A bout of volatility was witnessed as key benchmark indices pared gains after extending initial gains and hitting fresh intraday high in morning trade. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit three-week high. The Sensex was up 167.43 points or 0.67%, off about 70 points from the day's high and up close to 30 points from the day's low. The market breadth indicating the overall health of the market was strong. The BSE Mid-Cap index rose nearly 1.3%. The BSE Small-Cap index rose more than 1.6%. The market sentiment was boosted by data showing that foreign funds made substantial purchases of Indian stocks on Thursday, 5 June 2014.
Index heavyweight Reliance Industries (RIL) rose. Infosys fell on reports one more top executive quit the company. ONGC scaled record high. DLF hit 52-week high.
The market edged higher in early trade after the European Central Bank on Thursday, 5 June 2014, cut its benchmark interest rates to unprecedented lows, spurring speculation the move will spur demand for emerging-market assets. A bout of volatility was witnessed as key benchmark indices pared gains after extending initial gains and hitting fresh intraday high in morning trade. The Sensex and the 50-unit CNX Nifty, both, hit three-week high.
The market sentiment was boosted by data showing that foreign funds made substantial purchases of Indian stocks on Thursday, 5 June 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 1368.97 crore on Thursday, 5 June 2014, as per provisional data from the stock exchanges.
At 10:20 IST, the S&P BSE Sensex was up 167.43 points or 0.67% to 25,186.94. The index surged 239.47 points at the day's high of 25,259.98 in morning trade, its highest level since 16 May 2014. The index rose 134.41 points at the day's low of 25,153.92 in morning trade.
The CNX Nifty was up 40.25 points or 0.54% to 7,514.35. The index hit a high of 7,535.10 in intraday trade, its highest level since 16 May 2014. The index hit a low of 7,506.85 in intraday trade.
The BSE Mid-Cap index was up 115.20 points or 1.29% to 9,071.11. The BSE Small-Cap index was up 157.06 points or 1.63% to 9,780.98. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong, with more than three gainers for every loser on BSE. On BSE, 1,582 shares rose and 492 shares fell. A total of 65 shares were unchanged.
Hindalco Industries (up 3.99%), GAIL (India) (up 3.98%) and Tata Power Company (up 1.91%) edged higher from the Sensex pack.
DLF gained 3.76% to Rs 227.90 after hitting 52-week high of Rs 230.40 in intraday trade.
ONGC gained 4.09% to Rs 436.80 after hitting record high of Rs 437 in intraday trade.
Index heavyweight Reliance Industries (RIL) rose 2.75% to Rs 1,117.50. The stock hit high of Rs 1,121.35 and low of Rs 1,105 so far during the day.
Infosys fell 1.59% on reports one more top executive quit the company. Prasad Thrikutam who was in charge of strategic sales, marketing and alliances quit on Thursday, 5 June 2014. President Pravin Rao will take up his portfolio, reports suggest.
In the foreign exchange market, the rupee edged higher against the dollar after the European Central Bank on Thursday, 5 June 2014, cut its benchmark interest rates to unprecedented lows, spurring speculation the move will spur demand for emerging-market assets. The partially convertible rupee was hovering at 59.19, compared with its close of 59.33/34 on Thursday, 5 June 2014.
The Union Finance Minister Shri Arun Jaitley said on Thursday that social sector groups can play an important role in taking positive advantage of demographic dividend. Jaitley said that the government may have been implementing the various social sector programmes but there is need to upgrade them and their delivery mechanisms and also provide adequate interventions within the fiscal space available. He said that there is need to ensure that the benefits of these programmes reach the poor and marginalized and other weaker sections of the society. The Finance Minister was making the Opening Remarks while holding his second Pre-Budget Consultation with the representatives of the Social Sector related Groups.
Various suggestions were received during the meeting from the representatives of the different Social Sector Groups. Major suggestions include higher budgetary allocation in General Budget 2014-15 for 2.68 crore disabled people in the country, simplification of procedures for seeking grants and their timely release, helping in making NGOs especially welfare NGOs self-sustainable and financially viable by giving certain tax concessions and allowing creation of corpus fund among others.
Jaitley is expected to table Union Budget for 2014-15 in Lok Sabha by mid-July 2014. An interim budget was presented by P. Chidambaram in February this year. Essentially, in the nature of a vote on account, the interim budget was intended to get Parliament approval for expenditure to be incurred during the first few months of fiscal year 2014-15 due to Lok Sabha elections.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 5 August 2014. The RBI kept its main lending rate -- repo rate -- unchanged at 8% after a monetary policy review on 3 June 2014. The central bank at that time signaled it would ease monetary policy if inflation slows faster than targeted.
Asian stocks rose on Friday, 6 June 2014, after the unprecedented low rates from the European Central Bank and before US payrolls data due later in the global day. Key benchmark indices in Indonesia, Singapore and Taiwan were up 0.03% to 0.36%. Key benchmark indices in Hong Kong and China were off 0.26% to 0.63%.
Trading in US index futures indicated that the Dow could gain 37 points at the opening bell on Friday, 6 June 2014. US stocks rose to records on Thursday as European Central Bank stimulus boosted optimism in the global economy before US jobs report.
The Fed said in its Beige Book business survey that the economy expanded at a modest to moderate pace last month as auto sales led household spending and the labor market improved. The survey, released two weeks before policy makers meet in Washington, supports Chair Janet Yellen's view that the economy is rebounding from a 1% contraction in the first quarter caused largely by harsh winter weather.
Claims for American unemployment benefits climbed by a more-than-estimated 312,000 in the week to May 31, data yesterday showed.
The influential US nonfarm payroll data for May 2014 is due for release today, 6 June 2014.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 17-18 June 2014. The Fed on 30 April 2014 said after a monetary policy review that it will keep the benchmark interest-rate target at almost zero for a "considerable time" after its bond-buying program ends. The FOMC also reduced monthly debt purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in "measured steps" if the economy continues to improve.
In Europe, the European Central Bank cut interest rates to record lows on Thursday, launched a series of measures to pump money into the sluggish euro zone economy, and pledged to do more if needed to fight off the risk of Japan-like deflation. The ECB lowered the deposit rate to sub zero -- negative 0.1%. It cut its main refinancing rate to 0.15%, and the marginal lending rate - or emergency borrowing rate - to 0.40%.
For the first time, the ECB will charge banks for parking funds at the central bank overnight in an attempt to force them to lend to small- and medium-sized businesses. The measures were also aimed at easing pressure on the strong euro, which is threatening economic recovery and importing disinflation.
ECB President Mario Draghi outlined a four-year 400 billion euro ($544.86 billion) scheme giving banks that have been holding back credit due to looming stress tests an incentive to increase lending to businesses in the euro zone. "Now we are in a completely different world," Draghi said, citing "low inflation, a weak recovery and weak monetary and credit dynamics". The package, adopted unanimously, was aimed at increasing lending to the "real economy", he said.
Other steps included extending the duration of unlimited cheap liquidity for euro zone banks, injecting about 170 billion euros by stopping tenders that withdrew funds spent on past government bond purchases, and preparing for possible future purchases of asset-backed securities to support small business. "If required, we will act swiftly with further monetary policy easing," he said, adding that the policy-setting Governing Council was unanimous in its commitment to use unconventional instruments if needed "to further address risks of too prolonged a period of low inflation".
UK interest rates have been held at the record low of 0.5% for another month by the Bank of England on Thursday. The size of the Bank's bond-buying economic stimulus programme was also kept unchanged at 375 billion. The decision was widely expected, despite continued signs of strength in the UK economy.
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