After witnessing a roller coaster ride, key benchmark indices settled near the flat line. High volatility materialized after the Reserve Bank of India (RBI) kept its main lending rate unchanged after a monetary policy review as it waited for more signs that inflation is retreating. The 50-unit CNX Nifty failed to hold the psychological 8,000 level. It had moved past the psychological 8,000 level in afternoon trade. The barometer index, the S&P BSE Sensex, was provisionally up 3.99 points or 0.02% at 26,601.10. The market breadth indicating the overall health of the market turned negative from positive in late trade.
Interest rate sensitive banking and realty stocks declined after the RBI in its fourth bi-monthly monetary policy review today, 30 September 2014, kept key policy rates unchanged. PSU OMCs gained ahead of a fortnightly revision in fuel prices tomorrow, 1 October 2014.
Earlier, a sudden slide took key benchmark indices to negative zone from positive zone in mid-afternoon trade. Just before the slide in mid-afternoon trade, key indices had remained firm. Earlier, benchmark indices had moved into positive zone in morning trade after languishing in negative terrain earlier during the day.
Meanwhile, Prime Minister Narendra Modi yesterday, 29 September 2014, assured top American corporate honchos of tax stability and friendlier business environment in the country, according to reports. Meanwhile, a Vision Statement for the US-India Strategic Partnership released ahead of Modi's talks with US President Barack Obama later today, 30 September 2014, stated that the United States and India are committed to expand and deepen their strategic partnership in order to harness the inherent potential of the two democracies and the burgeoning ties between people, economies, and businesses of the two nations. Modi's five-day visit to the US concludes today.
In overseas markets, European stocks rose as investors speculated on the possibility of further European Central Bank stimulus, after data showed euro-area inflation slowed this month. Asian stocks declined amid concern over tensions in Hong Kong and as a Chinese manufacturing gauge missed estimates.
Brent crude oil prices edged higher as Ukraine's army suffered its highest casualties since signing a truce early this month in new clashes with pro-Russian fighters that are threatening to shatter a cease-fire that brought calm to the six-month old conflict.
In the foreign exchange market, the rupee edged lower against the dollar as a potential increase in US interest rates and geopolitical tensions in the Middle East damped demand for emerging-market assets.
As per provisional figures, the S&P BSE Sensex was up 3.99 points or 0.02% at 26,601.10. The index lost 115.80 points at the day's low of 26,481.31 in late trade, its lowest level since 26 September 2014. The index jumped 254.22 points at the day's high of 26,851.33 in afternoon trade, its highest level since 23 September 2014.
The CNX Nifty was up 5.90 points or 0.07% at 7,964.80, as per provisional figures. The index hit a low of 7,923.85 in intraday trade, its lowest level since 26 September 2014. The index hit a high of 8,030.90 in intraday trade, its highest level since 24 September 2014.
The total turnover on BSE amounted to Rs 3780 crore, higher than Rs 2741.83 crore on Monday, 29 September 2014.
The market breadth indicating the overall health of the market turned negative from positive in late trade. On BSE, 1,524 shares fell and 1,366 shares rose. A total of 98 shares were unchanged.
The BSE Mid-Cap index was up 10.62 points or 0.11% at 9,527.40. The BSE Small-Cap index was up 11.40 points or 0.11% at 10,679.07. Both these indices outperformed the Sensex.
Interest rate sensitive banking stocks mostly declined after the RBI in its fourth bi-monthly monetary policy review today, 30 September 2014, kept key policy rates unchanged. Among private sector banks, ICICI Bank (down 2.16%), Yes Bank (down 1.82%) and Axis Bank (down 2.12%), declined. HDFC Bank (up 0.85%), Federal Bank (up 0.16%), and Kotak Mahindra Bank (up 0.98%) gained.
In order to further develop the government securities market and enhance liquidity, the RBI has decided to bring down the ceiling on SLR securities under the HTM category from 24% of NDTL to 22% in a graduated manner i.e. 23.5% with effect from the fortnight beginning 10 January 2015, 23% with effect from the fortnight beginning 4 April 2015, 22.5% with effect from the fortnight beginning 11 July 2015 and 22% with effect from the fortnight beginning 19 September 2015. The RBI has also decided to liberalize guidelines on short sale in government securities.
IndusInd Bank dropped 0.69%. The bank after trading hours yesterday, 29 September 2014, announced the inauguration of its first Digital Branch at IndusInd Cybercity Rapid Metro Station, Gurgaon. The bank's fully digital branch aims to deliver best-in-class services to its growing tech savvy customer base, IndusInd Bank said in a statement.
PSU bank stocks declined after Financial Services Secretary G.S. Sandhu was quoted by the media as saying today, 30 September 2014, that state-run banks will very soon start raising funds from markets, as part of government's efforts to infuse capital into banks to meet the Basel III norms. State Bank of India (SBI) (down 0.31%), Union Bank of India (down 3.17%), Syndicate Bank (down 2.11%), Indian Overseas Bank (down 2.16%), Oriental Bank of Commerce (down 3.68%), Dena Bank (down 1.36%), Canara Bank (down 1.96%), Bank of India (down 3.64%), and Andhra Bank (down 2.91%), declined. Punjab National Bank (up 0.18%), Bank of Baroda (up 0.18%), and Indian Bank (up 0.66%), gained.
Realty stocks declined after the RBI in its fourth bi-monthly monetary policy review today, 30 September 2014, kept key policy rates unchanged. Purchases of both residential and commercial property are largely driven by finance. DLF (down 4.99%), D B Realty (down 1.39%), Anant Raj (down 2.74%) and Unitech (down 5.03%), edged lower.
Housing Development & Infrastructure rose 1.4% after the company said its promoters have revoked all shares pledged with IL&FS Trust Company. IL&FS Trust has released over 7.54 crore equity shares of promoters, including those of Rakesh Kumar Wadhawan. The released shares in the latest tranche comprise 51.89% of the total shares pledged by promoter group. With the latest release of pledged shares by IL&FS Trust, the total number of pledged shares by HDIL promoters now stands nil, the company said.
PSU OMCs gained ahead of a fortnightly revision in fuel prices tomorrow, 1 October 2014. BPCL (up 2.49%), HPCL (up 3.92%) and Indian Oil Corporation (up 5.29%) gained. PSU OMCs have over recovery of 35 paise per litre on sale of diesel for the current fortnight, as per data released by the Petroleum Planning & Analysis Cell on 16 September 2014. PSU OMCs are currently incurring daily under-recovery of Rs 190 crore on the sale of Diesel, PDS Kerosene and Domestic LPG. PSU OMCs suffer under-recoveries on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol. PSU OMCs review fuel prices on 1st and 16th of every month based on the average imported oil price in the previous fortnight.
The Reserve Bank of India (RBI) after its fourth bi-monthly monetary policy review today, 30 September 2014, kept its main lending rate viz. the repo rate unchanged at 8% as it waited for more signs that inflation is retreating. The RBI also kept the cash reserve ratio unchanged at 4% of net demand and time liabilities (NDTL). It has reduced the liquidity provided under the export credit refinance (ECR) facility from 32% of eligible export credit outstanding to 15% with effect from 10 October 2014.
RBI Governor Dr. Raghuram Rajan said in monetary policy statement that future food prices and the timing and magnitude of held back administered price revisions impart some uncertainty to an otherwise improving inflation outlook, where lower oil prices, a relatively stable currency, and a negative output gap continue to put downward pressure. Base effects will also temper inflation in the next few months only to reverse towards the end of the year, the RBI said. The Reserve Bank of India will look through base effects. The central bank said that the full impact of the skewed rainfall distribution carries risks to the future path of food inflation, though vegetable prices have fallen recently after the recent spike.
Meanwhile, the RBI has eased norms for importers for hedging foreign exchange risk. The central bank has raised the eligible limit for importers under the past performance route to 100% from the existing 50% i.e., importers can hedge up to 100% of the average of past three years' import turnover or the preceding year's import turnover, whichever is higher, subject to compliance with other conditions applicable for hedging under this route.
In the foreign exchange market, the rupee edged lower against the dollar as a potential increase in US interest rates and geopolitical tensions in the Middle East damped demand for emerging-market assets. The partially convertible rupee was hovering at 61.7375, compared with its close of 61.53 during the previous trading session. Reports showing an acceleration in US economic growth and signs of improvement in the labor market boosted odds that the Federal Reserve will raise borrowing costs next year.
Brent crude oil prices edged higher as Ukraine's army suffered its highest casualties since signing a truce early this month in new clashes with pro-Russian fighters that are threatening to shatter a cease-fire that brought calm to the six-month old conflict. Brent for November settlement was up 47 cents at $97.67 a barrel. The contract had risen 51 cents to settle at $97.20 a barrel yesterday, 29 September 2014.
Finance Secretary Dr Arvind Mayaram said at a function in Chennai yesterday, 29 September 2014, that that the government is committed to an early roll-out of the goods and services tax (GST), providing gainful employment to its youth through its skill development programme, fast tracking work on industrial corridors and bringing in the requisite amendments in the Land Acquisition Act to expedite project clearances.
European stocks rose Tuesday, 30 September 2014, after data showed Euro zone inflation slowed further in September. Key benchmark indices in UK and Germany were up 0.39% to 0.83%. France's CAC 40 fell 0.04%.
Euro zone inflation slowed further in September because of falling prices of unprocessed food and energy, a first estimate by the European Union's statistics office showed on Tuesday. Eurostat said consumer prices in the 18 countries sharing the euro rose 0.3% year-on-year, slowing from 0.4% year-on-year increases in August and July.
German unemployment unexpectedly increased in September, the country's labor agency said Tuesday, suggesting that the labor market in Europe's largest economy is beginning to weaken after a contraction in output last quarter.
The UK economy grew faster than estimated in the second quarter, extending a recovery from a recession that's been more robust than previously thought. Gross domestic product rose 0.9% in the three months through September, the fastest in almost a year and above the 0.8% previously published, the Office for National Statistics said today.
Asian stocks declined today, 30 September 2014, amid concern over tensions in Hong Kong and as a Chinese manufacturing gauge missed estimates. Key benchmark indices in South Korea, Hong Kong, Japan, Indonesia and Singapore were off 0.09% to 1.28%. Key benchmark indices in China, and Taiwan rose 0.07% to 0.26%.
Activity in China's vast factory sector showed signs of steadying in September as export orders climbed, a private survey showed today, 29 September 2014, easing fears of a hard landing but pointing to a still-sluggish economy facing considerable risks. The final HSBC/Markit Manufacturing Purchasing Managers' Index (PMI) hovered at 50.2 in September, unchanged from the August reading which was a three-month low, but lower than a preliminary reading of 50.5. A sub-index measuring new export orders, a gauge of external demand, expanded to a 4-1/2-year-high of 54.5, though domestic demand appeared soft. The 50 mark separates expansion from contraction in activity on a monthly basis.
China will release its official factory PMI tomorrow, 1 October 2014.
Small numbers of protesters reportedly continued to block roads in central Hong Kong in the fifth day of pro-democracy demonstrations today, 30 September 2014, as leaders warned the standoff would escalate if their demands are not met. Protest organizers are insisting that the city's top political figure, Chief Executive Leung Chun-ying, resign and that the government in Beijing drops plans to control who gets to run as Leung's successor in 2017.
Trading in US index futures indicated that the Dow could gain 52 points at the opening bell on Tuesday, 30 September 2014. US stocks ended lower on Monday, 29 September 2014, following protests in Hong Kong that added to worries about Chinese growth and after a disappointing forecast from Ford Motor Co.
Data on Tuesday showed US consumer spending rose by 0.5% last month, after being little changed in July, adding to signs the world's largest economy is on a stronger footing.
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