Key benchmark indices moved into positive zone from negative zone in early afternoon trade. The barometer index, the S&P BSE Sensex, hit its highest level in more than 3-1/2 weeks. The 50-unit CNX Nifty hit four-week high. The Sensex was up 54.41 points or 0.26%, up 117.86 points from the day's low and off 15.64 points from the day's high. The market breadth, indicating the overall health of the market, was positive.
Auto stocks edged higher on renewed buying. Car major Maruti Suzuki India reversed initial losses. TVS Motor Company rose after the company announced 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. Tata Power surged after the company said that it has got relief from the Central Electricity Regulatory Commission (CERC) that has asked electricity procurers to pay Rs 329.45 crore as compensatory tariff for its Mundra Ultra Mega Power Project (UMPP) to partly offset escalation in the price of imported coal. Shares of state-run power generation major NTPC tumbled to hit 52-week.
Key benchmark indices edged lower in early trade on weak Asian stocks. A bout of volatility was witnessed in morning trade as the key benchmark indices trimmed initial losses in morning trade. Intraday volatility continued as key benchmark indices once again slipped into the red after moving into positive zone from negative zone in mid-morning trade. Key benchmark indices once again moved into positive zone from negative zone in early afternoon trade. The Sensex hit its highest level in more than 3-1/2 weeks. The 50-unit CNX Nifty hit four-week high.
The market may remain volatile this week 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 on Wednesday, 26 February 2014. The stock market remains closed on Thursday, 27 February 2014, on account of Mahashivratri.
The market sentiment was boosted by data showing that foreign funds remained buyers of Indian stocks on Friday, 21 February 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 603.41 crore on Friday, 21 February 2014, as per provisional data from the stock exchanges.
At 12:20 IST, the S&P BSE Sensex was up 54.41 points or 0.26% to 20,755.16. The index rose 70.05 points at the day's high of 20,770.80 in early afternoon trade, its highest level since 29 January 2014. The index fell 63.45 points at the day's low of 20,637.30 in early trade.
The CNX Nifty was up 14.35 points or 0.23% to 6,169.80. The index hit a high of 6,172.40 in intraday trade, its highest level since 27 January 2014. The index hit a low of 6,130.80 in intraday trade.
The BSE Mid-Cap index was up 28.57 points or 0.44% at 6,450.62. The BSE Small-Cap index was up 26.12 points or 0.41% at 6,419.45. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,160 shares gained and 1,087 shares fell. A total of 154 shares were unchanged.
The total turnover on BSE amounted to Rs 1010 crore by 12:25 IST, compared with Rs 841 crore by 11:30 IST.
Auto stocks edged higher on renewed buying.
Maruti Suzuki India was up 0.52% at Rs 1,683.30. The stock was volatile. The stock hit a high of Rs 1,693.90 and low of Rs 1,646.65 so far during the day. 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) rose 1.47%. 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.
TVS Motor Company rose after the company announced 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 stock was up 1.03%.
Mr. J Srinivasan, Vice President - Sales, TVS Motor Company said, "In keeping with TVS Motor Company's tradition of trust and transparency, the benefit of the excise duty reduction has been passed on to the consumers through price reduction ranging between Rs 850 and Rs 3500 on the entire range of two and three wheeler models. Further, we have also worked out a mechanism to support all our channel partners through the transition on so that the benefit of reduction in prices is available to consumers even on the existing trade stock. This is true to TVS's longstanding tradition of standing by our consumers and dealers."
Hero MotoCorp gained 1.08%. 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 0.86%.
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%.
Tata Power surged after the company said that it has got relief from the Central Electricity Regulatory Commission (CERC) that has asked electricity procurers to pay Rs 329.45 crore as compensatory tariff for its Mundra Ultra Mega Power Project (UMPP) to partly offset escalation in the price of imported coal. The stock was up 5.34% at Rs 82.90. The stock hit a high of Rs 84.50 and low of Rs 81.60 so far during the day. CERC has asked Gujarat, Rajasthan, Punjab, Haryana and Maharashtra Electricity boards to pay this extra amount for the period 1 April 2012 to 31 March 2013, Tata Power said during trading hours today, 24 February 2014. Tata Power further said that a compensatory tariff of Rs 0.524 per kWh has been granted for the project from 1 April 2013, as per CERC order. This order is in continuation of CERC's previous order of April 2013 and the high level committee's recommendations of August 2013.
Tata Power said that the management of the company finds the order balanced keeping in view the beneficiaries and consumer interests. The decision of CERC was awaited to make Mundra viable, which had got impacted due to no fault of itself, but due to change of law at Indonesia as also other coal exporting countries and an unprecedented rise in coal prices which could not have been perceived, Tata Power said. This will help in resolving a major impasse affecting imported coal based power projects in the country that got impacted due to uncontrollable extraneous factors, Tata Power said. The order provides partial relief to Mundra UMPP, which has been contributing to the nation by way of about 2-3% of the gross generation, Tata Power said.
Mundra UMPP has since inception been delivering to its full potential across the five beneficiary states albeit with tremendous fiscal pain and this challenge of keeping Mundra UMPP viable had continued far too long, Tata Power said. Coastal Gujarat Power -- the wholly owned subsidiary of the company in which this UMPP is housed -- will continue to honour its commitment towards the nation's energy security by providing reliable and competitive power supply through the project, Tata Power said in a statement.
Adani Power rose 1.51%. The company during market hours today, 24 February 2014, said that the Central Electricity Regulatory Commission on 21 February 2014 has decided the methodology for determination of compensatory tariff for Adani Power's 4,620 megawatt Mundra thermal power plant, in continuation to its previous order of April 2013. Despite facing huge financial losses, Mundra power plant has been supplying power to the states of Gujarat and Haryana, Adani Power said. This order will facilitate in sustaining operations at Mundra and enable the company to continue honouring PPA commitments, Adani Power said. The order shall mitigate hardships to some extent on account of impact of enactment of Indonesian regulation and shortage of domestic coal supplies from Coal India (CIL), Adani Power said.
The order has been passed by CERC considering the views of all the relevant shareholders and is balanced in the interest of the State Discoms, consumers, generation companeis, financial institutions and the nation as a whole, Adani Power said. Power supply from Mundra shall continue to remain competitive even with compensatory tariff, in comparison to other sources of procurement of power by the State of Gujarat and Haryana, Adani Power said. When the power sector is facing a multitude of issues, this order shall go a long way in reviving investor confidence and will provide sustainable energy security for the country, the company said in a statement.
Shares of India's largest power generation firm by capacity NTPC tumbled. The stock was off 10.29% at Rs 118.55. The scrip hit 52-week low of Rs 116.95 in intraday trade.
In the foreign exchange market, the rupee was almost unchanged against the dollar. The partially convertible rupee was hovering at 62.115, compared with its close of 62.12/13 on Friday, 21 February 2014.
Government bond prices dropped after Reserve Bank of India Governor Raghuram Rajan on Sunday, 23 February 2014, said that inflation remains the biggest threat to economic growth. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.8496%, higher than its close of 8.7954% on Friday, 21 February 2014. Bond yield and bond prices move in opposite direction.
"Even at this point our challenge really is to bring inflation down, because inflation is hurting growth. As inflation comes down, we will get much more possibilities for growth," Rajan said in Sydney in an interview to a news agency. Rajan, who last month warned of a breakdown in international monetary policy cooperation, said there was "widespread agreement" that advanced economies should worry about spillover effects of central bank actions.
Finance Minister P. Chidambaram last week said that RBI must strike a balance between price stability and growth, while adding that the elected government must determine the pace of growth and policies that help the economy expand.
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.
Asian stocks edged lower on Monday, 24 February 2014, after a Chinese state-owned newspaper said some Chinese banks curbed loans to property developers. Key benchmark indices in Japan, Indonesia, Taiwan, China, Hong Kong and South Korea fell by 0.2% to 1.81%. In Singapore, the Straits Times index rose 0.05%
Industrial Bank Co. and other unidentified banks have curbed lending to the property sector and related industries such as steel and cement, Shanghai Securities News reported as China said new home prices rose in 69 of 70 cities last month from a year before. But the growth in new-home prices in China's first-tier cities slowed in January, National Bureau of Statistics data today showed.
Trading in US index futures indicated that the Dow could drop 19 points at the opening bell on Monday, 24 February 2014. US stocks edged lower in choppy trade on Friday, 21 February 2014, after the latest data showed existing-home sales in January showed a bigger-than-expected decline. In other economic news on Friday, Dallas Federal Reserve President Richard Fisher said the central bank should continue to taper its bond-buying program that's boosted stocks.
Richmond Fed President Jeffrey Lacker on Friday, 21 February 2014, said the 2008 Federal Open Market Committee transcripts released earlier in the day show "me and several other consumers of economic research grappling with some very difficult policy decisions." In prepared comments at Arizona State, he said there wasn't enough discussion during the crisis about specific models of banking and financial markets that there could have been, and there wasn't enough discussion about long-term consequences. Lacker said he still opposes the Fed's credit market interventions and said he remains "deeply skeptical about the advisability of those actions." Speaking of the market for asset-backed commercial paper, he said markets were responding in a plausibly efficient manner to significant revisions in expectations about the underlying economic fundamentals. Lacker also said the Fed's emergency lending program simply reallocated credit and was not like the "lender of last resort" that Henry Thornton and Walter Bagehot wrote about in the 1800s.
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.
Finance leaders from the world's biggest economies leaned on central banks and governments to help spur growth, reverting to the global economy's playbook of recent years, in an effort to safeguard a fragile recovery. Group of 20 officials ended their two-day summit on Sunday, 23 February 2014, saying they would look to boost world growth by more than $2 trillion over the next few years under a strategy crafted by the International Monetary Fund.
Under the G-20 plan, advanced economies would continue with their easy-money policies while emerging markets would seek to restructure their economies and tame inflation. In addition, governments everywhere would be expected to channel private-sector finance into new infrastructure projects.
The G-20's final communiquhighlights agreement among central banks to communicate their stimulus-exit strategies clearly and in a timely fashion. The communiquwarned that the global economy faces a period of potential "excessive volatility" harmful to growth as countries adjust their economic policies. "We do not want any surprises," Joe Hockey, Australia's treasurer and G-20 host, said at the conclusion of the summit on Sunday.
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