Key benchmark indices edged higher in choppy trade after a survey showed that private sector output across India rose for the first time in eight months during February and that Indian services companies maintained their positive outlook for output growth over the coming year in February 2014. The services sector accounts for about 60% of India's gross domestic product. The barometer index, the S&P BSE Sensex, was provisionally up 55.76 points or 0.26%, up about 90 points from the day's low and off close to 70 points from the day's high. The market breadth, indicating the overall health of the market, was positive. Receding geopolitical worries over Ukraine aided the upmove on the domestic bourses.
Indian stocks edged higher for the second day in a row today, 5 March 2014.
Bank stocks edged higher. Most metal stocks rose a China's leaders retained an economic growth target for this year. Capital goods stocks rose, with ABB India and Thermax hitting 52-week high.
The market edged higher in early trade on firm Asian stocks. The Sensex and the 50-unit CNX Nifty, both, hit their highest level in nearly six weeks. A bout of volatility was witnessed as key benchmark indices trimmed gains in morning trade. Intraday volatility continued as key benchmark indices recovered from lower level after giving away almost entire intraday gains in mid-morning trade. The Sensex slipped into the red later. Intraday volatility continued as key benchmark indices alternately moved between positive and negative terrain in early afternoon trade. Key benchmark indices extended intraday gains afternoon trade. Key benchmark indices hovered in green in mid-afternoon trade. The Sensex retained positive zone in late trade.
The market sentiment was boosted by data showing that foreign funds were net buyers of Indian stocks on Tuesday, 4 March 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 185.61 crore on Tuesday, 4 March 2014, as per provisional data from the stock exchanges.
As per provisional figures, the S&P BSE Sensex was up 55.76 points or 0.26% to 21,265.49. The index jumped 123.47 points at the day's high of 21,333.20 in early trade, its highest level since 24 January 2014. The index fell 33.57 points at the day's low of 21,176.16 in early afternoon trade.
The CNX Nifty was up 28.05 points or 0.45% to 6,326, as per provisional figures. The index hit a high of 6,336.25 in intraday trade, its highest level since 23 January 2014. The index hit a low of 6,287.80 in intraday trade.
The BSE Mid-Cap index was up 60.76 points or 0.93% at 6,626.35. The BSE Small-Cap index was up 27.48 points or 0.42% at 6,543.27. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,505 shares gained and 1,182 shares fell. A total of 151 shares were unchanged.
The total turnover on BSE amounted to Rs 2336 crore, higher than Rs 2195.50 crore on Tuesday, 4 March 2014.
Among the 30-share Sensex pack, 17 stocks rose and rest of them declined. Cipla (up 1.44%), ONGC (up 1.76%) and Coal India (up 1.88%) edged higher from the Sensex pack.
Capital goods stocks gained. Crompton Greaves (up 2.08%), L&T (up 0.55%), Punj Lloyd (up 1.95%) and Siemens (up 3.17%) gained. But, Bhel fell 0.27%.
Thermax rose 4.68% to Rs 747.60. The stock hit 52-week high of Rs 757 in intraday trade.
ABB (India) jumped 9.85% to Rs 802.50. The stock hit 52-week high of Rs 803.20 in intraday trade.
Most metal stocks rose as China's leaders retained an economic growth target for this year. China is the world's largest consumer of copper and aluminum. Hindalco Industries (up 1.76%), Hindustan Zinc (up 1.87%), Tata Steel (up 0.81%), JSW Steel (up 0.04%), Sail (up 2.74%), and Hindustan Copper (up 0.41%) gained. Sesa Sterlite dropped 0.71%.
National Aluminium Company (Nalco) fell 3.38% as the stock turned ex-dividend today, 5 March 2014, for interim dividend of Rs 1.10 per share for the year ending 31 March 2014.
Bank stocks edged higher. Among private sector banks, ICICI Bank (up 2.74%), Yes Bank (up 2.87%), Federal Bank (up 0.56%), Kotak Mahindra Bank (up 0.31%) and AXIS Bank (up 0.37%), gained. HDFC Bank fell 0.08%.
Among PSU bank stocks, State Bank of India, Canara Bank, Union Bank of India, Bank of India, and Bank of Baroda gained 1.16% to 6.17%.
State-run banks' bad loans are expected to be slightly higher by March-end from a year earlier, Finance Minister P. Chidambaram said today, 5 March 2014, after reviewing their quarterly performance. He added that banks recovered bad loans worth Rs 18933 crore during April to December 2013.
Punjab National Bank gained 4.26% after the bank announced after market hours on Tuesday, 4 March 2014, that after regulatory approvals, the bank has sold its entire stake in Credit Information Bureau India (CIBIL) to TransUnion International Inc. (FII).
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 61.73, compared with its close of 61.845/855 on Tuesday, 4 March 2014.
Private sector output across India rose for the first time in eight months during February. The seasonally adjusted HSBC India Composite Output Index posted 50.3 in February 2014, higher than 49.6 in January 2014, indicating a fractional rate of expansion. The latest growth was centred on the manufacturing sector, Markit Economics said in a statement. Adjusted for seasonal influences, the headline HSBC Services Business Activity Index rose from 48.3 in the previous month to 48.8 in February. This was consistent with a slight rate of contraction, and one that was the slowest in the current eight-month period of reduction, Markit Economics said. Where output declined, this was linked by survey respondents to lower levels of incoming new work and economic instability across the country. Sector data indicated that four of the six monitored categories recorded falling business activity, with the fastest decrease noted in Financial Intermediation.
February data highlighted an eighth consecutive monthly decline in new business placed with Indian services firms. That said, the pace of reduction eased to the weakest in that sequence and was marginal overall, Markit Economics said. Panellists reported weaker demand, a fragile economy and competitive pressures. Three of the six monitored sub-sectors registered lower new orders, namely Financial Intermediation, Renting & Business Activities and Transport & Storage. New business rose at a marked pace in the manufacturing economy, supporting growth across the private sector as a whole.
Staffing levels at service providers were broadly unchanged in February, with the index measuring employment posting only fractionally above the 50 no-change mark. Payroll numbers at manufacturers rose, albeit marginally. Concurrently, workforce numbers across the private sector as a whole were little-changed from those seen in January.
Indian service providers reported higher input prices in February 2014. The rate of cost inflation was solid, but eased since January and was weaker than the series average. Higher food, fuel and gold prices were cited by panellists as the main drivers of the rise in input costs. Input price inflation in the private sector accelerated to the strongest in four months, as manufacturers registered a sharp and accelerated increase. Reflective of sustained increases in costs, prices charged by services companies were raised further in February. Although the fastest in three months, the rate of charge inflation was moderate and below its average, Markit Economics said. Output prices in the private sector as a whole rose at a moderate pace that was unchanged from January.
Indian services companies maintained their positive outlook for output growth over the coming year, which they mainly linked to planned increases in marketing, forecasts of stronger demand and hopes of an overall improvement in economic conditions.
Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: "Service sector activity continued to stabilize, but the PMI reading remains below the water line and point to weak growth conditions. While inflation for input prices eased a bit, it picked up for prices charged as businesses passed on higher costs to clients. Despite the weak growth backdrop, the RBI will have to keep its inflation guards up to address lingering inflation pressures. Moreover, fiscal policy tightening to meet the deficit target will hold back government spending. This suggests that growth will remain subdued in coming months".
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.
On the political front, the Election Commission today, 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. With the announcement of poll dates, the Model Code of Conduct for governments and political parties comes into force with immediate effect. Therefore the Cabinet will no longer be able to take key decisions. Chief Election Commissioner VS Sampath said the dates have been decided keeping in view certain factors. "The parties brought to our notice a wide range of issues pertaining to security, revising the ceiling of poll expenditure, keeping the regional cultures and festivals in view while deciding dates," Sampath said.
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.
Meanwhile, geopolitical tensions over Ukraine eased after comments from Russian President Vladimir Putin on Tuesday, 4 March 2014, signaled the Ukraine crisis won't immediately escalate. Putin on Tuesday, 4 March 2014, said that he's not considering taking control of the Black Sea region of Crimea and would send troops into Ukraine only in extreme circumstances. Ukraine, a former Soviet republic, has been plunged into turmoil since protesters forced the ouster of the president last month. Russia keeps its Black Sea fleet in Crimea, where the majority language is Russian. Troops in the region have only been securing their bases and gunmen who have seized crucial infrastructure and surrounded military installations in the Crimea are acting independently, Putin said on Tuesday.
Meanwhile, US President Barack Obama on Tuesday said a Putin news conference earlier Tuesday was just a smoke screen to justify an illegal invasion.
European stocks fell on Wednesday, 5 March 2014, after rallying yesterday by the most in eight months, as investors turned their attention from the crisis in Ukraine to economic data from Europe and America. Key benchmark indices in France, Germany and UK shed 0.15% to 0.33%.
A monthly meeting of the Governing Council of the European Central Bank (ECB) is scheduled tomorrow, 6 March 2014, in Frankfurt to decide euro zone interest rates.
A two-day meeting of Bank of England's Monetary Policy Committee (MPC) begins today, 5 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.
Asian stocks edged higher on Wednesday, 5 March 2014, after comments from Russian President Vladimir Putin on Tuesday, 4 March 2014, signaled the Ukraine crisis won't immediately escalate and as China's leaders retained an economic growth target for this year. Key benchmark indices in Indonesia, Singapore, Japan, Taiwan and South Korea were up 0.38% to 1.26%. China's Shanghai Composite fell 0.89%. Hong Kong's Hang Seng shed 0.34%.
At the start of China's annual meeting of its legislature, the National People's Congress, Premier Li Keqiang today, 5 March 2014, said the government would keep its economic-growth target at 7.5% in 2014, unchanged from that of 2012 and 2013. Meanwhile, the consumer inflation target was set at 3.5%. The world's second-largest economy grew 7.6% in 2013, its slowest pace since 1999. Setting the target at 7.5% would strengthen market confidence, optimize economic structures, and protect jobs, Li said in his first "work report" to the legislature. "Growth is the key to solve all the key issues in our country. We have to hold firm to the focus of economic development in our work and maintain a proper economic growth rate," Li said.
The 7.5% target "is in keeping with our goal of finishing building a moderately prosperous society in all respects, and it will boost market confidence and promote economic structural adjustment. More importantly, stable growth ensures employment," Li said. "China is still a developing country in the primary stage of socialism, and development remains the key to solving all our country's problems," Li said in the report.
The expansion goal is "flexible and guiding, the National Development and Reform Commission said in a related report today, 5 March 2014. Local governments "must not seek faster growth or compete with each other to have the highest growth rate," the economic-planning agency said.
The budget deficit is estimated to rise to 1.35 trillion yuan this year from 1.2 trillion yuan last year, the Ministry of Finance said in its work report. That would account for about 2.1% of gross domestic product, it said. "China will expand the fiscal deficit to maintain a certain level of stimulus while keeping the deficit ratio unchanged, reflecting the stability and continuity of economic policy," the ministry said in today's report.
China today, 5 March 2014, provided more details on how it plans to reform some of its tightly regulated resource prices this year and gave hard targets for reducing pollution in 2014. "The problems of consumption of resources and environmental pollution are prominent," the National Development and Reform Commission (NDRC), the country's top economic planning agency, said in an annual report. "In particular, smog frequently engulfs large areas of China and seriously affects people's lives and health," it said. The report was presented to the National People's Congress, which opened on Wednesday. The NDRC said it would introduce tiered-pricing models for resources that would charge some users higher prices based on the amount they consume.
The HSBC China services Purchasing Managers' Index rose to 51 in February from 50.7 in January, HSBC Holdings PLC said on Wednesday. A reading above 50 indicates expansion in service-sector activity, while a reading below that shows a contraction. "The HSBC China Services PMI suggests that service sector growth seems to be stabilising at a relatively low level. However, combined with the weaker manufacturing PMI, the overall strength of economic growth is moderating and this is starting to weigh on employment growth," HSBC chief economist for China Qu Hongbin said in a statement. "Beijing policy makers can and should fine-tune policy to avoid growth deceleration in the first half of the year," he added.
Shanghai Chaori Solar Energy Science & Technology Co, which makes solar cells and panels, announced late on Tuesday, 4 March 2014, that it may not be able to make an 89.8 million yuan ($14.6 million) interest payment in full on March 7, in what would be the first default of an onshore bond. The company plans to pay 4 million yuan to bondholders, the company said in a statement to the Shenzhen stock exchange yesterday. Its stock has been suspended from trade. A default would highlight strain in China's $4.2 trillion bond market after a trust product issued by China Credit Trust Co. was bailed out in January.
Australia's economy expanded faster than analysts forecast last quarter on rising household spending and lower savings, as the central bank's bid to spur consumption-led growth bears fruit. Fourth-quarter gross domestic product rose 0.8% from the previous three months.
Trading in US index futures indicated a flat opening of US stocks on Wednesday, 5 March 2014. US stocks surged on Tuesday, 4 March 2014, as fears of a confrontation between Russia and Ukraine eased and Russian President Vladimir Putin said there was no need to use military force in the Crimea region for now.
The US economy will grow this year at its fastest pace since 2005, helping reduce the annual average unemployment rate for a fourth straight year even as market borrowing costs rise, the President Barack Obama administration predicted. Gross domestic product will expand 3.1% in 2014 after rising 1.9% last year, the administration said in forecasts accompanying its 2015 budget plan released in Washington. The jobless rate will average 6.9% this year, compared with 7.4% last year, and average 6.4% in 2015, according to estimates based on information as of mid-November.
The $3.9 trillion spending request anticipates an accelerating economy that's boosting employment while moving up inflation to levels unlikely to concern Federal Reserve policy makers. The proposal says fixing the immigration system, investing in infrastructure, simplifying the tax code and improving job training would reduce the ranks of the unemployed even more.
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.
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