Key benchmark indices edged higher in what was a choppy trading session as leads and results of Lok Sabha election showed that Narendra Modi was on course to wrest the top job in the country as a saffron wave swept large swathes of India and leaving Congress in tatters. Trends of Lok Sabha elections showed that Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) is all set to form the next government at the Centre. The NDA was leading in 271 seats and was declared winner in 63 seats out of the total of 543 Lok Sabha seats. The Congress-led United Progressive Alliance (UPA) was leading in 49 seats and was declared winner in 10 seats. A party or a pre-poll alliance will need 272 MPs to form government at the Centre, which is a simple majority in 543-member Lok Sabha. Investors are hoping that the BJP-led government will be better at getting things done and more business-friendly than the Congress-party-led coalition government which was in power during the past ten years. The barometer index, the S&P BSE Sensex, was provisionally up 196.92 points or 0.82%, off close to 1,270 points from the day's high and up about 230 points from the day's low. The market breadth, indicating the overall health of the market turned positive from negative in late trade. The BSE Mid-Cap index rose more than 1%. The BSE Small-Cap index gained more than 1%. Both these indices outperformed the Sensex.
Bank stocks vaulted with State Bank of India hitting 52-week high and ICICI Bank, Axis Bank and HDFC Bank hitting record high.
Indian stocks witnessed high intraday volatility today, 16 May 2014. The market surged in early trade after the early trends of Lok Sabha elections showed that Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) was leading in the elections. The Sensex and the 50-unit CNX Nifty, both, hit record high. A bout of volatility was witnessed as key benchmark indices trimmed gains after extending initial strong gains in morning trade. The Sensex further trimmed intraday gains in mid-morning trade. Firmness continued on the bourses in early afternoon trade as Lok Sabha election trends showed that Narendra Modi was on course to wrest the top job in the country as a saffron wave swept large swathes of India and leaving Congress in tatters. The Sensex trimmed gains in afternoon trade. Volatility ruled the roost as the Sensex regained positive zone after slipping into the red for a brief period in mid-afternoon trade.
The counting of votes for the Lok Sabha elections began at 8:00 IST today, 16 May 2014, and results are expected by today itself. If the NDA comes to power, Narendra Modi will become India's next Prime Minister. Modi is perceived as being more business-friendly and decisive by the business community. As chief minister for the fast-growing state of Gujarat, Modi has built a reputation for getting things done. While campaigning for the Lok Sabha elections, Modi pledged to reinvigorate the country's manufacturing sector, create more jobs and overhaul the country's inadequate infrastructure. Investors are hoping that the BJP-led government will be better at getting things done and more business-friendly than the Congress-party-led coalition government which was in power during the past ten years.
Investors are expecting measures for revival of the economy, business-friendly policies and good governance from the new government that comes to power after the elections. Investors expect policy measures from the new government to put India on a high-growth path on a sustainable basis.
The BJP in its Lok Sabha polls manifesto had promised more business-friendly policies if the party comes to power after elections. The BJP had said that measures for the revival of the economy are its priority if the party comes to power after elections. India's GDP growth has slowed to a decade low of below 5%. The GDP grew 4.7% in Q3 December 2013.
Global crediting rating agency Fitch Ratings today, 16 May 2014, said that the new government must focus on boosting growth by spurring a pick-up in investments, calling this the most important issue from a sovereign credit perspective. Fitch added the investment climate can be strengthened by measures including a clear strategy for fiscal consolidation, creating a low inflation environment and a new push towards structural reforms, including reducing red tape and easing infrastructure bottlenecks.
As per provisional figures, the S&P BSE Sensex was up 196.92 points or 0.82% to 24,102.52. The index jumped 1,470.03 points at the day's high of 25,375.63 in morning trade, a record high for the index. The index fell 32.44 points at the day's low of 23,873.16 in mid-afternoon trade.
The CNX Nifty was up 71.30 points or 1% to 7,194.45, as per provisional figures. The index hit a high of 7,563.50 in intraday trade, a record high for the index. The index hit a low of 7,130.65 in intraday trade.
The BSE Mid-Cap index was up 125.62 points or 1.64% at 7,765.72. The BSE Small-Cap index was up 94.64 points or 1.21% at 7,885.76. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 6791 crore, much higher than Rs 3223 crore on Thursday, 15 May 2014.
The market breadth, indicating the overall health of the market turned positive from negative in late trade. On BSE, 1,427 shares rose and 1,376 shares fell. A total of 161 shares were unchanged. Earlier, the breadth had turned negative from positive in mid-morning trade.
Among the 30-share Sensex pack, 18 stocks gained and rest of them declined. Sesa Sterlite (up 11.01%), Bharat Heavy Electricals (Bhel) (up 4.79%) and Tata Power Company (up 3.72%) edged higher from the Sensex pack.
GAIL (India) rose 1.25% to Rs 409. The stock hit 52-week high of Rs 430 in intraday trade.
Bank stocks vaulted. Among private sector banks, IndusInd Bank (up 4.48%), Yes Bank (up 3.95%), and Federal Bank (up 5.24%), gained.
Kotak Mahindra Bank rose 4.11% to Rs 925 after hitting record high of Rs 950 in intraday trade.
Axis Bank gained 5.68% to Rs 1,758.15 after hitting record high of Rs 1,878.20 in intraday trade.
ICICI Bank jumped 5.43% to Rs 1,468.80 after hitting record high of Rs 1,590.35 in intraday trade.
HDFC Bank rose 1.99% to Rs 803.75 after hitting record high of Rs 852.35 in intraday trade.
Among PSU bank stocks, Canara Bank (up 8.54%), Union Bank of India (up 6.74%), aand Bank of India (up 5.75%), gained.
Bank of Baroda rose 2.02% to Rs 940 after hitting 52-week high of Rs 1,009 in intraday trade.
Punjab National Bank jumped 8.14% to Rs 924 after hitting 52-week high of Rs 960.35 in intraday trade.
State Bank of India (SBI) jumped 5.92% to Rs 2,414.05 after hitting 52-week high of Rs 2,505.10 in intraday trade.
Steel Authority of India (Sail) rose 3.24% to Rs 78.15. The stock pared gains after hitting 52-week high of Rs 86.50 in intraday trade. The stock hit low of Rs 76.60.
The Supreme Court ordered on Friday the temporary closure of some iron ore mines in the top producing Odisha to curb illegal mining, electronic media reported, in a blow to local steel mills that depend on high-quality ore from the state. According to reports, the Supreme Court on Friday, 16 May 2014, passed a limited mining ban on Odisha, which produces over 50% of the country's iron ore and manganese, affecting only those who have been operating on deemed renewals for a second time and beyond.
The ban affects only 26 companies who were on their second renewal. They will apply for grant of license to the state which will take a call on their applications within six months, a three-judge bench, comprising justices AK Patnaik, SS Nijjar and FMI Kalifullah, reportedly said.
The state will have to pass reasoned orders on this, the court reportedly said.
Fourteen leases who are operating after their first renewal will be permitted to continue mining. Another sixteen have already been granted leases by the state. These can operate too, reports added.
However, another 102 identified by the central empowered committee, as not working for not having environmental clearances, cannot operate. Another 29 leases which have lapsed or who's clearances have been rejected will not operate till they get clearances, reports said.
Adani Ports & Special Economic Zone gained 1.95% to Rs 224.65 after striking a 52-week high of Rs 235.40 in intraday trade.
L&T rose 3.52% to Rs 1,425.95. The stock hit a 52-week high of Rs 1,493.15 in intraday trade today, 16 May 2014.
Tata Steel slipped 4.4% to Rs 440.45. The stock reversed direction after hitting 52-week high of Rs 484.85 in intraday trade. The stock hit low of Rs 428.30 in intraday trade.
Tata Steel and L&T Infrastructure Development Projects (L&T IDPL) today, 16 May 2014, announced that they have executed a definitive agreement with Adani Ports & Special Economic Zone (Adani Ports) to sell 100% stake in the Dhamra Port Company (DPCL) for an Enterprise Value of around Rs 5500 crore. DPCL is a 50:50 joint venture between L&T IDPL and Tata Steel. The port was commissioned in May 2011 with an 18 km approach channel and a dedicated 62.7 km rail link to Bhadrak. In FY 2014, DPCL handled 14.3 mtpa of cargo.
As part of Tata Steel's review of its investments portfolio, the oard of the company has approved the divestment of its equity holding in the JV at an attractive valuation, Tata Steel said. To secure its long term requirement and access to a deep-water port for its operations in Jamshedpur and Odisha, Tata Steel has also entered into a long-term cargo handling arrangement with DPCL.
In the foreign exchange market, the rupee edged higher against the dollar after the trends of Lok Sabha elections showed that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) is set to form the next government at Centre. The partially convertible rupee was hovering at 59.03, compared with its close of 59.29/30 on Thursday, 15 May 2014.
The India Meteorological Department (IMD) on Thursday, 15 May 2014, said that the southwest monsoon is likely to set over Kerala on 5 June 2014, with a model error of plus/minus 4 days. The normal date of onset of the southwest monsoon in India is 1 June. Advance of southwest monsoon over Andaman Sea normally takes place around 20 May with a standard deviation of about one week. Low level cross equatorial monsoon flow has started appearing over south of Andaman Sea and adjoining south Bay of Bengal, the IMD said in a statement. The monsoon is likely to advance over Andaman Sea during next three days, the IMD said. Past data suggests absence of any one to one association of the date of monsoon advance over Andaman Sea with the date of monsoon onset over Kerala or that with the seasonal monsoon rainfall over the country, the IMD said.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June 2014. The RBI left its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review on 1 April 2014, as consumer-price inflation eased to a two-year low and as the rupee firmed up against the dollar.
European stocks struggled for direction on Friday as investors digested the latest developments in Ukraine and corporate news. Key benchmark indices in UK, Germany and France were down 0.05% to 0.15%.
Asian stocks were mostly higher on Friday. Key benchmark indices in China, Indonesia, South Korea and Taiwan were up 0.08% to 0.8%. Key benchmark indices in Japan, Singapore and Hong Kong were off 0.08% to 1.41%.
Hong Kong's economy grew in the first quarter at the slowest pace since a contraction in 2012 because of weakness in exports. Gross domestic product expanded 0.2% from the previous three months, the government said in a statement on its website today.
Non-performing loans in Asia's biggest economy rose by 54 billion yuan ($8.7 billion) in the three months through March to 646.1 billion yuan, the highest level since September 2008, according to data released by the China Banking Regulatory Commission yesterday. Bad credit accounted for 1.04% of total lending, up from 1% three months earlier.
Trading in US index futures indicated that the Dow could fall 9 points at the opening bell on Friday, 16 May 2014. US stocks fell a second day on Thursday, with the Dow Jones Industrial Average sinking the most in a month, as investors continued to sell small-cap shares and Wal-Mart Stores Inc. forecast profit that missed estimates.
Economic data showed industrial production in the US unexpectedly declined in April, held back by a plunge in utilities as temperatures warmed and a broad-based decrease in manufacturing. Manufacturing, which makes up 75% of total production, decreased 0.4%. That contrasted with a higher-than-forecast reading on the Fed Bank of New York's gauge of regional manufacturing, which climbed to 19.01 this month, from 1.29 in April. Labor Department data showed the fewest Americans in seven years filed applications for unemployment benefits last week, while a separate report indicated the cost of living in the US rose in April by the most in almost a year.
Federal Reserve Chairwoman Janet Yellen yesterday said the US economy has further to go to achieve full health and predicted small businesses will play a vital role in the recovery.
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.
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