Key benchmark indices surged in early afternoon trade, extending their initial gains. The market sentiment was boosted after news reports said that the stock market regulator Securities and Exchange Board of India (Sebi) has relaxed the rules on trading of thinly-traded stocks. The market sentiment was also boosted by data showing that foreign funds made substantial purchases of Indian stocks on Thursday, 19 December 2013. The market breadth, indicating the overall health of the market, was strong. The barometer index, the S&P BSE Sensex, was up 207.74 points or 1%, up 170.42 points from the day's low and off 2.46 points from the day's high.
Sebi has reportedly rationalized the periodic call auction mechanism by modifying how it classifies the so-called illiquid stocks. A stock would now be classified as illiquid if its average daily turnover is less than Rs 2 lakh in the previous two quarters and if it is classified as illiquid at all the exchanges where it is traded. Earlier, a stock was classified to be illiquid if its average daily trading volume in a quarter was less than 10,000, the average daily number of trades was less than 50 in a quarter and if it was classified as illiquid by all the exchanges where it traded.
Call auctions will not apply to shares where a company is profitable in at least two of the past three years and not more than 20% of promoters' shareholding is pledged in the latest quarter and the book value is three times or more than the face value. The new rules also exclude companies with a market capitalisation of at least Rs 10 crore or which have paid a dividend in at least two of the past three years.
From now, stock exchanges will determine the number of call auction sessions for illiquid stocks. Exchanges will, however, have at least two sessions in a trading day, with one uniform closing session across the exchanges. So far, periodic call auction sessions of one hour each were conducted throughout trading hours, with the first session starting at 9:30 IST.
Index heavyweight Reliance Industries (RIL) edged higher in volatile trade on reports that the government has allowed the company to charge higher prices for gas from April 2014 after the company offered financial guarantees to the government to settle any claims against it over a shortfall in its gas output. Among IT stocks, Wipro hit 52-week high. Realty stocks rose after State Bank of India and HDFC on Thursday, 19 December 2013, cut home loan rates.
Key benchmark indices pared gains after a firm opening. Key benchmark indices retained positive zone in morning trade. The Sensex hovered in positive zone in mid-morning trade. Key benchmark indices surged in early afternoon trade.
The market sentiment was boosted by data showing that foreign funds made substantial purchases of Indian stocks on Thursday, 19 December 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 2264.11 crore on Thursday, 19 December 2013, as per provisional data from the stock exchanges.
At 12:16 IST, the S&P BSE Sensex was up 207.74 points or 1% to 20,916.36. The index jumped 210.20 points at the day's high of 20,918.82 in early afternoon trade. The index rose 37.32 points at the day's low of 20,745.94 in morning trade.
The CNX Nifty was up 56.75 points or 0.92% to 6,223.40. The index hit a high of 6,225.30 in intraday trade. The index hit a low of 6,170.35 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,371 shares gained and 811 shares fell. A total of 136 shares were unchanged.
The total turnover on BSE amounted to Rs 967 crore by 12:15 IST, compared with Rs 689 crore by 11:15 IST.
Among the 30-share Sensex pack, 25 stocks gained and rest of them declined.
ONGC (up 2.19%), Hero MotoCorp (up 2.11%) and Tata Motors (up 1.72%) edged higher from the Sensex pack.
Index heavyweight Reliance Industries (RIL) edged higher in volatile trade on reports that the government has allowed the company to charge higher prices for gas from April after the company offered financial guarantees to the government to settle any claims against it over a shortfall in its gas output. The stock was up 2.01% at Rs 871.75. The stock hit a high of Rs 878 and low of Rs 862.30 so far during the day. "Bank guarantee will be equivalent to the incremental revenue that Reliance will get from the new gas pricing," Oil Secretary Vivek Rae told reporters after a cabinet meeting on Thursday, 19 December 2013.
The government in June this year approved a move to higher, market-related rates for locally-produced gas from April 2014, but the finance ministry later said prices for RIL should be capped because the company's gas production from the offshore D6 block was far below its supply commitment. RIL, which operates the D6 block off India's eastern coast, has reported a sharp decline in gas output since 2010. Falling output had already prompted the government to disallow proportionate cost recovery to Reliance, leading to arbitration proceedings over the issue.
Wipro gained 2.31% to Rs 542.15. The stock hit 52-week high of Rs 542.50 in intraday trade.
Realty stocks rose after State Bank of India (SBI) and HDFC on Thursday, 19 December 2013, cut home loan rates. Purchases of both residential and commercial property are largely driven by finance. DLF (up 1.01%), Indiabulls Real Estate (up 2.14%), HDIL (up 2.5%), Unitech (up 1.01%) Godrej Properties (up 1.15%), Oberoi Realty (up 1.33%), Sobha Developers (up 0.76%) and Parsvnath Developers (up 0.82%) gained.
A day after RBI governor Raghuram Rajan decided to hold rates, SBI on Thursday, 19 December 2013, slashed home loan rates by up to 35 basis points for new borrowers and has unveiled a further discount of 5 basis points for women customers. Loans of up to Rs 75 lakh would be available to fresh borrowers at 10.15% against the existing rate of 10.50%. For women borrowers, the rate of interest after an additional concession of 0.05% would be 10.10% for home loans of up to Rs 75 lakh. With regard to loans of above Rs 75 lakh, the new rate would be 10.30%. For women borrowers it is 10.25%.
HDFC, meanwhile, said that it has launched a "Winter Bonanza" for home loan customers effective Friday under which loans up to Rs 75 lakh will be available at 10.25% as against 10.75%. The mortgage company said that the new rates are valid for all new applications submitted before 31 January 2014.
Max India rose 1.55% to Rs 199.65, with the stock recovering on bargain hunting after recent slide. Shares of Max India had declined 5.52% in five trading sessions to settle at Rs 196.60 on Thursday, 19 December 2013 from a recent high of Rs 208.10 on 12 December 2013.
Asian stocks were mostly higher on Friday, 20 December 2013. Key benchmark indices in Japan, Taiwan, Singapore and South Korea rose 0.01% to 0.54%. Key benchmark indices in Hong Kong, China and Indonesia fell by 0.3% to 1.88%.
The Chinese central bank said at the close of market trading yesterday, 19 December 2013, that it added funding to selected lenders using short-term liquidity operations.
The Bank of Japan kept its asset-purchase levels and overall monetary policy unchanged after a monetary policy review. The central bank's statement also retained previous language on the economic outlook, saying the nation's economy "has been recovering moderately," while "inflation expectations appear to be rising on the whole."
Trading in US index futures indicated that the Dow could advance 16 points at the opening bell on Friday, 20 December 2013. US stocks on Thursday recovered most earlier losses as investors shrugged off disappointing housing, manufacturing and employment reports, sending the Dow Jones Industrial Average to a record closing.
The Federal Reserve said after a two-day monetary policy review on 18 December 2013 that it will cut its monthly bond purchases to $75 billion from $85 billion starting in January 2014 amid an improved outlook for the job market in the world's largest economy. The Fed has said it will keep buying bonds until the outlook for the labor market has "improved substantially". Federal Reserve Chairman Ben S. Bernanke said after the Fed's monetary policy review on 18 December 2013 that the program was on its way to meeting that test, as the jobless rate fell to a five-year low of 7 percent in November.
The US central bank is poised to continue winding down its stimulus measures gradually over the next year.
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