision to let the market curb a global supply glut.
At 11:18 IST, the S&P BSE Sensex was down 45.03 points or 0.16% at 28,514.59. The index lost 173.16 points at the day's low of 28,386.46 in mid-morning trade, its lowest level since 27 November 2014. The index fell 17.66 points at the day's high of 28,541.96 in early trade.
The CNX Nifty was down 13.50 points or 0.16% at 8,542.40. The index hit a low of 8,504.65 in intraday trade, its lowest level since 27 November 2014. The index hit a high of 8,548.35 in intraday trade.
The market breadth indicating the overall health of the market was negative. On BSE, 1,212 shares declined and 1,054 shares gained. A total of 105 shares were unchanged.
The BSE Mid-Cap index was up 2.57 points or 0.03% at 10,265.47. The BSE Small-Cap index was off 9.45 points or 0.08% at 11,180.25. Both these indices outperformed the Sensex
The total turnover on BSE amounted to Rs 1168 crore by 11:15 IST, compared to Rs 629 crore by 10:15 IST.
Bank stocks declined in volatile trade as the Reserve Bank of India kept its main lending rate viz. the repo rate unchanged at 8% after the monetary policy review. Among private bank stocks, HDFC Bank (down 0.36%), IndusInd Bank (down 1.36%), Axis Bank (down 0.4%), Yes Bank (down 1.55%), and ICICI Bank (down 0.35%) declined. Kotak Mahindra Bank (up 0.68%) and ING Vysya Bank (up %) rose.
Among PSU bank stocks, State Bank of India (SBI) (down 1.24%), Andhra Bank (down 0.53%), Punjab National Bank (down 0.2%), Bank of Baroda (down 0.73%), Canara Bank (down 0.81%), Bank of India (down 0.49%) and Union Bank of India (down 1.45%) dropped. The Department of Financial Services, Ministry of Finance, Government of India yesterday, 1 December 2014, invited suggestions from general public on various parameters as to how to improve performance of public sector banks.
The RBI said that with deposit mobilisation outpacing credit growth and currency demand remaining subdued in relation to past trends, Indian banks are flush with funds, leading a number of banks to reduce deposit rates. Weak domestic demand and the rapid pace of recent disinflation are factors supporting monetary accommodation, the RBI said in its monetary policy statement. The central bank said that the weak transmission by commercial banks of the recent fall in money market rates into lending rates suggests monetary policy shifts will primarily have signaling effects for a while. The RBI said that slow bank credit growth is mirrored by increasing reliance of large corporations on commercial paper and domestic as well as external public issuances.
Realty stocks declined in volatile trade as the Reserve Bank of India kept its main lending rate viz. the repo rate unchanged at 8% after the monetary policy review. Purchases of both residential and commercial property are largely driven by finance. DLF (down 1.04%), Housing Development and Infrastructure (down 0.29%), D B Realty (down 0.23%), Godrej Properties (down 0.77%), Oberoi Realty (down 1.45%) declined. Indiabulls Real Estate (up 1.09%) and Unitech (up 0.27%) rose.
Reliance Industries (RIL) shed 0.18% to Rs 959.90. The stock hit high of Rs 969 and low of Rs 958.35 so far during the day. In reply to news reports titled RIL may pull out of Leela IT park deal, RIL during market hours today, 2 December 2014, clarified that the company has not issued any notice for cancellation of the transaction.
In the foreign exchange market, the rupee strengthened past 62 against the dollar. The partially convertible rupee was hovering at 61.98, compared with its close of 62.025 during the previous trading session.
Brent crude slipped, giving up some of the gains seen yesterday, 1 December 2014 when prices rallied for the first time in six sessions staging a recovery after touching five-year lows. Brent for January settlement was off 45 cents a barrel at $72.09 a barrel. The contract had gained $2.39 a barrel to settle at $72.54 yesterday, 1 December 2014
The Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 8% and also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL) after a monetary policy review today, 2 December 2014. RBI Governor Dr. Raghuram Rajan said in a statement that there is still some uncertainty about the evolution of base effects in inflation, the strength of the on-going disinflationary impulses, the pace of change of the public's inflationary expectations, as well as the success of the government's efforts to hit deficit targets. A change in the monetary policy stance at the current juncture is premature, Rajan said. However, if the current inflation momentum and changes in inflationary expectations continue, and fiscal developments are encouraging, a change in the monetary policy stance is likely early next year, including outside the policy review cycle, Rajan said.
The RBI has revised downwards the the central forecast for CPI inflation to 6 per cent for March 2015. The central bank said that the risks to the January 2016 target of 6% CPI inflation appear evenly balanced under the current policy stance.
A rise in investment is critical for a sustained pick-up in overall economic activity, the RBI said. A durable revival of investment demand continues to be held back by infrastructural constraints and lack of assured supply of key inputs, in particular coal, power, land and minerals. The success of ongoing government actions in these areas will be key to reviving growth and offsetting downside risks emanating from agriculture - in view of weaker-than-expected rabi sowing - and exports - given the sluggishness in external demand. The RBI has kept unchanged its central estimate of projected GDP growth for 2014-15 at 5.5% and it expects a gradual pick-up in momentum in GDP growth in 2015-16 on the assumption of a normal monsoon and no adverse supply/financial shocks.
The fiscal outlook should brighten because of the fall in crude prices, but weak tax revenue growth and the slow pace of disinvestment suggest some uncertainty about the likely achievement of fiscal targets, and the quality of eventual fiscal adjustment. The government, however, appears determined to stay on course, Rajaj said.
The HSBC India Services PMI for November 2014 is due tomorrow, 3 December 2014. Adjusted for seasonal factors, the headline HSBC India Services PMI Business Activity Index -- a single question tracking changes in activity at Indian services companies on a month-by-month basis -- fell to 50 in October, from 51.6 in September.
Asian stocks rose today, 2 December 2014, as a rebound in the crude oil price gave resource-related sectors a breather. Key benchmark indices in China, Hong Kong, Japan, Indonesia and Singapore rose by 0.25% to 1.39%. Key benchmark indices in Taiwan and South Korea fell by 0.08% to 0.88%.
Trading in US index futures indicated that the Dow could rise 18 points at the opening bell today, 2 December 2014. US stocks fell on Monday, 1 December 2014 with the S&P 500 suffering its biggest one-day drop in more than a month, as economic data indicated weakness across the globe.
In economic data, the Institute for Supply Management said its US manufacturing index edged down to 58.7% in November from 59% in October. A number above 50% signals expansion and the latest reading kept the ISM index near a three-year high. A separate report on Monday, 1 December 2014 by the research firm Markit said that purchasing managers index for November showed a reading of 54.8, down from 55.9 in October. That marks the lowest reading in ten months. US retailers reported sluggish Black Friday spending, with sales falling 11% from the same period last year, according to the National Retail Federation (NRF). US consumers spent on average $380.95 per person, down 6.4% from a year ago. Overall, total holiday weekend sales were estimated to be $50.9 billion.
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