Key benchmark indices extended losses and hit fresh intraday low in afternoon trade. The barometer index, the S&P BSE Sensex, was down 191.43 points or 0.79%, off close to 235 points from the day's high. Weakness in Asian and European stocks hit sentiment on the domestic bourses adversely.
Metal and mining stocks edged lower. But, NMDC and Hindalco Industries bucked the weak trend in metal and mining stocks. Realty stocks were mixed. Shares of PSU OMCs dropped as crude futures rose.
The market breadth, indicating the overall health of the market was strong.
Key benchmark indices edged lower amid initial volatility on weak Asian stocks. Key benchmark indices cut losses after hitting fresh intraday low in morning trade. Key benchmark indices languished in negative zone in mid-morning trade. Key benchmark indices extended losses in early afternoon trade. Key benchmark indices extended losses and hit fresh intraday low in afternoon trade.
At 13:20 IST, the S&P BSE Sensex was down 191.43 points or 0.79% to 24,185.45. The index lost 193.08 points at the day's low of 24,183.80 in afternoon trade, its lowest level since 19 May 2014. The index gained 42.66 points at the day's high of 24,419.54 in early trade.
The CNX Nifty was down 62.40 points or 0.86% to 7,213.10. The index hit a low of 7,206.70 in intraday trade, its lowest level since 19 May 2014. The index hit a high of 7,287.15 in intraday trade.
The BSE Mid-Cap index was up 46.71 points or 0.57% at 8,279.11. The BSE Small-Cap index was up 61.72 points or 0.72% at 8,662.05. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,799 shares gained and 966 shares fell. A total of 90 shares were unchanged.
Among the 30-share Sensex pack, 21 stocks declined and rest of them gained. Bharat Heavy Electricals (Bhel) (down 2.79%), GAIL (India) (down 2.33%) and Axis Bank (down 2.03%) edged lower from the Sensex pack.
Mahindra & Mahindra (M&M) declined 1.05% after the company said during market hours that as part of aligning its production with sales requirements, the company will suspend production at the company's automotive plants for upto 3 days during the remaining period of this month. The company also said that Mahindra Vehicle Manufacturers' plant at Chakan would also be observing no production days for upto 3 days during the remaining period of May 2014. Mahindra Vehicle Manufacturers is a wholly-owned subsidiary of M&M. M&M said that the management does not envisage any adverse impact on availability of vehicles in the market due to adequacy of vehicle stocks to serve the market requirements.
Metal and mining stocks edged lower. Tata Steel (down 0.54%), Hindustan Zinc (down 2.38%), JSW Steel (down 1.05%), Bhushan Steel (down 3.17%), Steel Authority of India (Sail) (down 2.42%) and Jindal Steel & Power (down 1.41%) edged lower. Hindustan Copper (up 8.14%) and National Aluminium Company (up 0.1%) edged higher.
NMDC gained 1.32% to Rs 180.65 after hitting 52-week high of Rs 189.35 in intraday trade.
Sesa Sterlite was flat at Rs 245.65. The stock was volatile. The stock hit a 52-week high of Rs 250.80 in intraday trade. The stock hit a low of Rs 235.40 in intraday trade so far. The stock had gained 26.98% in three trading days to settle at Rs 245.65 on Tuesday, 20 May 2014, from recent low of Rs 193.45 on 15 May 2014.
Hindalco Industries gained 3.44% to Rs 161 after hitting a 52-week high of Rs 163.55 in intraday trade. Novelis, Hindalco's US subsidiary, on Friday, 16 May 2014, said its net income attributable to its common shareholder was $54 million in Q4 March 2014, lower than $59 million in Q4 March 2013. Excluding certain tax-effected items, net income was $75 million in Q4 March 2014. Net sales rose to 1.96% to $2.54 billion in Q4 March 2014 over Q4 March 2013.
Realty stocks were mixed. DLF (up 0.38%), D B Realty (up 0.12%), Godrej Properties (up 2.1%), Oberoi Realty (up 2.81%), and Parsvnath Developers (up 5%) gained. Housing Development & Infrastructure (HDIL) (down 2.94%), Sobha Developers (down 2.84%) and Unitech (down 1.52%) declined.
Shares of PSU OMCs dropped as crude futures rose. BPCL (down 0.56%), HPCL (down 1.75%) and Indian Oil Corporation (IOCL) (down 1.33%) declined.
Higher crude oil prices could increase under recovery of PSU OMCs on domestic sales of diesel, kerosene and LPG at government controlled prices. The government has already decontrolled pricing of petrol. Brent for July settlement was 39 cents higher at $110.08 a barrel on the London-based ICE Futures Europe exchange.
In the foreign exchange market, the rupee edged lower against the dollar as importers stepped in to buy dollars to pay bills. The partially convertible rupee was hovering at 58.735, compared with its close of 58.63/64 on Tuesday, 20 May 2014.
Reserve Bank of India Governor Raghuram Rajan on Tuesday, 20 May 2014, reiterated his call for fiscal discipline, saying it is essential for India to achieve sustainable economic growth. Rajan said India would not always be able to rely on banks to buy a large portion of its government debt as it usually does. "(Bank) deposits will not continue to be cheap, while the government cannot continue to pre-empt financing at the scale it has in the past if we are to have a modern entrepreneurial economy. This is yet another reason why fiscal discipline will be central to sustainable growth going forward," Rajan said at an event in New Delhi. Rajan suggested the need for India to offer more specialised banking licences that would result in smaller banks offering niche services. The RBI on April granted two new commercial banking licences, its first new ones in 10 years.
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.
After Bharatiya Janata Party (BJP) led National Democratic Alliance's (NDA) landslide victory in the recently concluded Lok Sabha election, investors are expecting measures from the incoming government to revive the Indian economy. There are expectations that Gujarat chief minister and Prime Minister-designate Narendra Modi will be in a position to replicate the economic success he enjoyed in Gujarat state when he takes over as the country's Prime Minister. Gujarat's economy expanded by 10.1% a year, on average and adjusting for inflation, from 2001 and 2012, compared with 7.7% growth a year for India's economy as a whole. India's GDP growth slowed sharply at 4.7% in Q3 December 2013. Investors hope that a BJP-led government would be able to accelerate policy reforms and overhaul the country's poor infrastructure. Investors will now be keenly watching policy announcements from the new government to drive a turnaround in the investment cycle.
Modi will be sworn in as India's next Prime Minister on Monday, 26 May 2014, evening at the Rashtrapati Bhawan.
Ever since NDA's victory in the election last week, speculation has been rife about the likely allocation of key ministerial portfolios in the Modi-led NDA government.
The first budget of the new government is expected by July 2014. An interim budget was presented by P. Chidambaram in February this year. Essentially, in the nature of a vote on account, the interim budget was intended to get Parliament approval for expenditure to be incurred during the first few months of fiscal year 2014-15 due to Lok Sabha elections.
European stocks edged lower on Wednesday, 21 May 2014, as investors awaited data on consumer confidence in the euro area. Key benchmark indices in France, UK and Germany shed 0.14% to 0.41%.
Asian markets edged lower on Wednesday, 21 May 2014, tracking overnight decline in US markets. Key benchmark indices in Taiwan, Hong Kong, South Korea, Singapore, Japan and Indonesia were off 0.02% to 0.24%. Key benchmark indices in China and Indonesia rose 0.14% to 0.84%.
The Bank of Japan refrained from boosting stimulus as the economy shows signs of weathering the impact of the first sales-tax increase since 1997. The central bank will continue to expand the monetary base at a pace of 60 trillion yen to 70 trillion yen per year, it said in a statement in Tokyo today, 21 May 2014.
Japan posted a trade deficit of 808.9 billion yen ($8 billion) for April, data showed today, 21 May 2014. Exports gained 5.1% year on year, while imports increased 3.4%.
Trading in US index futures indicated that the Dow could advance 8 points at the opening bell on Wednesday, 21 May 2014. US stocks ended Tuesday with broad-based losses after disappointing earnings from TJX Companies, Inc, Staples, Inc. and weak sales numbers from Caterpillar Inc. weighed on investor sentiment. Selling intensified in the afternoon after comments from Philadelphia Fed President Charles Plosser, who said that Fed may need to act sooner rather than later should the economy accelerate.
New York Fed President William Dudley, who gets a vote at every Federal Open Market Committee meeting and is vice chairman of the interest-rate setting committee, told the New York Association for Business Economics on Tuesday, 20 May 2014, said that there will be a considerable period of time between the end of its asset purchases and the first rate hike.
The Federal Reserve releases minutes from the April 29-30 meeting of Federal Open Market Committee today, 21 May 2014. The minutes are expected to contain details of when, and by how much, interest rates will be raised.
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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