A bout of volatility was witnessed as key benchmark indices weakened once again after trimming intraday losses in afternoon trade. The barometer index, the S&P BSE Sensex, was down 217.50 points or 0.88%, off 277.93 points from the day's high and up 77.05 points from the day's low. The market breadth indicating the overall health of the market was weak. The BSE Small-Cap index was off more than 1.4%. The BSE Mid-Cap index was off 1.4%.
IT stocks rose on renewed buying. Engineering and construction major L&T rose in volatile trade after the company said that its subsidiary L&T Special Steels and Heavy Forgings (LTSSHF) has entered into a technology transfer agreement with The Japan Steel Works (JSW) which covers transfer of critical technology for steel melting and heavy forgings made from ingots weighing 200 MT, for hydrocarbon, thermal power, steel and cement sectors. PSU OMCs declined as crude oil prices rose. Motherson Sumi Systems rose after the company signed an agreement to acquire the wiring harness business of Stoneridge Inc.
The Sensex slipped into the red after opening higher. Key benchmark indices extended initial losses and hit fresh intraday low in morning trade. A bout of volatility was witnessed as key benchmark indices trimmed intraday losses in mid-morning trade. Weakness continued on the bourses in early afternoon trade. A bout of volatility was witnessed as key benchmark indices weakened once again after trimming intraday losses in afternoon trade.
Foreign institutional investors (FIIs) sold shares worth a net Rs 84.13 crore on Monday, 26 May 2014, as per provisional data from the stock exchanges.
The market may remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month May 2014 series to June 2014 series. The near month May 2014 derivatives contract expire on Thursday, 29 May 2014.
At 13:15 IST, the S&P BSE Sensex was down 217.50 points or 0.88% to 24,499.38. The index declined 294.55 points at the day's low of 24,422.33 in mid-morning trade, its lowest level since 22 May 2014. The index rose 60.43 points at the day's high of 24,777.31 in early trade.
The CNX Nifty was down 61.05 points or 0.83% to 7,298. The index hit a low of 7,274.75 in intraday trade. The index hit a high of 7,372.95 in intraday trade.
The BSE Mid-Cap index was off 118.50 points or 1.4% at 8,366.56. The BSE Small-Cap index was off 127.60 points or 1.43% at 8,796.05. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was weak. On BSE, 1,782 shares fell and 979 shares rose. A total of 98 shares were unchanged.
The total turnover on BSE amounted to Rs 2750 crore by 13:15 IST.
Among the 30-share Sensex pack, 20 stocks fell and rest of them rose. GAIL (India) (down 5.77%), Bharat Heavy Electricals (Bhel) (down 4.93%) and Mahindra & Mahindra (M&M) (down 3.39%) edged lower from the Sensex pack.
Hindalco Industries (up 1.66%), Bajaj Auto (up 1.45%) and HDFC Bank (up 1.01%) edged higher from the Sensex pack.
IT stocks were in demand on renewed buying. HCL Technologies (up 0.13%), Wipro (up 0.85%), Infosys (up 1.72%), and Tech Mahindra (up 0.69%) edged higher.
TCS lost 1.33% to Rs 2,125 in volatile trade. The stock hit high of Rs 2,183.70 and low of Rs 2,122.30 so far during the day.
Engineering and construction major L&T rose 1.02% to Rs 1,560. The stock was volatile. The stock hit high of Rs 1,576 and low Rs 1,522.80 so far during the day. L&T during trading hours today, 27 May 2014, said that its subsidiary L&T Special Steels and Heavy Forgings (LTSSHF) has entered into a five-year technology transfer agreement with The Japan Steel Works (JSW) which covers transfer of critical technology for steel melting and heavy forgings made from ingots weighing 200 MT, for hydrocarbon, thermal power, steel and cement sectors.
PSU OMCs declined as crude oil prices rose. BPCL (down 0.23%), HPCL (down 2.42%) and Indian Oil Corporation (IOCL) (down 3.09%) edged lower.
Brent crude rebounded from the lowest price in four days amid speculation that renewed tension between Ukraine and Russia may threaten Europe's energy supplies. Brent for July settlement was up 8 cents at $110.40 a barrel on the London-based ICE Futures Europe exchange.
Higher crude oil prices could increase under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals. The government has already freed pricing of petrol.
Motherson Sumi Systems rose 1.75% after the company signed an agreement to acquire the wiring harness business of Stoneridge Inc. The announcement was made during market hours today, 27 May 2014
Motherson Sumi Systems (MSSL) signed an agreement to acquire the wiring harness business of Stoneridge Inc. through asset purchase at transaction value of $65.7 million (debt free and cash free). This acquisition is expected to close in the third quarter of 2014, subject to customary closing conditions. The acquired business has a turnover of about $300 million. The transaction includes six manufacturing facilities located in Portland, Indiana; Chihuahua, Mexico; Saltillo Mexico; and Monclova, Mexico; as well as an engineering and administrative center located in Warren, Ohio. This is by far the largest acquisition for the core business of wiring harnesses, MSSL said in a press release.
MSSL said that the acquired business has a history of 48 years of wiring harness manufacturing and is a well-established name in the markets it serves. It supplies principally to the commercial vehicles, agricultural equipment, material handling equipment and off-highway vehicle segments.
This acquisition further strengthens MSSL presence in North America where it has in recent past, established wiring harness operations, MSSL said.
On the macro front, India's current account deficit (CAD) narrowed sharply to $1.2 billion (0.2% of GDP) in Q4 March 2014, from $18.1 billion (3.6% of GDP) in Q4 March 2013, which was also lower than $4.2 billion (0.9% of GDP) in Q3 December 2013. The lower CAD was primarily on account of a decline in the trade deficit as decline in imports was sharper than that in exports.
On a BoP basis, merchandise exports declined by 1.3% to $ 83.7 billion in Q4 March 2014 as against an increase of 5.9% in Q4 March 2013.
Reserve Bank of India Governor Raghuram Rajan today, 27 May 2014, said that fighting inflation would continue to be a top priority, although the central bank will also aim to strike a balance between promoting economic growth and containing inflation. Rajan was speaking to reporters after meeting new Finance Minister Arun Jaitley in the capital. "It's absolutely a task that the government and the RBI are engaged with," Rajan said when asked if curbing inflation was going to be one of the biggest tasks for the government and the RBI. But Rajan also added: "RBI has always maintained the balance between growth and inflation."
After taking charge of the Finance Ministry, Jaitley said at a news conference today, 27 May 2014, that a balancing act will have to be done to restore growth while curbing inflation and taking steps toward fiscal consolidation. "I think political change itself sends strong signals to the global community as also to domestic investors. Over the next few months by expediting decision making processes, I'm sure we'll be able to build on that," Jaitley said.
Narendra Modi was sworn in India's 15th Prime Minister on Monday, 26 May 2014. The Union Council of Ministers includes Rajnath Singh as Home Minister and Sushma Swaraj as Minister for External Affairs. Arun Jaitley was allocated Finance Ministry, corporate affairs and will also have additional charge of Defence. Nitin Gadkari will be a minister of road transport, highways and shipping. Ravi Shankar Prasad will take charge of Communications and Information Technology, Law and Justice Ministry. Venkaiah Naidu takes charge as minister of Urban Development, Housing and Urban Poverty Alleviation and Parliamentary Affairs. Shri D.V. Sadananda Gowda was allotted Ministry of railways. Uma Bharati was allotted Water Resources, River Development and Ganga Rejuvenation Ministry, Ashok Gajapathi Raju Pusapati was allotted Civil Aviation Ministry, Ananthkumar was allotted Chemicals and Fertilizers. Gopinath Munde was allotted Rural Development, Panchayati Raj and Drinking Water and Sanitation Ministry. Ramvilas Paswan was allotted Consumer Affairs, Food and Public Distribution Ministry. Kalraj Mishra was allotted Micro, Small and Medium Enterprises. Maneka Gandhi was allotted Women and Child Development Ministry. Anant Geete was allotted Heavy Industries and Public Enterprises Ministry. Harsimrat Kaur Badal was allotted Food Processing Industries Ministry. Dharmendra Pradhan has got Petroleum and Natural Gas ministry with independent charge.
Investors are expecting measures from the new government to revive the Indian economy. India's GDP growth slowed sharply at 4.7% in Q3 December 2013. Investors expect the new government to accelerate policy reforms and overhaul the country's poor infrastructure.
Modi is favored by business leaders because of his record in Gujarat, which he's led since 2001. With Modi at the helm of affairs, Gujarat's economy expanded by 10.1% a year, on average and adjusting for inflation, from 2001 and 2012, compared with 7.7% growth a year for India's economy as a whole.
Modi has pledged to fight inflation by cracking down on food hoarders, creating a national agriculture market and improving rural infrastructure.
The first budget of the new government is expected by July 2014. An interim budget was presented by P. Chidambaram in February this year. Essentially, in the nature of a vote on account, the interim budget was intended to get Parliament approval for expenditure to be incurred during the first few months of fiscal year 2014-15 due to Lok Sabha elections.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June 2014. The RBI left its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review on 1 April 2014, as consumer-price inflation eased to a two-year low and as the rupee firmed up against the dollar.
European stocks edged higher on Tuesday, 27 May 2014. Key benchmark indices in UK and Germany were up 0.03% to 0.36%. In France, the CAC 40 index was off 0.25%.
French consumer confidence stagnated at a historically low level in May, a survey from statistics agency INSEE showed on Tuesday. The monthly survey recorded consumer confidence of 85 in May, unchanged from 85 in April. That reading is well below the long-term average of 100.
Asian stocks edged lower in choppy trade on Tuesday, 27 May 2014. Key benchmark indices in China, Singapore, Hong Kong and South Korea were off 0.18% to 0.63%. Key benchmark indices in and Taiwan and Japan were up 0.21% to 0.23%.
Trading in US index futures indicated that the Dow could gain 43 points at the opening bell on Tuesday, 27 May 2014. US stock market was closed on Monday, 26 May 2014, on account of Memorial Day.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 17-18 June 2014. The Fed on 30 April 2014 said after a monetary policy review that it will keep the benchmark interest-rate target at almost zero for a "considerable time" after its bond-buying program ends. The FOMC also reduced monthly debt purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in "measured steps" if the economy continues to improve.
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