Key benchmark indices retained positive zone in mid-morning trade. The market breadth, indicating the overall health of the market was strong. Except BSE FMCG index all the other sectoral indices on BSE were in the green. The barometer index, the S&P BSE Sensex, was up 82.66 points or 0.39%, up about 30 points from the day's low and off close to 40 points from the day's high. The market sentiment was boosted by provisional data showing that foreign funds remained buyers of Indian stocks on Wednesday, 5 March 2014 and data showing a sharp reduction in India's current account deficit (CAD) in Q3 December 2013. Gains in Asian stocks also underpinned sentiment on the domestic bourses.
Shares of PSU OMCs rose as crude oil prices declined and as the rupee edged higher against the dollar. Reliance Anil Dhirubhai Ambani (ADA) Group shares surged. ALSTOM India rose after the company said it won a contract worth approximately Rs 679 crore from state-run Bhel to supply two supercritical boilers for a super thermal power project in Odisha.
The market edged higher in early trade after data released by the Reserve Bank of India (RBI) after trading hours on Wednesday, 5 March 2014, showed that India's current account deficit declined sharply in Q3 December 2013. The Sensex extended initial gains and hit fresh intraday high in morning trade. The barometer index hit 6-week high. The 50-unit CNX Nifty hit its highest level in more than 12 weeks. Key benchmark indices retained positive zone in mid-morning trade.
The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Wednesday, 5 March 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 737.29 crore on Wednesday, 5 March 2014, as per provisional data from the stock exchanges.
At 11:25 IST, the S&P BSE Sensex was up 82.66 points or 0.39% to 21,359.52. The index jumped 121.70 points at the day's high of 21,398.56 in morning trade, its highest level since 23 January 2014. The index rose 53.02 points at the day's low of 21,329.88 in early trade.
The CNX Nifty was up 25.35 points or 0.4% to 6,354. The index hit a high of 6,363.95 in intraday trade, its highest level since 9 December 2013. The index hit a low of 6,339.70 in intraday trade.
The BSE Mid-Cap index was up 52.67 points or 0.79% at 6,680.18. The BSE Small-Cap index was up 54.84 points or 0.84% at 6,601.28. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,374 shares gained and 827 shares fell. A total of 129 shares were unchanged.
Among the 30-share Sensex pack, 24 stocks rose and rest of them fell. Hero MotoCorp (up 1.84%), Sesa Sterlite (up 1.79%) and GAIL (India) (up 1.93%) edged higher from the Sensex pack.
Shares of PSU OMCs rose as crude oil prices declined and as the rupee edged higher against the dollar. BPCL (up 1.31%), HPCL (up 1.2%) and Indian Oil Corporation (up 1.12%) gained. Lower crude oil prices could reduce under-recoveries of public sector oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at government controlled prices. US crude oil futures for April delivery were off 34 cents or 0.34% to $101.11 a barrel in electronic trading today. On Wednesday, 5 March 2014, crude oil for April delivery fell $1.88, or 1.8%, to settle at $101.45 a barrel on the New York Mercantile Exchange.
Gains in rupee against the dollar aided gains in shares of PSU OMCs. A firm rupee will reduce cost of crude oil imports. PSU OMCs import about 70-75% of their crude oil needs.
PSU OMCs hiked the price of petrol by 60 paise and diesel by 50 paise per litre effective 1 March 2014 midnight amid rising crude oil prices and depreciation of rupee against the dollar. This price hike is exclusive of local taxes. PSU OMCs also hiked the price of jet fuel or aviation turbine fuel by 1% effective 1 March 2014.
Separately, the price of non-subsidized cooking gas (LPG), which customers buy after using up their quota of 12 subsidised cylinders, was cut by Rs 53.5 per cylinder, the second straight reduction in rates since February.
The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas reviewed international prices of crude oil and petroleum products during the second fortnight of February 2014. The under-recovery on High Speed Diesel (HSD) applicable for first fortnight of March 2014 rose to Rs 8.37 per/litre. This was Rs 8.31 per litre during the second fortnight of February 2014. In case of PDS Kerosene, the under-recovery is Rs 36.34 per litre for March 2014. The under-recovery is Rs 605.80 per cylinder for domestic LPG cylinders for March 2014. While the under-recovery for diesel is calculated on fortnightly basis, the under-recovery for PDS Kerosene and LPG is calculated on monthly basis.
In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals. The government has already freed pricing of petrol.
Reliance Anil Dhirubhai Ambani (ADA) Group shares surged. Reliance Communications (up 3.38%), Reliance Infrastructure (up 5.71%), Reliance Broadcast Network (up 0.81%), Reliance Capital (up 3.61%), Reliance MediaWorks (up 2.42%) and Reliance Power (up 3.11%) gained.
ALSTOM India rose 2.86% after the company said it won a contract worth approximately Rs 679 crore from state-run Bhel to supply two supercritical boilers for a super thermal power project in Odisha. The company made the announcement after trading hours on Wednesday, 5 March 2014.
ALSTOM India said it won a contract worth approximately Rs 679 crore by Bharat Heavy Electricals (Bhel) to supply two 800 megawatts (MW) supercritical boilers for Darlipalli super thermal power project (STPP) located in Sundergarh, in the State of Odisha (India). This project forms part of NTPC's bulk 800 MW tender.
Under the scope of the contract, Alstom, the sole licensor for Bhel supercritical technology, will design the 800 MW supercritical boilers and supply identified pressure parts along with windboxes, pulverizers and airpreheater components. The company will also assist Bhel with technical advisors during the erection and commissioning of the units. Key components will be manufactured in Alstom's facilities in Concordia and Wellsville, USA, as well as in Durgapur and Shahabad, India. The units are expected to be commissioned starting in 2017, the company said in a statement.
Out of the entire aforesaid contract, ALSTOM India's scope of work would be approximately Rs 379.80 crore, ALSTOM India said.
Dredging Corporation of India rose 1.27% after the company said that a new dredger vessel has been delivered at Netherlands on 23 January 2014 and was inaugurated and joined the fleet on Wednesday, 5 March 2014. The announcement was made after market hours on Wednesday, 5 March 2014. Dredging Corporation of India said that a new Trailer Suction Hopper Dredger DCI Dr. XXI with 5500 Cu.M Hopper capacity has been delivered at Netherlands on 23 January 2014 and the vessel was inaugurated and joined the fleet on Wednesday, 5 March 2014. With the addition of this dredger, the fleet of Trailer Suction Hopper Dredgers of the company is increased to twelve from the present eleven. The other fleet consists of three Cutter Suction Dredgers and one back hoe dredger.
In the foreign exchange market, the rupee edged higher against the dollar after data released by the Reserve Bank of India (RBI) after trading hours on Wednesday, 5 March 2014, showed that India's current account deficit declined sharply in Q3 December 2013. The partially convertible rupee was hovering at 61.37, compared with its close of 61.75/76 on Wednesday, 5 March 2014.
Indian government bond prices rose on optimism a shrinking current-account deficit will boost the rupee and prompt foreign investors to buy more local debt. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.8031%, lower than its close of 8.8419% on Wednesday, 5 March 2014. Bond yield and bond prices move in opposite direction.
India's current account deficit (CAD) narrowed sharply to $4.2 billion or 0.9% of GDP in Q3 December 2013, from $31.9 billion or 6.5% of GDP in Q3 December 2012. CAD in Q3 December 2013 was also lower than $5.2 billion or 1.2% of GDP in Q2 September 2013. The lower CAD was primarily on account of a decline in the trade deficit as merchandise exports picked up and imports moderated, particularly gold imports, the Reserve Bank of India (RBI) said.
On a BoP basis, merchandise exports rose 7.5% year-on-year to $79.8 billion in Q3 December 2013 on the back of significant growth especially in the exports of engineering goods, readymade garments, iron ore, marine products and chemicals. On the other hand, merchandise imports dropped 14.8% year-on-year at $112.9 billion in Q3 December 2013. The decline in imports in Q3 December 2013 was primarily led by a steep decline in gold imports, which amounted to $3.1 billion as compared to $17.8 billion in Q3 December 2012 and $3.9 billion in Q2 September 2013.
Net services receipts improved during Q3 December 2013, essentially reflecting a decline in payments on account of services imports. Net services at $18.1 billion in Q3 December 2013 recorded a growth of 8.9% year-on-year.
In the financial account, on net basis, foreign direct investment registered inflows of $6.1 billion and foreign portfolio investment recorded inflows $2.4 billion in Q3 December 2013. Within portfolio investment, the debt segment showed net outflow in Q3 which, however, was offset by higher net inflows of $6.2 billion under the category of equity. On a BoP basis, there was a net accretion of $19.1 billion to India's foreign exchange reserves in Q3 December 2013 as compared to a drawdown of $10.4 billion in the preceding quarter, the RBI said in a statement.
The turnaround in export growth and decline in imports from July 2013 onwards led to a sharp improvement in the trade deficit to $116.9 billion in April-December 2013, from $150 billion in April-December 2012. Contraction in the trade deficit, coupled with a rise in net invisibles receipts, resulted in a reduction of the CAD to $31.1 billion (2.3% of GDP) in April-December 2013, from $69.8 billion (5.2% of GDP) in April-December of 2012. Net inflows under the capital and financial account (excluding change in foreign exchange reserves) declined to $39.7 billion in April-December 2013, from $68.5 billion in corresponding period of 2012-13 owing to net outflows on account of portfolio investment, higher repayment of loans, and trade credit & advances. On BoP basis, foreign exchange reserves increased by $8.4 billion during April-December 2013, as compared with an accretion of $1.1 billion in April-December 2012.
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.
Business activity across emerging markets expanded in February at the slowest pace in five months, weighed down by weaker manufacturing in big developing countries such as Russia and China, a survey showed on Thursday, 6 March 2014. HSBC's composite emerging markets index of manufacturing and services purchasing managers' surveys slipped for the third month running to 51.1 in February. It stayed under the 2013 average of 51.7 and well below a long-run level of 54. But the monthly index remained above the 50 threshold which marks the difference between expansion and contraction.
Based on data from purchasing managers at about 8,000 firms in 17 countries, the survey showed Chinese factory output stayed below the 50 mark. Manufacturing in Russia, India and Brazil hovered just above 50.
On the domestic political front, the Election Commission on Wednesday, 5 March 2014, announced the dates for 2014 Lok Sabha elections. The polls will be held between 7 April 2014 and 12 May 2014 in nine phases. The counting of votes will be 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, 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.
An estimated 81.4 crore voters will be eligible to vote in the coming elections after 9.71 crore new voters have been added to the rolls since the last elections. From the coming elections, candidates in a Parliamentary constituency in bigger states can spend up to Rs 70 lakh on their campaign, up from Rs 40 lakh in 2011. In the 2009 elections, it was Rs 25 lakh.
The 2014 Lok Sabha elections will see the introduction of "None of the Above" (NOTA) option in voting, which came into vogue in the assembly elections a few months ago.
Asian stocks edged higher on Thursday, 6 March 2014, with shares of telecommunications companies leading gains. Key benchmark indices in Singapore, Japan, South Korea, Indonesia, Taiwan and Hong Kong were up 0.04% to 1.93%. China's Shanghai Composite fell 0.03%.
China's Finance Minister Lou Jiwei today, 6 March 2014, said economic growth below the government's target is acceptable, with employment, not the exact level of expansion, being key. China's Premier Li Keqiang yesterday, 5 March 2014, kept China's annual growth target unchanged at 7.5% for 2014.
Trading in US index futures indicated that the Dow could advance 20 points at the opening bell on Thursday, 6 March 2014. US stocks finished a choppy trading day on Wednesday generally lower with blue-chips falling the most, as investors reacted mildly to mostly disappointing economic reports.
US companies added 139,000 workers in February, fewer than the market estimates, a sign that employers were waiting for a pickup in demand before boosting headcount, a report from the ADP Research Institute in Roseland, New Jersey showed on Wednesday.
Separate data indicated that service industries in the US expanded in February at the slowest pace in four years, reflecting a plunge in hiring that shows the biggest part of the economy is struggling as harsher weather weighs on consumers and businesses. The Institute for Supply Management's non- manufacturing index slipped to 51.6 in February from 54 the previous month.
The Federal Reserve said the economy in most regions grew last month even as harsh winter weather impeded hiring, disrupted supply chains, and kept customers away from stores and auto dealerships. Eight of the Fed's 12 districts "reported improved levels of activity, but in most cases the increases were characterized as modest to moderate," the central bank said in its Beige Book business survey.
Federal Reserve Chair Janet Yellen vowed on Wednesday to do all that she can to boost the US economy that is running well short of the central bank's objectives. "The economy continues to operate considerably short of these objectives" of maximum employment and stable prices, Yellen said according to prepared remarks at a swearing-in ceremony at the central bank in Washington. "The economy is stronger and the financial system is sounder," added Yellen, who succeeded Ben Bernanke on February 1. "We have come a long way, but we have farther to go."
"Too many Americans still can't find a job or are forced to work part-time," Yellen said on Wednesday, underscoring her long-standing focus on the troubled labor market. "I promise to never forget the individual lives, experiences and challenges that lie behind the statistics we use to gauge the health of the economy," she said. "When we make progress toward our goals, each job that is created lifts this burden for someone who is better equipped to be a good parent, to build a stronger community, and to contribute to a more prosperous nation."
Turning to Wall Street reforms, Yellen said the Fed will move forward "quickly and responsibly" to complete the work that remains to safeguard the financial system.
Richard Fisher, president of the Federal Reserve Bank of Dallas, on Wednesday said he was concerned about "eye-popping levels" of some stock market metrics, and said the central bank has to monitor the signs carefully to make sure another bubble isn't forming. In his speech in Mexico City, Fisher said some indicators like the price-to-projected forward earnings, price-to-sales ratios and market capitalization as a percentage of GDP, are at levels not seen since the dot-com boom of the late 1990s. He noted that margin debt is pushing up against all-time records. "We must monitor these indicators very carefully so as to ensure that the ghost of 'irrational exuberance' does not haunt us again," Fisher said. While a few Fed officials have mentioned unease about stock prices, Fisher's comments are the most pointed to date. Fisher did not spare the bond market, saying that narrow spreads between corporate and Treasury debt "reflect lower risk premia on top of already abnormally low nominal yields." Fisher is a voting member of the Fed's monetary policy committee this year. He has been a strong opponent of the Fed's latest round of asset purchases.
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.
In Europe, a monthly meeting of the Governing Council of the European Central Bank (ECB) is scheduled today, 6 March 2014, in Frankfurt to decide euro zone interest rates.
A two-day meeting of Bank of England's Monetary Policy Committee (MPC) ends today, 6 March 2014, to decide interest rates in UK. Policy rates are expected to remain unchanged at record low. The UK's central bank slashed interest rates to record low of 0.5% at the height of the financial crisis in 2009.
European Union leaders will consider repercussions for Russia at an emergency meeting today, 6 March 2014, on the Ukraine crisis, after Russia's foreign minister fended off a US effort to ease tensions in the Crimean peninsula. Western nations are threatening Russia with sanctions over its military intervention in Crimea while pursuing diplomacy in an effort to defuse the situation.
On Wednesday, US Secretary of State John Kerry described his Paris meeting with his Russian counterpart Sergei Lavrov over Ukraine as "tough", but promised to continue talking. Mr Kerry said he was committed to working with Moscow to ease the crisis. However, he stressed afterwards that that Russia's violation of Ukrainian sovereignty "would not go unanswered".
On Wednesday, the UN special envoy in Crimea, Robert Serry, was forced to cut his mission short after he was threatened by pro-Russian armed men in Crimea's regional capital, Simferopol. Nato chief Anders Fogh Rasmussen on Wednesday said he would be conducting a "full review" of the alliance's co-operation with the Kremlin.
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