A bout of volatility was witnessed as key benchmark indices recovered and were almost unchanged after hitting fresh intraday low in the negative terrain in afternoon trade. The barometer index, the S&P BSE Sensex, was currently unchanged at 20,810.87, off close to 100 points from the day's high and up about 35 points from the day's low. The market breadth, indicating the overall health of the market, turned negative from positive. Auto stocks were mixed. Realty stocks edged lower.
Key benchmark indices edged higher in early trade on firm Asian stocks. The Sensex and the 50-unit CNX Nifty, both, hit 4-1/2-week high. Key benchmark indices trimmed initial gains in morning trade. Key benchmark indices hovered in green in mid-morning trade. Key benchmark trimmed intraday gains in early afternoon trade as the Shanghai Composite index extends losses in late trading there. It recovered and was almost unchanged after hitting fresh intraday low in afternoon trade.
The market may remain volatile in the near future as traders roll over positions in the futures and options (F&O) segment from the near-month February 2014 series to March 2014 series. The near month February 2014 F&O contracts expire tomorrow, 26 February 2014. The stock market remains closed on Thursday, 27 February 2014, on account of Mahashivratri.
Foreign institutional investors (FIIs) bought shares worth a net Rs 266.87 crore on Monday, 24 February 2014, as per provisional data from the stock exchanges.
At 13:20 IST, the S&P BSE Sensex was unchanged at 20,810.87. The index jumped 101.10 points at the day's high of 20,912.54 in early trade, its highest level since 24 January 2014. The index fell 33.71 points at the day's low of 20,777.73 in afternoon trade.
The CNX Nifty was up 1.95 points or 0.03% to 6,188.05. The index hit a high of 6,216.85 in intraday trade, its highest level since 24 January 2014. The index hit a low of 6,176.60 in intraday trade.
The BSE Mid-Cap index was up 14.86 points or 0.23% at 6,456.46. The BSE Small-Cap index was up 6.69 points or 0.1% at 6,422.32. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, negative from positive. On BSE, 1,180 shares fell and 1,127 shares rose. A total of 153 shares were unchanged.
Among the 30-share Sensex pack, 20 stocks declined and rest of them gained. GAIL (India) (down 2.16%), NTPC (down 1.96%) and Coal India (down 1.49%) edged lower form the Sensex pack.
Wipro (up 1.54%), Bharti Airtel (up 1.52%), Bhel (up 1.5%), Cipla (up 1.41%). TCS (up 0.77%), Infosys (up 0.75%), Hindalco Industries (up 0.62%), Axis Bank (up 0.19%) and ITC (up 0.16%) edged higher from the Sensex pack.
Auto stocks were mixed. Maruti Suzuki India fell 0.26%. Maruti has received about 14,000 orders for the Celerio in less than two weeks of its introduction, Maruti's chief operating officer for marketing and sales Mayank Pareek said in a media interview on Friday, 21 February 2014. Mr. Pareek said that the Celerio's automatic transmission is driving demand for the vehicle. Half of the orders for the 14,000 Celerio were models with automatic transmissions, he said. "Demand for the Celerio has exceeded our expectations," he said. Maruti introduced the Celerio on 6 February 2014 with an optional automatic transmission, a rarity for an entry-level car in India. The Celerio's automatic gearbox allows the driver to switch between automatic and manual modes. Maruti expects to draw a large number of buyers for the automatic-transmission model due to the relatively small difference in price with the manual-transmission version.
Maruti has also decided to stop manufacturing the A-Star and Estilo small cars due to weak demand for these two models. The A-Star and Estilo join the former flagship model, the M800 in being junked. Maruti stopped making the M800 in January after a production run of about three decades.
Mahindra & Mahindra (M&M) dropped 0.05%. The company last week announced a reduction in prices of its passenger vehicle portfolio ranging from Rs 13,000 to Rs 49,000. The company also reduced prices of its premium SUV, the Rexton by up to Rs 92,000. The reduction is due to the lower excise duties announced in the Interim Budget and would be effective immediately, M&M said in a statement on 19 February 2014.
Tata Motors declined 0.44%.
TVS Motor Company rose for the second day in a row triggered by the company announcing a reduction in the prices of its two and three wheelers following reduction in excise duty announced by the government in Interim Budget for 2014-15 announced on 17 February 2014. The announcement was made after market hours on Friday, 21 February 2014. The stock was up 0.33%.
Hero MotoCorp lost 0.12%. The company last week said it has decided to pass on the entire benefit of the excise duty reduction to customers. Hero MotorCorp said it has judiciously spread out the price cut across the product portfolio ranging from 2% going up to 5% with the maximum reduction being Rs 4,500 per unit. The government reduced excise duty on two-wheelers to 8% from 12% for a period up to 30 June 2014 in the Interim Budget for 2014-15 announced last week.
Bajaj Auto rose 1.66%.
The government reduced excise duty on cars, commercial vehicles, sports utility vehicles (SUVs), motorcycles and scooters for the period up to 30 June 2014 in the in the Interim Budget for 2014-15 announced on 17 February 2014. The excise duty on small cars, two-wheelers and commercial vehicles was reduced to 8% from 12%. The excise duty on SUVs was reduced to 24% from 30%. The excise duty on large cars was cut to 24% from 27%. The excise duty on mid-segment cars was cut to 20% from 24%.
Realty stocks edged lower. DLF (down 0.98%), D B Realty (down 0.1%), HDIL (down 1.66%) and Unitech (down 0.57%) declined.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 61.995, compared with its close of 62.07/08 on Monday, 24 February 2014.
Government bond prices dropped for the second day in a row after Reserve Bank of India (RBI) Governor Raghuram Rajan on Sunday, 23 February 2014, warned that inflation remains the biggest threat to economic growth and that reining in price gains is RBI's top challenge. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.9052%, higher than its close of 8.885% Monday, 24 February 2014. Bond yield and bond prices move in opposite direction.
Rajan in another television interview which was broadcast on Monday, 24 February 2014, said the government and the central bank shared similar views on inflation management, while reiterating a call for the US Federal Reserve to be more sensitive to emerging economies. Rajan's comments come after Finance Minister P. Chidambaram last week chided the central bank over its focus on fighting inflation, saying the RBI needed to abide by government policy to promote economic growth. "It's not as if the government is on a different page on what we've been doing on inflation thus far. They may have different views on what they would like to see done, but there is a process, there is a conversation. I think there is fair amount of coordination at the highest level," Rajan said.
Rajan said the central bank panel report on inflation was consistent with the government's stance. "We have a committee which has suggested a target, which is also by the way, consistent with the process the finance ministry's committee has suggested, so there is no disagreement about the broader need to get a framework in place. I think in terms of how I see the process, is really that the government sets the objective, and the central bank delivers on that objective," Rajan said.
Rajan said he believes India is likely to continue with its major economic policies irrespective of the government at the Centre after the upcoming general elections. "My sense is if there is a stable coalition post election, no matter which persuasion it is, the broad policies will continue. There may be difference in details but they are all for passing the Goods and Services Tax, all for a number of actions that the current government is taking," Rajan said. The central bank is likely to continue the level of coordination and discussion with the government after the elections, Rajan said.
Rajan also reiterated his call for the Federal Reserve to take into account the impact of its withdrawal of monetary stimulus on emerging economies, despite saying he was comfortable with the current pace of tapering. "I actually welcome a measured pace of tapering. The only thing I have been calling for is that in the communication there should be some sensitivity to conditions in emerging markets. And this is not from our perspective, this is broadly emerging markets, some of whom have been in trouble in the last few months. But I am fully prepared for a tapering that continues at this measured pace," Rajan said.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Citing price pressures, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
Most Asian stocks edged lower on Tuesday, 25 February 2014, after overnight rally in US stocks. Key benchmark indices in Indoensia and Singapore fell 0.04% to 0.9%. Key benchmark indices in Japan, Taiwan and South Korea were up 0.18% to 1.44%.
Chinese stocks dropped amid speculation a weaker property market and falling yuan will curb corporate earnings. In mainland China, the Shanghai Composite index was off 2.04%. Hong Kong's Hang Seng index was off 0.49%. China's Industrial Bank Co. on Monday, 24 February 2014, said it will delay loans for property projects until the end of March, fueling speculation that a weaker housing market will erode demand for everything from electric appliances to cars.
Trading in US index futures indicated that the Dow drop 14 points at the opening bell on Tuesday, 25 February 2014. US stocks climbed on Monday, 24 February 2014, boosted by M&A activity, an upbeat German confidence report and bets that the S&P 500's foray into new high ground could spur further buying. The main indexes finished with solid gains, although they ended well off their session highs as buying momentum faded.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion.
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