Key benchmark indices extended intraday gains in afternoon trade. The barometer index, the S&P BSE Sensex, hit its highest level in nearly a week. The Sensex was up 43.74 points or 0.21%, up 126.43 points from the day's low and off 10.78 points from the day's high. The market breadth, indicating the overall health of the market, was positive.
Bharat Heavy Electricals (Bhel) rose in volatile trade on massive volume after multiple bulk deals were executed on the counter in early afternoon trade. Index heavyweight and cigarette major ITC edged lower. Index heavyweight Reliance Industries (RIL) hovered in green. Shares of local search engine, Just Dial, surged. Shares of shipping companies gained across the board. In pharma pack, Aurobindo Pharma hit record high.
The Sensex edged lower amid initial volatility after a Reserve Bank of India panel recommended that the central bank should start using a consumer-price inflation target to determine monetary policy. High volatility was witnessed as key benchmark indices alternately swung between gains and losses in morning trade. Key benchmark indices moved into positive zone from negative zone in mid-morning trade as Asian stocks rose. Key benchmark indices gave away a lion's portion of intraday gains in early afternoon trade. Key benchmark indices extended intraday gains in afternoon trade.
Foreign institutional investors (FIIs) sold shares worth a net Rs 43.74 crore on Tuesday, 21 January 2014, as per provisional data from the stock exchanges.
At 13:15 IST, the S&P BSE Sensex was up 43.74 points or 0.21% to 21,294.86. The index rose 54.52 points at the day's high of 21,305.64 in afternoon trade, its highest level since 16 January 2014. The index dropped 82.69 points at the day's low of 21,168.43 in early trade, its lowest level since 20 January 2014.
The CNX Nifty was up 11.95 points or 0.19% to 6,325.75. The index hit a high of 6,329.75 in intraday trade. The index hit a low of 6,287.45 in intraday trade, its lowest level since 20 January 2014.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,266 shares gained and 1,171 shares fell. A total of 141 shares were unchanged.
The total turnover on BSE amounted to Rs 1124 crore by 13:15 IST.
Among the 30-share Sensex pack, 20 stocks rose and rest fell. Sun Pharmaceutical Industries (up 2.47%), Tata Steel (up 1.97%) and Bharti Airtel (up 1.75%) edged higher from the Sensex pack.
Hero MotoCorp (down 0.54%), State Bank of India (down 0.46%) and Hindustan Unilever (down 0.46%) edged lower from the Sensex pack.
Bharat Heavy Electricals rose 0.5% to Rs 171 on massive volume. So far on BSE, 77.44 lakh shares were traded in the counter as against average daily volume of 7.33 lakh shares in the past one quarter. The stock was volatile. It hit a high of Rs 172.30 and low of Rs 168.70 so far during the day. Multiple bulk deals were executed on the counter in early afternoon trade. A bulk deal of 20.55 lakh share was struck on the scrip at Rs 170.75 per share at 12:12 IST on BSE.
Index heavyweight and cigarette major ITC was off 1.32% at Rs 324.65. The stock hit a high of Rs 329.50 and low of Rs 323.15 so far during the day.
Index heavyweight Reliance Industries (RIL) edged higher. The stock was up 0.75% at Rs 870.50. The stock hit a high of Rs 871.90 and low of Rs 859 so far during the day.
The company's net profit rose 0.2% to Rs 5511 crore on 10.5% growth in revenue to Rs 106383 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Friday, 17 January 2014.
Shares of local search engine, Just Dial, surged. The stock was up 6.3% at Rs 1,711. The stock hit record high of Rs 1,774.35 in intraday trade.
Shares of shipping companies gained across the board. Great Eastern Shipping Company (up 2.92%), Shipping Corporation of India (up 3.97%), Mercator (up 1.82%), Varun Shipping Company (up 12.06%) and Essar Shipping (up 0.26%) gained.
Aurobindo Pharma rose 2.08% to Rs 444.20 after striking a record high of Rs 446 in intraday trade. The stock extended recent rally triggered by the company announcing on Saturday, 18 January 2014, that it has signed a binding offer to acquire commercial operations in seven Western European countries from Actavis plc. Closing of the transaction is conditional on certain antitrust approvals and completion of employee consultation processes, Aurobindo Pharma said in a statement.
Jaypee Infratech (up 4.92%), Torrent Power (up 3.3%), CESC (up 3.22%), Ashok Leyland (up 2.98%) and Wockhardt (up 2.64%) were among the major gainers from BSE's 'A' group.
Power Finance Corporation (down 2.34%), Thermax (down 2.1%), Havells India (down 2.07%), Jammu & Kashmir Bank (down 1.98%) and Berger Paints (down 1.92%) were among the major losers from BSE's 'A' group.
Bond prices dropped after a Reserve Bank of India panel recommended that the central bank should start using a consumer-price inflation target to determine monetary policy. The panel's recommendations if accepted by the central bank may result in increase in interest rates to achieve the panel's 4% consumer-price inflation target by 2016. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.6312%, higher than its close of 8.5531% on Tuesday, 21 January 2014. Bond yield and bond prices move in opposite direction.
A Reserve Bank of India panel has recommended that the central bank should start using a consumer-price inflation target to determine monetary policy. The panelset up soon after former International Monetary Fund chief economist Raghuram Rajan took over as RBI governor last yearwas created to come up with ways to make the country's monetary policy more transparent and predictable. In a 130-page report released on Tuesday, 21 January 2014, the panel recommended using a well-defined range of consumer-price index inflation to set monetary policy. The report suggested a CPI inflation rate target within two percentage points above or below 4%. The RBI panel said the central bank should move to lower India's consumer inflation, which has been close to 10% in recent months, to 8% within the next 12 months and to 6% in 24 months, before adopting the target. "This transition path should be clearly communicated to the public," the report said.
If accepted, the report's recommendation would bring India in line with global norms by placing less emphasis on wholesale price inflation, which India has used until now as its main indicator of price movements. The wholesale price inflation measure, which excludes the massive service sector, has typically been much lower than consumer prices. The consumer price index is currently hovering near 10%, compared with about 6% for wholesale prices.
Historically, the Indian central bank has followed a multifocus approach to monetary policy, setting interest rates based on how it sees inflation, growth and currency stability. It usually didn't have an official inflation target, which often left markets surprised by its moves.
The panel also suggested monetary policy be decided by a committee headed by the governor with final decisions through a vote of the committee members, as is the practice in some developed countries like the UK. Right now in India monetary policy decisions are made by the RBI governor alone, though he gets input from an advisory committee.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.
Asian stocks edged higher on Wednesday, 22 January 2014, after the Bank of Japan pledged to maintain economic stimulus and the International Monetary Fund raised its global growth forecast. Key benchmark indices in Japan, Singapore, South Korea, Indonesia, China, Taiwan and Hong Kong were up 0.03% to 2.16%.
The Bank of Japan (BOJ) today, 22 January 2014, pledged to maintain economic stimulus after a two-day monetary policy review. The BOJ said it will keep plans to increase the monetary base annually by 60 trillion to 70 trillion yen and maintained its inflation target for 2015.
The Thai government declared a state of emergency in its capital in response to antigovernment protests that have paralyzed the city and stirred up increasingly violent attacks. Over the past week, unknown assailants have launched attacks on the protesters, killing one and injuring dozens. The unrest is also dragging on the economy, with Japanese auto companies, some of Thailand's most important investors, raising a red flag that future investment could be affected.
Trading in US index futures indicated that the Dow could advance 2 points at the opening bell on Wednesday, 22 January 2014. US stocks closed mostly higher on Tuesday, 21 January 2014, though disappointing earnings results from Verizon Communications Inc and the Travelers Cos. Inc. weighed on the Dow. The S&P 500's cyclical sectors energy and natural resources were among the biggest gainers after the People's Bank of China on Tuesday, 21 January 2014, said it provided emergency funding support for commercial banks as they gear up to meet demands for cash ahead of the Lunar New Year.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
The International Monetary Fund raised its forecast for global growth this year as expansions in the US and UK accelerate, and urged advanced economies to maintain monetary accommodation to strengthen the recovery. The global economy will grow 3.7% this year, compared with an October estimate of 3.6%, the IMF said in revisions to its World Economic Outlook released in Washington.
US gross domestic product will expand 2.8%, compared with 2.6%; Japan will gain 1.7% versus 1.2%; and the UK will increase 2.4% from 1.9%, the report showed. "In advanced economies, output gaps generally remain large and, given the risks, the monetary policy stance should stay accommodative while fiscal consolidation continues," the Washington-based organization said in the report. "In many emerging market and developing economies, stronger external demand from advanced economies will lift growth, although domestic weaknesses remain a concern." Central banks in the US, Japan and the euro area face inflation levels under their targets while trying to accelerate growth with policies including benchmark interest rates near zero and bond-buying programs. While it raised the outlook for advanced nations, the IMF said "downside risks remain," including financial-market volatility in emerging markets.
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