Key benchmark indices extended initial gains in morning trade. The barometer index, the S&P BSE Sensex, was up 113.08 points or 0.47%, up 63.32 points from the day's low and off 24.24 points from the day's high. The market breadth, indicating the overall health of the market, was quite strong, with more than four gainers for every loser on BSE. The BSE Small-Cap index was up more than 2%. The BSE Mid-Cap index was up more than 1.8%. Both these indices outperformed the Sensex. Gains in Asian stocks and upmove in US stocks on Wednesday, 21 May 2014, underpinned sentiment on the domestic bourses.
Index heavyweight Reliance Industries (RIL) extended initial gain. Realty stocks were in demand on renewed buying. Shares of jewellery makers advanced after the Reserve Bank of India on Wednesday, 21 May 2014, eased some restrictions on gold imports that were imposed last year.
Key benchmark indices edged higher amid initial volatility. The Sensex extended initial gains in morning trade.
Asian stocks edged higher on Thursday, 22 May 2014, after Federal Reserve meeting minutes showed policy makers see a muted risk of inflation from continued US stimulus and as a China manufacturing gauge rose to a five-month high this month.
At 10:15 IST, the S&P BSE Sensex was up 113.08 points or 0.47% to 24,411.10. The index jumped 137.32 points at the day's high of 24,435.34 in morning trade, its highest level since 20 May 2014. The index rose 49.76 points at the day's low of 24,347.78 in early trade.
The CNX Nifty was up 31.85 points or 0.44% to 7,284.75. The index hit a high of 7,298.35 in intraday trade, its highest level since 20 May 2014. The index hit a low of 7,258.15 in intraday trade.
The market breadth, indicating the overall health of the market, was quite strong, with more than four gainers for every loser on BSE. On BSE, 1,813 shares gained and 444 shares fell. A total of 69 shares were unchanged.
The BSE Mid-Cap index was up 157.88 points or 1.89% at 8,500.24. The BSE Small-Cap index was up 183.49 points or 2.1% at 8,941.77. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 1330 crore by 10:15 IST, compared with Rs 491 crore by 09:25 IST.
Among the 30-share Sensex pack, 21 stocks gained and rest of them declined.
Index heavyweight Reliance Industries (RIL) rose 1.58% to Rs 1,095.50. The stock hit high of Rs 1,097.60 and low of Rs 1,085 so far during the day.
Realty stocks were in demand on renewed buying. DLF (up 3.66%), Godrej Properties (up 1.55%), Indiabulls Real Estate (up 5.72%), Parsvnath Developers (up 4.98%), Housing Development & Infrastructure (HDIL) (up 3.84%), Sobha Developers (up 1.01%), D B Realty (up 3.37%) and Unitech (up 4.22%) gained. Oberoi Realty dropped 4.22%.
Shares of jewellery makers advanced after the Reserve Bank of India on Wednesday, 21 May 2014, eased some restrictions on gold imports that were imposed last year. Tribhovandas Bhimji Zaveri (up 16.95%), Thangamayil Jewellery (up 19.97%), PC Jeweller (up 15.54%), Gitanjali Gems (up 11.98%), Rajesh Exports (up 13.65%), Tara Jewels (up 7.29%), Titan Company (up 7.85%) and Shree Ganesh Jewellery House (up 5%) edged higher.
The Reserve Bank of India (RBI) on Wednesday, 21 May 2014, allowed large private gold importers, or star and premier trading houses, to import the yellow metal. The new norms come into force with immediate effect.
"Star Trading Houses/Premier Trading Houses (STH/PTH), which are registered as nominated agencies by the Director General of Foreign Trade (DGFT), may now import gold under 20:80 scheme," RBI said in a statement. Further, it has been decided to permit the nominated banks to give Gold Metal Loans (GML) to domestic jewellery manufacturers out of the eligible domestic import quota of 80% to the extent of GML outstanding in their books as on 31 March 2013, RBI said.
Last year, RBI had imposed severe restrictions on gold imports in order to check the burgeoning current account deficit and sliding rupee. The central bank had tied imports with exports and prescribed a 20:80 formula. This facility was available to select banks only and other entities were barred from importing the metal.
Under the 80:20 scheme, the government had on 14 August 2013 allowed nominated agencies to import gold on the condition that 20% of the import would be exported.
In the foreign exchange market, the rupee edged higher against the dollar as equities rose. The partially convertible rupee was hovering at 58.585, compared with its close of 58.775/785 on Wednesday, 21 May 2014.
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.
After Bharatiya Janata Party (BJP) led National Democratic Alliance's (NDA) landslide victory in the recently concluded Lok Sabha election, investors are expecting measures from the incoming government to revive the Indian economy. There are expectations that Narendra Modi will be in a position to replicate the economic success he enjoyed in Gujarat state when he takes over as the country's Prime Minister. 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. India's GDP growth slowed sharply at 4.7% in Q3 December 2013. Investors hope that a BJP-led government would be able to accelerate policy reforms and overhaul the country's poor infrastructure. Investors will now be keenly watching policy announcements from the new government to drive a turnaround in the investment cycle.
Ever since NDA's victory in the election last week, speculation has been rife about the likely allocation of key ministerial portfolios in the Modi-led NDA government.
Modi will be sworn in as India's next Prime Minister on Monday, 26 May 2014, evening at the Rashtrapati Bhawan.
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.
Asian stocks edged higher on Thursday, 22 May 2014, after Federal Reserve meeting minutes showed policy makers see a muted risk of inflation from continued US stimulus and a China manufacturing gauge rose to a five-month high in May. Key benchmark indices in Taiwan, Hong Kong, China, Singapore, Japan, Indonesia and South Korea were up 0.19% to 2.15%.
The China manufacturing purchasing managers' index released today by HSBC Holdings Plc and Markit Economics delivered a provisional reading of 49.7 for May, rising from 48.1 in April. Readings below 50 indicate contraction.
Trading in US index futures indicated that the Dow could advance 57 points at the opening bell on Thursday, 22 May 2014. US stocks rebounded on Wednesday from the previous day's losses and ended the session with solid gains, led by advances in the consumer discretionary and energy sectors. The main benchmarks extended gains after the release of the minutes from the Federal Open Market Committee meeting, which showed officials considering options on exiting from ultra-loose monetary policy and a decision to remain flexible.
Minutes from the April 29-30 meeting showed that Fed officials are monitoring progress toward the goal of full employment in the US as they consider the timing of the first interest-rate increase since 2006. The minutes also showed policy makers agreed that early communication of their exit strategy on stimulus and interest rates would enhance the clarity and credibility of monetary policy. The Fed reiterated in the minutes that it will keep the key interest rate target near zero for a "considerable time" once it concludes the bond program.
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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