Volatility continued in mid-afternoon trade as key benchmark indices regained positive terrain as firmness in European stocks boosted sentiment. The barometer index, the S&P BSE Sensex, was currently up 90.23 points or 0.35% at 25,813.39. The market breadth indicating the overall health of the market was still positive. Capital goods stocks edged lower.
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 cut 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.
At 14:20 IST, the S&P BSE Sensex was up 90.23 points or 0.35% to 25,813.39. The index gained 108.37 points at the day's high of 25,831.53 in early afternoon trade, its highest level since 1 August 2014. The index fell 160.80 points at the day's low of 25,562.36 in afternoon trade.
The CNX Nifty was up 34.85 points or 0.45% to 7,718.50. The index hit a high of 7,730.55 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 positive. On BSE, 1,427 shares rose and 1,320 shares fell. A total of 132 shares were unchanged.
The BSE Mid-Cap index was up 43.73 points or 0.48% at 9,240.64. The BSE Small-Cap index was up 74.21 points or 0.74% at 10,073.96. Both these indices outperformed the Sensex.
Among the 30 Sensex shares, 20 shares declined and the remaining shares rose. Mahindra & Mahindra (M&M) (up 2.7%), Hindalco Industries (up 2.37%) and Bajaj Auto (up 2.24%) edged higher from the Sensex pack.
Capital goods stocks edged lower. L&T (down 0.74%), Bharat Heavy Electricals (Bhel) (down 0.72%), Siemens (down 0.09%) and Thermax (down 0.72%) dropped.
Mahindra Ugine Steel Company rose 2.83% after net profit jumped 136.06% to Rs 8.64 crore on 2.39% decline in total income from operations to Rs 177.92 crore in Q1 June 2014 over Q1 June 2013. The Q1 result was announced during market hours today, 5 August 2014.
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 higher against the dollar. The partially convertible rupee was hovering at 60.72, 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 0.46% to 0.72%.
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 0.17% to 0.2%.
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 2 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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