Intraday recovery proved short lived as key benchmark indices once again weakened in mid-afternoon trade. The barometer index, the S&P BSE Sensex, was down 116.17 points or 0.46%, up close to 115 points from the day's low and off about 245 points from the day's high. The market breadth indicating the overall health of the market was positive. The market sentiment was edgy after the India Meteorological Department (IMD) on Monday, 9 June 2014, said that rainfall over the country as a whole for the 2014 southwest monsoon season is likely to be below normal as the chances of El Nino occurring during monsoon are very high. Weakness in European stocks also dampened sentiment on the domestic bourses.
Bank stocks were mostly lower. Shares of power generation firms dropped. Coal India extended Monday's gains triggered by the government's announcement on Monday, 9 June 2014, that it will formulate clear rules for allocation of coal, minerals and telecoms spectrum.
A bout of volatility was witnessed as key benchmark indices slipped into the red after opening higher. The barometer index, the S&P BSE Sensex and the 50-unit CNX Nifty, both, slipped into the red after scaling record high in opening trade. Volatility continued as key benchmark indices trimmed losses after hitting fresh intraday low in morning trade. The Sensex languished in the negative terrain in mid-morning trade. The Sensex trimmed losses in early afternoon trade. Intraday recovery continued as key benchmark indices further trimmed intraday losses in afternoon trade. Intraday recovery proved short lived as key benchmark indices once again weakened in mid-afternoon trade.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 536.68 crore on Monday, 9 June 2014, as per provisional data from the stock exchanges.
At 14:20 IST, the S&P BSE Sensex was down 116.17 points or 0.46% to 25,463.51. The index fell 232.88 points at the day's low of 25,347.33 in morning trade, its lowest level since 6 June 2014. The index rose 130.90 points at the day's high of 25,711.11 in early trade, a lifetime high for the index.
The CNX Nifty was down 37.95 points or 0.5% to 7,616.65. The index hit a low of 7,579.30 in intraday trade, its lowest level since 6 June 2014. The index hit a high of 7,683.20 in intraday trade, a lifetime high for the index.
The BSE Mid-Cap index was down 42.15 points or 0.46% at 9,195, matching with Sensex's decline in percentage terms. The BSE Small-Cap index was up 5.92 points or 0.06% at 9,996.97, outperforming the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,574 shares gained and 1,406 shares declined. A total of 82 shares were unchanged.
Among the 30-share Sensex pack, 16 stocks declined and rest of them gained. ONGC (down 3.66%), Hero MotoCorp (down 3.26%) and Tata Steel (down 3.29%) edged lower from the Sensex pack.
Coal India extended Monday's gains triggered by the government's announcement on Monday, 9 June 2014, that it will formulate clear rules for allocation of coal, minerals and telecoms spectrum. The stock was up 1.96% at Rs 421. Reforms in the coal sector will be pursued with urgency for attracting private investment in a transparent manner, President Pranab Mukherjee said in his speech addressing a joint sitting of Parliament on Monday, 9 June 2014.
Shares of power generation firms dropped. NHPC (down 1.95% to Rs 27.65), Tata Power Company (down 1.76% to Rs 111.55), GVK Power & Infrastructure (down 4.4% to Rs 19.50), Adani Power (down 1.48% to Rs 63.25), CESC (down 1.02% to Rs 621), JSW Energy (down 2.88% to Rs 80.80), Reliance Infrastructure (down 2.12% to Rs 789.50) and Reliance Power (down 1.89% to Rs 109.20) declined.
Bank stocks were mostly lower. Among PSU banks, Union Bank of India (down 3.4% at Rs 245.80, Oriental Bank of Commerce (down 3.4% at Rs 352.52), Canara Bank (down 3.2% at Rs 477.20), Bank of India (down 2.6% at Rs 320.40), Bank of Baroda (down 2.1% at Rs 885.10), Punjab National Bank (down 1.8% at Rs 1,002.50) and State Bank of India (down 1.7% at Rs 2,656.05) edged lower.
Among private sector banks, ING Vysya Bank (down 3.02% at Rs 632), Yes Bank (down 2.1% at Rs 557.35), Axis Bank (down 1.3% at Rs 1,939.30), ICICI Bank (down 0.65% at Rs 1,477) and HDFC Bank (down 0.39% at Rs 816.85) edged lower.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 59.295, compared with its close of 59.20/21 on Monday, 9 June 2014.
India can easily cut down its fiscal deficit without hurting people, if there is enough political will, the finance ministry's principal economic adviser Ila Patnaik reportedly said in a panel discussion in her capacity as an economist. Patnaik also said there were enough leakages in schemes and excess subsidies to cut the country's deficit, while replying in her private capacity to a question on fiscal consolidation.
The India Meteorological Department (IMD) on Monday, 9 June 2014, said rainfall over the country as a whole for the 2014 southwest monsoon season (June to September) is likely to be below normal (90-96% of long period average). Quantitatively, monsoon season rainfall for the country as a whole is likely to be 93% of the long period average with a model error of 4%. Region wise, the season rainfall is likely to be 85% of LPA over North-West India, 94% of LPA over Central India, 93% of LPA over South Peninsula and 99% of LPA over North-East India, all with a model error of 8 %. The monthly rainfall over the country as whole is likely to be 93% of its LPA during July and 96% of LPA during August both with a model error of 9.
After IMD's forecast of below normal rains this year, Agriculture Minister Radha Mohan Singh on Monday, 9 June 2014, reaffirmed government's seriousness in tackling any situation arising out of poor monsoon. Contingency plans are already in place, state governments have been suitably advised, sufficient foodstocks are in place, and quick action will be taken to tackle any situation arising out of deficient monsoon, he said. Storage position in major reservoirs across the country, except in Southern India, is satisfactory, the Ministry of Agriculture said. Crop contingency plans have been developed for 500 out of about 540 agricultural districts by Central Research Institute of Dryland Agriculture (CRIDA) in collaboration with State Agricultural Universities and concerned state governments to deal with challenges posed by aberrant monsoon.
India's farm sector accounts for 14% of India's nearly $2 trillion economy, with two-thirds of its 1.2 billion population living in rural areas.
Rains are vital to rejuvenate an economy battling its longest economic slowdown since the 1980s and to cool inflation running close to double digits. The new government on Monday made fighting food inflation its top priority.
Finance Minister Arun Jaitley on Monday, 9 June 2014, said at a Pre-Budget Meeting with the finance ministers of all states and union territories that the Centre and the states must complement each other in managing the economy and the fiscal policy. Goods and Services Taxes (GST) is one pending issue on which consensus needs to be built and implementation done at an early date, Jaitley said. Implementation of GST has the potential to significantly improve the growth story, he said.
Jaitley said the government is committed to breaking the vicious cycle of high inflation and high interest rates.
The next major trigger for the market is the Union Budget for 2014-15. Jaitley is expected to table Union Budget for 2014-15 in Lok Sabha by mid-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.
European stocks declined on Tuesday, 10 June 2014, as investors awaited a report on UK industrial production. Key benchmark indices in UK, France and Germany were down 0.09% to 0.47%.
French industrial production rebounded in April on an increase in manufacturing and energy and output, national statistics bureau Insee said Tuesday. Industrial output rose 0.3% in April from March, and Insee revised the March reading upwards to a 0.4% contraction from a 0.7% contraction previously.
Meanwhile, French business sentiment declined in May and economic growth will be tepid in the second quarter of the year, a Bank of France survey showed Tuesday. Based on its monthly survey, the Bank of France expects the economy will grow only 0.2% in the second quarter from the first.
Asian stocks edged up on Tuesday, 10 June 2014, after a record close for US stocks on Monday on the back of economic optimism in the US. Key benchmark indices in Taiwan, Hong Kong, Indonesia, South Korea and China were up 0.65% to 1.09%. Key benchmark indices in Japan and Singapore were off 0.35% to 0.85%.
China's central bank said it will cut the level of deposits that banks have to keep with it by 50 basis points for some lenders, a move aimed at freeing up more cash for loans to bolster flagging economic growth. The People's Bank of China said in a statement that the reduction would be effective from June 16, and will apply to banks whose new loans to the farm sector last year exceeded 50% of total new lending for 2014. It is also a requirement that outstanding loans to the farming sector exceeds 30% of total outstanding loans. The central bank said in a short statement that current liquidity in China's banking system was ample, and that the direction of the country's monetary policy had not changed.
China's inflation accelerated in May to the fastest pace in four months on food costs, while a decline in factory-gate prices moderated. Consumer prices rose 2.5% from a year earlier, the statistics bureau said today in Beijing. The producer-price index fell 1.4% after a 2% decline the previous month.
Trading in US index futures indicated that the Dow could fall 29 points at the opening bell on Tuesday, 10 June 2014. US stocks rose on Monday, with benchmark indexes extending records, as small-cap shares rallied and Family Dollar Stores Inc. advanced with Analog Devices Inc. amid deals activity.
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