Key benchmark indices surged in a volatle session as market sentiment was boosted after the Reserve Bank of India (RBI), in its policy review today, 5 August 2014, kept policy rates and cash reserve ratio unchanged while cutting statutory liquidity ratio by 50 basis points. Firmness in European stocks also boosted sentiment. The barometer index, the S&P BSE Sensex, rose 184.85 points or 0.72% at 25,908.01. The market breadth indicating the overall health of the market was strong. Interest rate sensitive banking, realty and auto stocks led rally on the bourses after the RBI in its policy review today, 5 August 2014, kept policy rates and cash reserve ratio unchanged while cutting statutory liquidity ratio by 50 basis points.
Key indices, which were marginally higher ahead of the central bank's policy announcements, witnessed high volatility after the Reserve Bank of India (RBI) in its policy review today, 5 August 2014, kept policy rates and cash reserve ratio unchanged while cutting statutory liquidity ratio by 50 basis points. Key indices regained positive terrain after slipping into the red for a brief period soon after the policy announcement. Key indices recovered after falling sharply in the negative terrain in afternoon trade. Key indices extended gains in late trade.
The S&P BSE Sensex rose 184.85 points or 0.72% to 25,908.01, highest closing level since 30 July 2014. The index gained 205.16 points at the day's high of 25,928.32 in late trade, its highest level since 31 July 2014. The index fell 160.80 points at the day's low of 25,562.36 in afternoon trade.
The CNX Nifty rose 62.90 points or 0.82% to 7,746.55, highest closing level since 30 July 2014. The index hit a high of 7,752.45 in intraday trade, its highest level since 31 July 2014. The index hit a low of 7,638.05 in intraday trade.
The market breadth indicating the overall health of the market was strong. On BSE, 1,778 shares rose and 1,142 shares fell. A total of 123 shares were unchanged.
The BSE Mid-Cap index rose 75.73 points or 0.82% at 9,272.54. The BSE Small-Cap index was up 111.52 points or 1.12% at 10,111.27. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 2976 crore, higher than Rs 2430.53 crore on Monday, 4 August 2014.
The S&P BSE Capital Goods index fell 0.15%. The S&P BSE Power index (up 0.11%), the S&P BSE Bankex (up 0.28%), the S&P BSE Teck index (up 0.3%), the S&P BSE FMCG index (up 0.31%), the S&P BSE IT index (up 0.35%), the S&P BSE Oil & Gas index (up 0.55%) and the S&P BSE Healthcare index (up 0.58%), underperformed the Sensex.
The S&P BSE Realty index (up 2.65%), the S&P BSE Auto index (up 2.11%), the S&P BSE Metal index (up 1.33%) and the S&P BSE Consumer Durables index (up 0.99%), outperformed the Sensex.
Among the 30 Sensex shares, 20 shares rose and the remaining shares fell.
Bank stocks edged higher in volatile trade after the Reserve Bank of India (RBI) after a policy review today, 5 August 2014, kept the policy rates and cash reserve ratio unchanged while cutting statutory liquidity ratio by 50 basis points. Among private sector banks, HDFC Bank (up 0.84%), Axis Bank (up 0.45%), Yes Bank (up 0.39%) and Kotak Mahindra Bank (up 0.02%), edged higher. IndusInd Bank (down 0.17%), Federal Bank (down 0.29%) and ICICI Bank (down 0.39%), edged lower.
Among PSU bank stocks, Union Bank of India (up 1.86%), Bank of Baroda (up 1.24%), Punjab National Bank (up 0.91%), Bank of India (up 0.63%), IDBI Bank (up 0.61%), Canara Bank (up 0.38%) and State Bank of India (up 0.36%), edged higher.
Obligations put on Indian banks need to be reduced further as they are entering a more competitive environment and the statutory liquidity ratio will have to be cut further, RBI chief Raghuram Rajan said. Rajan also said interest rate tools are blunt and the central bank is trying to use other tools.
In the second bi-monthly monetary policy statement of June 2014, the Reserve Bank reduced the SLR to 22.5% of NDTL in anticipation of recovery in economic activity. With the Union Budget for 2014-15 renewing commitment to the medium-term fiscal consolidation roadmap and budgeting 4.1 per cent of GDP as the fiscal deficit for the year, space has opened up further for banks to expand credit to the productive sectors in response to its financing needs as growth picks up. Accordingly, the SLR is reduced by a further 0.5% of NDTL.
In consonance with the calibrated reduction in the SLR, it is necessary to enhance liquidity in the money and debt markets so that financial intermediation expands apace with a growing economy. Currently, banks are permitted to exceed the limit of 25% of total investments under the held to maturity (HTM) category provided the excess comprises only SLR securities, and banks' total holdings of SLR securities in the HTM category is not more than 24.5 per cent of their NDTL as on the last Friday of the second preceding fortnight. In order to enable banks greater participation in financial markets, this ceiling is being brought down to 24% of NDTL with effect from the fortnight beginning 9 August 2014.
Auto stocks gained after the Reserve Bank of India (RBI) after a policy review today, 5 August 2014, kept the policy rates unchanged. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Tata Motors gained 2.20%. The company after market hours on Friday, 1 August 2014 said that its total sales declined 23% to 39,623 units in July 2014 over July 2013. Domestic sales of Tata commercial and passenger vehicles dropped 25% to 35,256 units in July 2014 over July 2013. Tata Motors' sales of commercial vehicles declined 28% to 26,089 units in July 2014 over July 2013. LCV sales fell 39% to 16,364 units in July 2014 over July 2013. M&HCV sales remained flat at 9,725 units in July 2014. Passenger vehicle sales fell 15% to 9,167 units in July 2014 over July 2013. Exports rose 2% to 4,367 units in July 2014 over July 2013.
Mahindra & Mahindra (M&M) gained 3.83%. The company after market hours on Friday, 1 August 2014, reported 6% decline in its total tractor sales to 17,407 units in July 2014 over July 2013. Domestic sales declined 8% to 16,379 units in July 2014 over July 2013. Exports surged 47% to 1,028 units in July 2014 over July 2013. Exports include CKD units.
Separately, M&M on Friday, 1 August 2014, reported 4% drop in its total auto sales at 35,567 units in July 2014 over July 2013. Sales of Passenger Vehicle segment (which includes UVs and Verito) declined 5% to 14,708 units in July 2014 over July 2013. Domestic sales dropped 4% to 33,047 units in July 2014 over July 2013. Sales of four-wheeler commercial segment declined 9% to 12,472 units in July 2014 over July 2013. Three-wheeler sales rose 15% to 5,142 units in July 2014 over July 2013. Exports dropped 3% to 2,520 units in July 2014 over July 2013.
Maruti Suzuki India gained 0.68%, with the stock extending recent gains triggered by strong sales in July. Maruti Suzuki India said during market hours during market hours on Friday, 1 August 2014, that the company's total sales jumped 21.7% to 1.01 lakh units in July 2014 over July 2013. Domestic sales rose 19.9% to 90,093 units in July 2014 over July 2013. Exports rose 38.4% to 11,287 units in July 2014 over July 2013.
Bajaj Auto rose 2.71%, with the stock extending Monday's gains triggered by announcing good July sales. The company said during market hours on Monday, 4 August 2014, that total sales rose 13% to 3.19 lakh units in July 2014 over July 2013. Commercial vehicles sales rose 49% to 51,451 units in July 2014 over July 2013. Motorcycles sales rose 9% to 2.67 lakh units in July 2014 over July 2013. Exports rose 54% to 1.69 lakh units in July 2014 over July 2013.
Meanwhile, a foreign brokerage reportedly upgraded the stock to "overweight" from "equalweight". It said all the bad news appears to be priced in the stock and demand for two-wheelers in India will accelerate to 12 and 12.3% for FY 2015 and FY 2016 as macro factors improve along with new launches.
Hero MotoCorp shed 0.86% ahead of its Q1 results today, 5 August 2014. The company said during market hours on Friday, 1 August 2014, its sales rose 9% to 5.29 lakh units in July 2014 over July 2013. The company also on 1 August 2014, extended the tenure of its Chief Financial Officer (CFO) Mr. Ravi Sud by another two years till 31 July 2016.
TVS Motor Company rose 3.04%. The company recorded 32% growth in sales to 2.03 lakh units in July 2014 over July 2013. The sales figures were announced on Saturday, 2 August 2014.
Realty stocks gained after the Reserve Bank of India (RBI) after a policy review today, 5 August 2014, kept the policy rates unchanged. Purchases of both residential and commercial property are largely driven by finance. HDIL (up 8.63%), Unitech (up 6.36%), Indiabulls Real Estate (up 3.85%), Parsvnath Developers (up 3.34%), Godrej Properties (up 3.19%), Anant Raj (up 2.96%), D B Realty (up 2.77%), Phoenix Mills (up 2.27%), DLF (up 2.09%), Oberoi Realty (up 1.37%) and Peninsula Land (up 1.09%), edged lower.
Sunteck Realty (down 5.69%), Sobha Developers (down 1.91%) and Prestige Estates (down 1.02%), edged higher.
Footwear maker Bata India rose 0.62% to Rs 1,253.20. The company's net profit fell 4.1% to Rs 59.39 crore on 8.6% rise in net sales to Rs 621.58 crore in Q2 June 2014 over Q2 June 2013. The result was announced after market hours today, 5 August 2014.
Tata Chemicals rose 3.04% after consolidated net profit jumped 133.34% to Rs 175.50 crore on 17.41% growth in total income from operations to Rs 3846.64 crore in Q1 June 2014 over Q1 June 2013. The Q1 result was announced during market hours today, 5 August 2014.
Ajanta Pharma slumped 8.24% after net profit surged 80% to Rs 59 crore on 32% growth in revenue from operations to Rs 287 crore in Q1 June 2014 over Q1 June 2013. The Q1 result was announced during market hours today, 5 August 2014. Ajanta Pharma's EBITDA jumped 78% to Rs 90 crore in Q1 June 2014 over Q1 June 2013.
Deep Industries rose 0.47% after net profit rose 16.36% to Rs 5.83 crore on 26.35% growth in total income from operations to Rs 26.99 crore in Q1 June 2014 over Q1 June 2013. The Q1 result was announced after market hours on Monday, 4 August 2014.
India Glycols fell 0.32% after the company reported a net profit of Rs 1.31 crore in Q1 June 2014 as against net loss of Rs 26.23 crore in Q1 June 2013. The Q1 result was announced after market hours no Monday, 4 August 2014. India Glycols' total income from operations declined 9.05% to Rs 740.31 crore in Q1 June 2014 over Q1 June 2013.
Indian stocks rose for the second day in a row today, 5 August 2014. From a recent low of 25,480.84 on 1 August 2014, the Sensex has risen 427.17 points or 1.68% in two trading sessions. The Sensex has gained 4,737.33 points or 22.38% in calendar year 2014 so far (till 5 August 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 8,459.30 points or 48.48%. From a record high of 26,300.17 on 25 July 2014, the Sensex has declined 392.16 points or 1.49%.
The Reserve Bank of India (RBI) after a policy review today, 5 August 2014, kept policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8%. It also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL) and reduced the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 22.5% to 22% of their NDTL with effect from the fortnight beginning 9 August 2014.
Since the second bi-monthly monetary policy statement of June 2014, global economic activity has been picking up at a modest space from a sharp slowdown in Q1. Investor risk appetite has buoyed financial markets, partly drawing strength from assurances of continuing monetary policy support in industrial countries, RBI said.
Sentiment on domestic economic activity appears to be reviving, with incoming data suggesting a firming up of industrial growth and exports. The June round of the Reserve Bank's industrial outlook survey also points to improvement in business expectations in Q2. Leading indicators of the services sector are mixed, although there are early signs of modest strengthening of corporate sales and business flows. While the initial slow progress of the monsoon and its uneven spatial distribution raised serious concerns regarding agricultural production, these have been mitigated, though not entirely dispelled, by the pick-up in the monsoon through much of the country in July. The implementation of government policy actions that have been announced should create a congenial setting for a steady improvement in domestic demand and supply conditions.
Markit Economics said today, 5 August 2014, adjusted for seasonal factors, the HSBC Services Business Activity Index stood at 52.2 in July, down from Junes 17-month peak of 54.4. The latest reading indicated a third successive monthly expansion and was consistent with a modest rise in business activity. The headline HSBC Composite Output Index posted 53 in July, down from Junes 16-month high of 53.8. The latest figure was indicative of a solid expansion in private sector activity, and was the second highest reading since February 2013.Output growth accelerated to a 17-month peak in the manufacturing sector, while activity rose for a third consecutive month at services companies.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 60.83, compared with its close of 60.93 on Monday, 4 August 2014.
European stocks rose today, 5 August 2014, rebounding from four days of losses, as companies including Bayerische Motoren Werke AG and Credit Agricole SA reported better-than-expected quarterly profit. Key benchmark indices in UK, France and Germany were up by 0.35% to 0.69%.
Euro-area services expanded less than initially estimated last month, keeping alive concerns about the outlook for the recovery in the 18-nation region. Markit Economics' Purchasing Managers Index rose to 54.2 from 52.8 in June, below the 54.4 reading published on July 24. A composite index of services and manufacturing increased to 53.8, also lower than previously estimated.
Asian stocks dropped today, 5 August 2014, with Shanghai shares retreating from the year's highest close as a private gauge of Chinese services industries fell to a record low. Key benchmark indices in Japan, Indonesia, South Korea, China and Taiwan were down by 0.15% to 2.02%. Key benchmark indices in Hong Kong and Singapore rose 0.2% to 0.28%.
A purchasing managers' index of China's non-manufacturing sector fell to 50 in July, the borderline between expansion and contraction and the lowest reading in data from HSBC Holdings Plc and Markit Economics.
Trading in US index futures indicated that the Dow could fall 21 points at the opening bell on Tuesday, 5 August 2014. US stocks staged a late-day rally Monday, 4 August 2014, helping push the indices higher for the first time in a week on a decent earnings report from Berkshire Hathaway and the announcement of a rescue package for a struggling Portuguese bank.
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