Intraday volatility continued as key benchmark indices trimmed gains soon after extending intraday gains in early afternoon trade. Volatility materialized after the Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 8% as widely expected after a monetary policy review announced at 11:00 IST today, 30 September 2014. The barometer index, the S&P BSE Sensex, was currently up 85.18 points or 0.32% at 26,682.29. The market breadth indicating the overall health of the market was positive.
Auto stocks rose on hopes of higher demand during the upcoming festive season. Most bank stocks rose after the RBI kept key policy rates unchanged.
Earlier, key indices had swung alternately between positive and negative terrain soon after the RBI's policy announcement at 11:00 IST. Before that, key indices had moved into positive zone in morning trade after languishing in negative terrain earlier during the day.
Meanwhile, a Vision Statement for the US-India Strategic Partnership released ahead of Prime Minister Narendra 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, Asian stocks declined amid concern over tensions in Hong Kong and as a Chinese manufacturing gauge missed estimates. US stocks ended lower yesterday, 29 September 2014, following protests in Hong Kong that added to worries about Chinese growth and after a disappointing forecast from Ford Motor Co.
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.
At 12:15 IST, the S&P BSE Sensex was up 85.18 points or 0.32% at 26,682.29. The index jumped 140.25 points at the day's high of 26,737.36 in early afternoon trade, its highest level since 25 September 2014. The index lost 49.67 points at the day's low of 26,547.44 in early trade.
The CNX Nifty was up 21.50 points or 0.27% at 7,980.40. The index hit a high of 7,999.10 in intraday trade, its highest level since 25 September 2014. The index hit a low of 7,943.75 in intraday trade.
The market breadth indicating the overall health of the market was positive. On BSE, 1,476 shares rose and 998 shares fell. A total of 95 shares were unchanged.
The BSE Mid-Cap index was up 78.36 points or 0.82% at 9,594.14. The BSE Small-Cap index was up 79.55 points or 0.75% at 10,747.22. Both these indices outperformed the Sensex.
L&T rose 1.57% after the company said during market hours that its construction division has won new orders worth Rs 1423 crore across various business segments in this month.
Auto stocks rose on hopes of higher demand during upcoming festive season. Maruti Suzuki India (up 1.61%), Hero MotoCorp (up 1.2%), TVS Motor Company (up 1.64%) and Bajaj Auto (up 2.01%) gained. Mahindra & Mahindra (M&M) (down 0.37%) and Ashok Leyland (down 0.12%) declined.
Auto companies will start reporting sales volume data for September 2014 starting tomorrow, 1 October 2014.
Tata Motors gained 0.47% after the company after trading hours yesterday, 29 September 2014, announced the appointment of Mr. Mayank Pareek as President, Passenger Vehicle Business Unit (PVBU) of Tata Motors. He will join the company on Wednesday, 1 October 2014, and will take over from Mr. Ranjit Yadav, who will now head the International Business for Passenger & Commercial vehicles. As the President, PVBU, Mr. Pareek would be responsible for steering the passenger vehicle business. He will also be a member of the Corporate Steering Committee. His extensive experience in the passenger car market will play a significant role in harnessing Tata Motors' growth potential to help position the company as one of the leading passenger car manufacturers in India, Tata Motors said in a statement.
IDFC gained 0.78%. IDFC Alternatives during trading hours today, 30 September 2014, announced a final exit from its proprietary India Office Fund with an IRR of 22% to real estate funds managed by Blackstone. IDFC Alternatives had seeded the fund with investments in two office parks -- Galaxy IT park, Noida and BlueRidge SEZ, Pune -- acquired at an enterprise value of about Rs 900 crore. IDFC Alternatives is one of India's largest alternatives fund manager with AUM of $3.4 billion. IDFC Alternatives is a wholly owned subsidiary of IDFC.
Most bank stocks rose after the RBI in its fourth bi-monthly monetary policy review today, 30 September 2014, kept key policy rates unchanged. Among PSU bank stocks, State Bank of India (SBI) (up 0.35%), Union Bank of India (up 1.24%), Bank of Baroda (up 0.14%), Punjab National Bank (up 0.75%) Syndicate Bank (up 0.49%), Indian Overseas Bank (up 0.69%), Oriental Bank of Commerce (up 0.61%), Dena Bank (up 0.77%), and Indian Bank (up 0.98%), gained. Canara Bank (down 0.21%), Bank of India (down 0.35%), and Andhra Bank (down 0.07%), declined.
Among private sector banks, HDFC Bank (up 0.4%), Federal Bank (up 1.44%), and Kotak Mahindra Bank (up 2.07%) gained. ICICI Bank (down 0.03%), Yes Bank (down 0.36%) and Axis Bank (down 0.83%), declined.
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 rose 0.06%. 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.
The Reserve Bank of India (RBI) after its fourth bi-monthly monetary policy review today, 30 September 2014, also kept 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. The partially convertible rupee was hovering at 61.6325, compared with its close of 61.53 during the previous trading session.
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 5 cents at $97.25 a barrel. The contract had risen 20 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.
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, and Singapore were off 0.32% to 1.2%. Key benchmark indices in China, Indonesia and Taiwan rose 0.07% to 0.21%.
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 14 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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