Key benchmark indices edged higher in choppy trade, with the market sentiment boosted by data showing that foreign institutional investors (FIIs) resorted to heavy buying of Indian stocks on Thursday, 27 March 2014. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit record high. The Sensex was provisionally up 101.74 points or 0.46%, off 47.86 points from the day's high and up 131 points from the day's low. The market breadth, indicating the overall health of the market, was strong. The BSE Mid-Cap and Small-Cap indices rose more than 1% each, with both these indices outperforming the Sensex.
Index heavyweight and cigarette major ITC slipped in choppy trade. Reliance Industries (RIL) gained amid volatility after the company's spokesperson Umesh Upadhyay after market hours on Thursday, 27 March 2014, said that the FIR relating to gas contracts filed by former Delhi Chief Minister Arvind Kejriwal against the Union Government was completely illegal. Bank shares rose after the Reserve Bank of India (RBI) on Thursday, 27 March 2014, extended the deadline for banks to fully implement the stringent capital requirements under Basel III by a year due to industry wide concerns over potential bad loans and its impact on profitability. Shares of Adani group companies surged, with Adani Enterprises hitting 52-week high. Shares of the two state-run power finance companies -- REC and Power Finance Corporation -- surged.
High volatility was witnessed at the onset of the trading session as key benchmark indices trimmed an initial rally triggered by firm Asian stocks. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit record high. Volatility ruled the roost in morning trade as the key benchmark indices recovered from lower level after erasing almost entire gains after an initial surge. Volatility continued as the Sensex regained positive zone after reversing intraday gains in mid-morning trade. The Sensex slipped into negative zone from positive zone in early afternoon trade. The Sensex alternatively swung between positive and negative zone nearly the flat line in afternoon trade. The Sensex retained positive zone in mid-afternoon trade as European stocks edged higher in early trade there. Key benchmark indices trimmed gains after seeing a sudden surge in late trade. The Nifty hit record high above 6,700.
The market sentiment was boosted by data showing that foreign institutional investors (FIIs) resorted to heavy buying of Indian stocks on Thursday, 27 March 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 2269.20 crore from the secondary equity markets on Thursday, 27 March 2014, as per the data from the Securities & Exchange Board of India (Sebi).
As per provisional closing, the S&P BSE Sensex was up 101.74 points or 0.46% to 22,316.11. The index jumped 149.60 points at the day's high of 22,363.97 in early trade, a record high for the barometer index. The index fell 29.26 points at the day's low of 22,185.11 in early afternoon trade.
The CNX Nifty was up 51.65 points or 0.78% to 6,693.40. The index hit a high of 6,702.60 in intraday trade, a record high for the index. The index hit a low of 6,643.80 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,710 shares gained and 1,060 shares fell. A total of 159 shares were unchanged.
The BSE Mid-Cap index was up 107.75 points or 1.56% at 7,017.42. The BSE Small-Cap index was up 84.76 points or 1.23% at 7,001.26. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 2890 crore, higher than Rs 2585.81 crore on Thursday, 27 March 2014.
Among the 30-share Sensex pack, 17 stocks gained and rest of them declined.
Index heavyweight and cigarette major ITC fell 0.49% to Rs 358.20 in volatile trade. The stock hit high of Rs 361.85 and low of Rs 353.
Reliance Industries (RIL) rose 1.24% to Rs 913.30 amid high intraday volatility. The stock hit high of Rs 919.30 and low of Rs 899.60. RIL spokesperson Umesh Upadhyay after market hours on Thursday, 27 March 2014, said that the FIR relating to gas contracts filed by former Delhi Chief Minister Arvind Kejriwal against the Union Government was completely illegal. The Constitution clearly spells out the division of power between and Centre and State very unambiguously. Mr. Upadhyay said he spoke with constitutional expert and former Secretary General of Lok Sabha, Dr. Subhash Kashyap on the issue.
Dr. Kashyap said that Delhi is a centrally administered Union Territory and the President is supposed to be administering it through the Lt. Governor. As a concession to the political forces in Delhi and to the public opinion, a council of ministers and a legislature was conceded to Delhi. But entirely unlike a state legislature, their powers are very clearly defined and delimited by the Constitution and by the NCT act, Dr. Kashyap said. They do not take away the powers of the Union Parliament and Union Government over the territory of Delhi and even in the State list, the Parliament remains fully authorized to make laws and if there is a contradiction in the laws made by the Parliament and the Delhi Legislative Assembly even in the State list it is the Union law that prevails, Dr. Kashyap said.
Just two days prior to quitting from his position, the then Delhi Chief Minister Arvind Kejriwal ordered an FIR with the Anti-Corruption Bureau of Delhi, which reports to him and not Delhi police which is under the Ministry of Home Affairs, Mr. Upadhyay said. It is clear that neither he was keen on fighting corruption nor willing to follow due legal process, Mr. Upadhyay said. He had an eye on the forthcoming Lok Sabha elections, Mr. Upadhyay said.
Bank shares rose after the Reserve Bank of India (RBI) on Thursday, 27 March 2014, extended the deadline for banks to fully implement the stringent capital requirements under Basel III by a year due to industry wide concerns over potential bad loans and its impact on profitability. "This may necessitate some lead time for banks to raise capital within the internationally agreed timeline for full implementation of the Basel III Capital Regulations," the RBI said in a notification on its website. The period for full implementation of Basel III capital regulations has now been extended to 31 March 2019, from 31 March 2018, the RBI said. Basel III is a global regulatory framework for more resilient banks and banking systems.
Among PSU bank stocks, State Bank of India (SBI) (up 3.67%), Punjab National Bank (up 7.98%), Bank of Baroda (up 6.54%), Bank of India (up 8.52%) and Union Bank of India (up 9.96%) gained.
Canara Bank gained 7.04%. Canara Bank after market hours on Thursday, 27 March 2014, said it has successfully raised Rs 1000 crore under BASEL-III Complaint Tier-II Bonds (Series-II).
Among private sector banks, IndusInd Bank (up 1.9%), Axis Bank (up 2.64%), Kotak Mahindra Bank (up 0.51%) and Yes Bank (up 2.63%) gained. ICICI Bank (down 0.12%) and HDFC Bank (down 0.21%) fell.
Lakshmi Vilas Bank surged 4.98% after the bank said it has filed a draft letter of offer in connection with the proposed rights issue of equity shares aggregating up to Rs 505 crore. The announcement was made after market hours on Thursday, 27 March 2014.
Lakshmi Vilas Bank (LVB) said it has filed a draft letter of offer in connection with the proposed rights issue of equity shares of Rs 10 each by the bank aggregating up to Rs 505 crore for cash, in terms of Part E of Schedule VIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended (SEBI ICDR Regulations), with the Securities and Exchange Board of India on Thursday, 27 March 2014.
Among power finance companies, REC (up 5.17%) and Power Finance Corporation (up 5.73%) surged.
Shares of Adani group were in demand on renewed buying. Adani Ports and Special Economic Zone (up 3.31%) and Adani Power (up 16.51%) gained.
Adani Enterprises jumped 7.8% to Rs 356.45 after hitting a 52-week high of Rs 357.20 in intraday trade.
In the foreign exchange market, the rupee edged higher against the dollar after provisional data released by the stock exchanges after trading hours on Thursday, 27 March 2014, showed that foreign institutional investors (FIIs) made massive purchases of Indian stocks on that day. The partially convertible rupee was hovering at 59.93, compared with its close of 60.31/32 on Thursday, 27 March 2014.
The Reserve Bank of India (RBI) on Thursday, 27 March 2014, relaxed some of the forex hedging rules for importers and exporters, to allow greater operational flexibility. Importers and exporters can cancel up to 75% of their hedged forex exposures, as against 25% earlier, the RBI said. In addition, the profit or loss from these cancellations will be borne by the importer/exporter instead of passing it on to the customers as was mandated earlier.
India's external debt to GDP ratio stood at 23.3% at end-December 2013 vis-vis 21.8% at end-March 2013, the Ministry of Finance said in a statement today, 28 March 2014. At end-December 2013, India's total external debt stock stood at $426 billion, recording an increase of $21.1 billion i.e. an increase of 5.2% over the level at end-March 2013. The rise in external debt during the period was due to long-term debt particularly NRI deposits. A sharp increase in NRI deposits reflected the impact of fresh FCNR(B) deposits mobilised under the swap scheme during September-November 2013, the Ministry of Finance said.
The long-term debt stood at $333.3 billion at end-December 2013, showing an increase of 8.1% over the end-March 2013 level, while short-term debt decreased by 4.1% to $92.7 billion. Short-term debt accounted for 21.8% of India's total external debt, while the remaining (78.2%) was long-term debt. Component-wise, commercial borrowings accounted for 31.5% of the total external debt, followed by NRI deposits at 23.2% and multilateral debt at 12.3%.
Government (Sovereign) external debt stood at $76.4 billion, (17.9% of total external debt) at end-December 2013 as against $81.7 billion (20.2%) at end-March 2013.
The share of US dollar denominated debt was the highest in external debt stock and stood at 63.6% at end-December 2013, followed by debt denominated in Indian rupee at 19.4%, SDR at 7.1%, Japanese yen at 5% and Euro at 3.1%.
The Reserve Bank of India will announce the First Bi-monthly Monetary Policy Statement, 2014-15 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.
The next major trigger for the stock market is the outcome of the upcoming Lok Sabha elections. Lok Sabha elections will be held between 7 April 2014 and 12 May 2014 in nine phases. The counting of votes will take place on 16 May 2014. The term of the current Lok Sabha expires on June 1 and the new House has to be constituted by May 31. Along with the Lok Sabha election, Andhra Pradesh (AP), including the regions comprising Telangana, Odisha and Sikkim will go to polls to elect new assemblies. AP, Odisha and Sikkim assemblies come to end on June 2, June 7 and May 7 respectively.
European stocks edged higher on Friday, 28 March 2014, as investors awaited data that may show euro-area economic confidence rose in March. Key benchmark indices in UK, France and Germany were up 0.51% to 0.85%.
Asian stocks edged higher on Friday, 28 March 2014, as recent weaker economic data from China has raised expectations that China will take steps to stimulate its sagging economy. Key benchmark indices in Hong Kong, Singapore, Japan, Indonesia and South Korea were up 0.15% to 1.06%. In Taiwan, the Taiwan Weighted index was off 0.06%. China's Shanghai Composite index shed 0.24%.
Chinese Premier Li Keqiang said the country has policies in reserve to deal with any economic volatility this year and can't ignore "difficulties and risks" from a slowdown, according to a central-government website statement.
Japan's consumer price index stripped of perishables and energy rose 0.8% in February 2014, the most since 1998, a report showed. Household spending fell 2.5% in February from a year earlier, the first drop in six months.
Trading in US index futures indicated that the Dow could advance 37 points at the opening bell on Friday, 28 March 2014. US stock market extended losses for the second day and finished lower Thursday, amid concerns that improving economic indicators might force the Fed to start raising rates sooner than anticipated.
US government data showed that the economy's growth in the fourth quarter was bumped up to 2.6%, mainly because of higher health-care spending, while weekly unemployment benefits fell to the lowest level in four months, offering further evidence that US layoffs have slowed sharply and perhaps a hint that hiring is about to pick up.
Slumping for an eighth month, a guage of pending home sales fell 0.8% in February to the lowest level in more than two years, signaling that upcoming activity may slow, the National Association of Realtors reported.
Separately, the Labor Department said the number of individuals filing for initial jobless benefits in the US last week declined by 10,000 to a 311,000 from the previous week's revised total of 321,000.
Chicago Federal Reserve Bank President Charles Evans today, 28 March 2014, said in Hong Kong that he expected the benchmark US policy interest rate to remain near zero well into 2015, given low inflation and still-high unemployment. Evans said the current 1% inflation situation calls for extended policy accommodation. "While low interest rates could lead to financial exuberance in principle, monetary policy is not the best tool to mitigate this risk," he said at an investment conference organized by Credit Suisse. Instead, macroprudential tools available to policy makers are "better suited safeguards" to addressing financial risks directly. Evans said he thinks that the first rate hike will occur in the second half of 2015 and that, given the state of economy the appropriate monetary policy would be to hold off into early 2016 for the funds rate increase. He projected the federal funds rate to reach 1.25% by the end of 2016, a quarter-point higher than his previous prediction. He also noted the harsh weather earlier this year might take a bite out of US economy in the first quarter, with the GDP growth based on "some private-sector estimates" possibly dipping to as low as 1.5%. However, "in the second quarter, we'll pass that weather effect on GDP ... (as) business prospects are still good," he said. He expected about 3% growth for the remainder of this year.
Cleveland Fed president Sandra Pianalto on Thursday, 27 March 2014, said "no single data point will determine how long the Federal Reserve can keep short-term interest rates low." "We will be watching labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. It is a complicated world out there," Pianalto said.
The Federal Reserve seems to be doing a better job communicating with markets now than it did last summer, according to William Dudley, president of the central bank's New York branch, on Thursday, 27 March 2014.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 29-30 April 2014. The Federal Reserve on 19 March 2014 said after the conclusion of a monetary policy review that it will trim its monthly bond purchases by $10 billion to $55 billion. The Federal Reserve will end its bond-buying program before the end of the year with an interest-rate increase likely to follow in "around six months," Chair Janet Yellen said on 19 March 2014. Quarterly Fed forecasts on 19 March 2014 showed more officials predicting that the benchmark interest rate, now close to zero, will rise to at least 1% by the end of 2015 and 2.25% a year later.
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