Metal, power generation and banking stocks led gains as key benchmark indices extended previous day's rally. A rally in European stocks aided the upmove on the domestic bourses. The market sentiment was upbeat after provisional data released by the stock exchanges after trading hours yesterday, 20 October 2014, showed that foreign portfolio investors (FPIs) bought shares worth a net Rs 1040.08 crore on that day. The barometer index, the S&P BSE Sensex, was provisionally up 146.71 points or 0.56% to 26,576.56. The market breadth indicating the overall health of the market was positive.
Metal and power generation stocks rose after the Narendra Modi government yesterday, 20 October 2014, announced that it will auction 74 coal-mining licenses to private companies in the next three to four months after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993. Power Finance Corporation and Rural Electrification Corporation edged higher as coal block auctions will reduce uncertainty regarding power generation companies that depend on the dry fuel. Coal India declined. Bank stocks rose for the second day in a row as a sharp cut in diesel price on Saturday, 18 October 2014, is expected to bring down freight rates which in turn could reduce consumer price inflation.
Earlier, key indices had reversed intraday gains in afternoon trade. Before that the benchmark indices had extended initial gains in morning trade that took the Sensex and the 50-unit CNX Nifty to their highest level in almost two weeks.
In overseas markets, European shares rose, with a round of solid earnings report helping boost the mood after the recent selloff. Asian stocks dropped after the latest data showed that China's gross domestic product (GDP) rose 7.3% year-over-year in Q3 September 2014, marking its slowest pace of growth in five years.
In the foreign exchange market, the rupee edged higher against the dollar as key equity benchmark indices rose.
Brent crude prices edged higher on news of robust Chinese oil demand.
As per provisional closing, the S&P BSE Sensex was up 146.71 points or 0.56% to 26,576.56. The index jumped 185.56 points at the day's high of 26,615.41 in morning trade, its highest level since 9 October 2014. The index shed 22.85 points at the day's low of 26,407 in afternoon trade.
The CNX Nifty was up 48.35 points or 0.61% at 7,927.75, as per provisional closing. The index hit a high of 7,936.60 in intraday trade, its highest level since 9 October 2014. The index hit a low of 7,874.35 in intraday trade.
The BSE Mid-Cap index was up 85.73 points or 0.91% at 9,461.81, outperforming the Sensex. The BSE Small-Cap index was up 19.27 points or 0.19% at 10,382.72, underperforming the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,475 shares rose while 1,335 shares declined. A total of 112 shares were unchanged.
The total turnover on BSE amounted to Rs 3097 crore, lower than turnover of Rs 3407.74 crore on Monday, 20 October 2014.
Among the 30 Sensex shares, 20 stocks rose and the remaining shares fell.
Cairn India rose 0.11%. The company announced during trading hours today, 21 October 2014, that it has appointed Mayank Ashar as the Managing Director & Chief Executive Officer of the company with effect from 17 November 2014.
Idea Cellular fell 0.43%. The company's consolidated profit after tax (PAT) rose 3.8% to Rs 755.90 crore on 0.11% growth in total revenue to Rs 7569.90 crore in Q2 September 2014 over Q1 June 2014. The result was announced after market hours yesterday, 20 October 2014.
Shriram Transport Finance Company fell 2.62%. On a consolidated basis, the company reported 11.9% fall in net profit to Rs 310.04 crore on 7.49% rise in total income to Rs 2261.24 crore in Q2 September 2014 over Q2 September 2013. The result was announced after market hours yesterday, 20 October 2014.
Just Dial fell 2.55%. The company reported 9.87% rise in net profit to Rs 31.49 crore on 28.52% rise in total income to Rs 155.91 crore in Q2 September 2014 over Q2 September 2013. The result was announced after market hours yesterday, 20 October 2014. Just Dial's board of directors considered and approved raising of funds for an amount up to Rs 1000 crore through issue of equity or equity-linked securities, subject to approval of shareholders to be obtained through Postal Ballot.
Bank stocks rose for the second day in a row as a sharp cut in diesel price on Saturday, 18 October 2014, is expected to bring down freight rates which in turn could reduce consumer price inflation. Lower consumer price inflation could provide room for the Reserve Bank of India (RBI) to cut interest rates.
Soon after the government on Saturday, 18 October 2014, announced deregulation of diesel prices, PSU OMCs cut diesel prices. Indian Oil Corporation (IOCL) on Saturday, 18 October 2014, said it has cut diesel price by Rs 3.37/litre (including VAT) in Delhi with corresponding decrease in other price in other states from the midnight of 18/19 October 2014. The movement of prices in international oil market and rupee dollar exchange rate shall continue to be closely monitored and developing trends of the market will be reflected in future price changes in diesel prices, IOCL said.
Among state-run banks, IDBI Bank (up 3.45%), Bank of India (up 2.38%), IndusInd Bank (up 1.55%), Bank of Baroda (up 1.01%), State Bank of India (up 0.70%), Canara Bank (up 0.58%), rose. Union Bank of India was down 0.83%.
Punjab National Bank fell 2.60% to Rs 931.50. The stock hit a high of Rs 975.35 and a low of Rs 918.70. The bank's net profit rose 13.81% to Rs 575.34 crore on 11.92% growth in total income to Rs 13020.46 crore in Q2 September 2014 over Q2 September 2013. The result was announced during market hours.
PNB's ratio of gross non-performing assets (NPA) to gross advances stood at 5.65% as on 30 September 2014 as against 5.48% as on 30 June 2014 and 5.14% as on 30 September 2013. The ratio of net NPA to net advances stood at 3.26% as on 30 September 2014 as against 3.02% as on 30 June 2014 and 3.07% as on 30 September 2013.
Among private sector companies, ICICI Bank (up 2.41%), Yes Bank (up 1.49%), Federal Bank (up 1.12%), Axis Bank (up 0.99%) and Kotak Mahindra Bank (up 0.29%), edged higher.
HDFC Bank fell 0.07% to Rs 894.20. The stock hit a high of Rs 905.65 and a low of Rs 888. The bank's net profit rose 20.13% to Rs 2381.46 crore on 16.39% rise in total income to Rs 13894.73 crore in Q2 September 2014 over Q2 September 2013. The result was announced during trading hours today, 21 October 2014.
HDFC Bank's gross non-performing assets (NPAs) were at 1.02% of gross advances as on 30 September 2014, as against 1.09% as on 30 September 2013 and 1.07% as on 30 June 2014. Net non-performing assets were at 0.28% of net advances as on 30 September 2014 same as on 30 September 2013 and as on 30 June 2014. Total restructured loans (including applications received and under process for restricting) were at 0.1% of gross advances as of 30 September 2014 as against 0.2% as of 30 September 2013.
The bank's total capital adequacy ratio (CAR) as at 30 September 2014 (computed as per Basel III guidelines) stood at 15.7% as against a regulatory requirement of 9%. Tier-I CAR was 11.8%.
Shares of power companies rose after the government yesterday, 20 October 2014, announced that it will auction 74 coal-mining licenses to private companies in the next three to four months after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993. Adani Power (up 2.52%), JSW Energy (up 2.15%), NTPC (up 2.12%), Reliance Power (up 1.56%), NHPC (up 1.31%), Tata Power (up 1.15%) and Torrent Power (up 0.71%), edged higher.
The government is reallocating hundreds of mining licenses after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993, saying the way they were given out was nontransparent and arbitrary. The licenses will be auctioned to private-sector companies only for captive use. Finance Minister Arun Jaitley said yesterday, 20 October 2014, that allowing private-sector companies to mine coal to sell to others is something the government may consider in the future.
Shares of state-run Coal India were off 1.51% at Rs 355.25.
Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) edged higher as coal block auctions will reduce uncertainty regarding power generation companies that depend on the dry fuel. Power Finance Corporation was up 4.85% and REC was up 3.69%.
In the foreign exchange market, the rupee edged higher against the dollar as key equity benchmark indices rose. The partially convertible rupee was hovering at 61.335, compared with its close of 61.365 during the previous trading session.
Brent crude prices edged higher on news of robust Chinese oil demand. Brent for December settlement was up 80 cents at $86.20 a barrel. The contract had lost 76 cents or 0.9% to settle at $85.40 a barrel yesterday, 20 October 2014.
Meanwhile, Ashima Goyal, a member of the Reserve Bank of India's (RBI) technical advisory committee reportedly said yesterday, 20 October 2014, that the RBI may consider easing monetary policy as early as March after global crude prices fell to a four-year low this month. Real interest rates are becoming more and more positive, which would be severely disinflationary, and that means the RBI has to cut rates, Goyal said. The RBI's technical advisory committee makes policy recommendations to RBI Governor Raghuram Rajan.
The Reserve Bank of India (RBI) is scheduled to undertake its fifth bi-monthly monetary policy review on 2 December 2014.
Meanwhile, the Narendra Modi government yesterday, 20 October 2014, announced that it will auction 74 coal-mining licenses to private companies in the next three to four months after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993. The licenses will be auctioned to private-sector companies only for captive use. Finance Minister Arun Jaitley said allowing private-sector companies to mine coal to sell to others is something the government may consider in the future.
Mr. Jaitley said state-run, coal-consuming companies that want to mine for their own use won't have to compete against the private sector for coal licenses, especially in key industries such as power. The government will allocate government companies licenses without an auction.
The announcement of coal block auctions comes close on the heels of the government announcing diesel price decontrol and increase in natural-gas tariffs over the weekend. The deregulation of diesel prices will reduce the government's fuel subsidy burden. Meanwhile, as a result of the gas price hike, the government will get additional revenue of approximately Rs 3800 crore per annum on account of higher royalty, higher profit petroleum and higher taxes.
European shares rose today, 21 October 2014, with a round of solid earnings report helping boost the mood after the recent selloff. Key indices in Germany, France and UK were up 0.53% to 0.90%.
Asian stocks edged lower today, 21 October 2014, after a mixed bag of Chinese economic data, including the slowest GDP growth in five years, and a drop in housing prices, but a better-than-expected gain for September industrial production. Key benchmark indices in China, Indonesia, Taiwan, Japan and South Korea were off 0.10% to 2.03%. However, key benchmark indices in Singapore and Hong Kong were up 0.08% to 0.68%.
China posted a 7.3% year-over-year quarterly growth rate, marking growth at its slowest pace in five years amid a slumping real-estate market and weak domestic demand and industrial production. Value-added industrial output in China rose by a larger-than-expected 8% in September from a year earlier, accelerating from a 6.9% year-over-year increase in August, the statistics bureau said. Industrial production also increased 0.91% in September from August, when it rose 0.2% from the preceding month, it said.
Meanwhile, Japan downgraded its overall assessment of the economy in October for the second consecutive month, citing a slowdown in production, likely adding to concerns over whether the government will go ahead with a second sales tax increase next year. In its monthly economic report released Tuesday, the government said the overall economy was recovering moderately, though weakness can be seen recently.
Trading in US index futures indicated that the Dow could advance 11 points at the opening bell today, 21 October 2014. US equity investors began the week on an optimistic, albeit cautious, note on Monday, 20 October 2014, with gains in broader markets led by defensive sectors such as consumer staples and utilities.
The Federal Open Market Committee (FOMC) next undertakes a monetary policy review at a two-day meeting on 28-29 October 2014.
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