Firmness continued on the bourses in early afternoon trade as Lok Sabha election trends showed that Narendra Modi was on course to wrest the top job in the country as a saffron wave swept large swathes of India and leaving Congress in tatters. The barometer index, the S&P BSE Sensex, was up 852.29 points or 3.57%, off close to 620 points from the day's high and up about 485 points from the day's low. Trends of Lok Sabha elections showed that Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) is set to form the next government at the Centre. The NDA was leading in 323 seats and was declared winner in one seat out of 541 seats for which trends and results were available so far. The Congress-led United Progressive Alliance (UPA) was leading in 74 seats. There are a total 543 Lok Sabha seats. A party or a pre-poll alliance will need 272 MPs to form government at the Centre, which is a simple majority in 543-member Lok Sabha. Investors are hoping that the BJP-led government will be better at getting things done and more business-friendly than the Congress-party-led coalition government which was in power during the past ten years. The BSE Mid-Cap index was up almost 2.5%. The BSE Small-Cap index was up more than 1%.
Shares of power finance firms surged. IT stocks edged lower on firm rupee. Cement stocks rallied with Ambuja Cements and UltraTech Cement hitting record high and ACC hitting 52-week high. Index heavyweight Reliance Industries hit 52-week high.
The market breadth, indicating the overall health of the market was negative.
The market surged in early trade after the early trends of Lok Sabha elections showed that Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) was leading in the elections. The Sensex and the 50-unit CNX Nifty, both, hit record high. A bout of volatility was witnessed as key benchmark indices trimmed gains after extending initial strong gains in morning trade. The Sensex further trimmed intraday gains in mid-morning trade. Firmness continued on the bourses in early afternoon trade as Lok Sabha election trends showed that Narendra Modi was on course to wrest the top job in the country as a saffron wave swept large swathes of India and leaving Congress in tatters.
The counting of votes began at 8:00 IST today, 16 May 2014, and results are expected by today itself.
If the NDA comes to power, Narendra Modi will become India's next Prime Minister. Modi is perceived as being more business-friendly and decisive by the business community. As chief minister for the fast-growing state of Gujarat, Modi has built a reputation for getting things done. While campaigning for the Lok Sabha elections, Modi has pledged to reinvigorate the country's manufacturing sector, create more jobs and overhaul the country's inadequate infrastructure. Investors are hoping that the BJP-led government will be better at getting things done and more business-friendly than the Congress-party-led coalition government which was in power during the past ten years.
Investors are expecting measures for revival of the economy, business-friendly policies and good governance from the new government that comes to power after the elections. Investors expect policy measures from the new government to put India on a high-growth path on a sustainable basis.
The BJP in its Lok Sabha polls manifesto has promised more business-friendly policies if the party comes to power after elections. The BJP has said that measures for the revival of the economy are its priority if the party comes to power after elections. India's GDP growth has slowed to a decade low of below 5%. The GDP grew 4.7% in Q3 December 2013.
The market sentiment was boosted by data showing that foreign funds made purchases of Indian stocks on Thursday, 15 May 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 934.94 crore on Thursday, 15 May 2014, as per provisional data from the stock exchanges.
At 12:20 IST, the S&P BSE Sensex was up 852.29 points or 3.57% to 24,757.89. The index jumped 1,470.03 points at the day's high of 25,375.63 in morning trade, a record high for the index. The index gained 365.94 points at the day's low of 24,271.54 in opening trade.
The CNX Nifty was up 265.35 points or 3.73% to 7,388.50. The index hit a high of 7,563.50 in intraday trade, a record high for the index. The index hit a low of 7,264.40 in intraday trade.
The BSE Mid-Cap index was up 184.88 points or 2.42% at 7,824.98. The BSE Small-Cap index was up 97.93 points or 1.26% at 7,889.05. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market was negative. On BSE, 1,325 shares fell and 1,211 shares rose. A total of 124 shares were unchanged.
Among the 30-share Sensex pack, 26 stocks gained and only four fell. ICICI Bank (up 7.67%), Sesa Sterlite (up 10.93%) and Axis Bank (up 6.98%) edged higher from the Sensex pack.
Shares of power finance firms surged. Power Finance Corporation (PFC) (up 13.93%) and Rural Electrification Corporation (REC) (up 14.63%) jumped.
IT stocks edged lower on firm rupee. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports. TCS (down 0.54%), Infosys (down 1.86%), Tech Mahindra (down 2.62%) and Wipro (down 1.2%) declined. HCL Technologies rose 0.97%.
Cement stocks rallied. ACC rose 4.87% to Rs 1,443 after hitting 52-week high of Rs 1,455.40 in intraday trade.
Ambuja Cements rose 5.7% to Rs 231.70 after hitting record high of Rs 241 in intraday trade.
UltraTech Cement jumped 6.77% to Rs 2,381.15 after hitting record high of Rs 2,465 in intraday trade.
Index heavyweight Reliance Industries (RIL) jumped 5.11% to Rs 1,107. The stock hit 52-week high of Rs 1,142.50. The company said after market hours on Thursday, 15 May 2014, Reliance Jio Infocomm (Reliance Jio), a subsidiary of RIL and the first telecom operator to hold a Pan-India Unified License, and Tower Vision India, an independent tower company in India, have entered into a MSA (Master Service Agreement) for tower sharing. Under the agreement, Reliance Jio would utilise the telecom tower infrastructure of Tower Vision to launch its services across the country. Tower Vision has a portfolio of 8,400 towers in India.
Separately, RIL clarified after market hours on Thursday, 15 May 2014 that it appears that ONGC has filed certain proceedings in relation to issues pertaining to development and production of natural gas from KG basin before the Delhi High Court. All petroleum operations undertaken by RIL have been in accordance with the Production Sharing Contract and the Development Plan approved by Management Committee which has Government representatives with veto powers. All well locations and well profiles have been specifically reviewed and approved by the Management Committee.
RIL has been constructively engaged with ONGC in sharing of data and finding a suitable resolution through appointment of an independent Third Party expert - the most recent being as late as on 9 May 2014. ONGC and RIL have jointly signed Minutes of a Meeting to record such an understanding. Any inference prior to such assessment is mere speculation and commencement of legal proceedings at this juncture is unwarranted. Any claims of any impropriety on the part of RIL, if these have been made, are baseless and RIL will take appropriate steps to safeguards its position and rights.
Shares of RIL turned ex-dividend today, 16 May 2014, for dividend of Rs 9.50 per share for the year ended 31 March 2014.
In the foreign exchange market, the rupee edged higher against the dollar after the trends of Lok Sabha elections showed that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) is set to form the next government at Centre. The partially convertible rupee was hovering at 58.88, compared with its close of 59.29/30 on Thursday, 15 May 2014.
Indian government bond prices edged higher after the trends of Lok Sabha elections showed that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) is set to form the next government at Centre. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.719%, lower than its close of 8.781% on Thursday, 15 May 2014. Bond yields and bond prices move in opposite direction.
The India Meteorological Department (IMD) on Thursday, 15 May 2014, said that the southwest monsoon is likely to set over Kerala on 5 June 2014, with a model error of plus/minus 4 days. The normal date of onset of the southwest monsoon in India is 1 June. Advance of southwest monsoon over Andaman Sea normally takes place around 20 May with a standard deviation of about one week. Low level cross equatorial monsoon flow has started appearing over south of Andaman Sea and adjoining south Bay of Bengal, the IMD said in a statement. The monsoon is likely to advance over Andaman Sea during next three days, the IMD said. Past data suggests absence of any one to one association of the date of monsoon advance over Andaman Sea with the date of monsoon onset over Kerala or that with the seasonal monsoon rainfall over the country, the IMD said.
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.
Asian stocks fell on Friday after a report showed China's bad loans jumped the most since 2005 and the yen strengthened amid concern about global growth. Key benchmark indices in South Korea, China, Japan, Taiwan, Singapore and Hong Kong were down 0.08% to 1.79%. Indonesia's Jakarta Composite rose 0.38%.
Non-performing loans in Asia's biggest economy rose by 54 billion yuan ($8.7 billion) in the three months through March to 646.1 billion yuan, the highest level since September 2008, according to data released by the China Banking Regulatory Commission yesterday. Bad credit accounted for 1.04% of total lending, up from 1% three months earlier.
Trading in US index futures indicated that the Dow could fall 8 points at the opening bell on Friday, 16 May 2014. US stocks fell a second day on Thursday, with the Dow Jones Industrial Average sinking the most in a month, as investors continued to sell small-cap shares and Wal-Mart Stores Inc. forecast profit that missed estimates.
Economic data showed industrial production in the US unexpectedly declined in April, held back by a plunge in utilities as temperatures warmed and a broad-based decrease in manufacturing. Manufacturing, which makes up 75% of total production, decreased 0.4%. That contrasted with a higher-than-forecast reading on the Fed Bank of New York's gauge of regional manufacturing, which climbed to 19.01 this month, from 1.29 in April. Labor Department data showed the fewest Americans in seven years filed applications for unemployment benefits last week, while a separate report indicated the cost of living in the US rose in April by the most in almost a year.
Federal Reserve Chairwoman Janet Yellen yesterday said the US economy has further to go to achieve full health and predicted small businesses will play a vital role in the recovery.
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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