Reserve Bank of India's (RBI) incentives for banks to raise long term bonds for financing infrastructure projects and data showing a decent growth in India's merchandise exports in June 2014 triggered a rally on the domestic bourses today, 16 July 2014. The lion's share of the gains came during the last one hour of trade as European stocks surged on the back of data showing acceleration in China's GDP growth in Q2 June 2014. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, reached their highest closing level in more than a week. The Sensex garnered 321.07 points or 1.27%, up close to 300 points from the day's low and off about 50 points from the day's high. The market breadth indicating the overall health of the market was strong, with more than two gainers for every loser on BSE. The BSE Mid-Cap index was up 1.34%. The BSE Small-Cap index was up 2.04%. Both these indices outperformed the Sensex.
Banking, realty and infrastructure stocks rose after the Reserve Bank of India (RBI) on Tuesday, 15 July 2014, announced incentives to raise long term bonds for infrastructure financing, including affordable housing. Kotak Mahindra Bank rose in volatile trade after declaring Q1 June 2014 result during market hours today, 16 July 2014. Shares of IDFC, which is in the process of converting into a bank and which has a large exposure to the infrastructure sector, surged to hit 52-week high after RBI's announcement of incentives to raise long term bonds for infrastructure financing. Metal and mining stocks gained after the latest data showed that China's GDP growth accelerated to 7.5% in Q2 June 2014, from 7.4% in Q1 March 2014. Hindalco Industries surged after a foreign brokerage upgraded the stock to buy from underperform.
The S&P BSE Sensex garnered 321.07 points or 1.27% to settle at 25,549.72, its highest closing level since 8 July 2014. The index jumped 374.13 points at the day's high of 25,602.78 in late trade. The index rose 18.10 points at the day's low of 25,246.75 in early afternoon trade.
The CNX Nifty garnered 97.25 points or 1.3% to settle at 7,624.40, its highest closing level since 7 July 2014. The index hit a high of 7,640.10 and a low of 7,532.45 in intraday trade.
The market breadth indicating the overall health of the market was strong, with more than two gainers for every loser. On BSE, 1,990 shares gained and 952 shares fell. A total of 103 shares were unchanged.
The BSE Mid-Cap index garnered 121 points or 1.34% to settle at 9,165.92. The BSE Small-Cap index garnered 201.37 points or 2.04% to settle at 10,057.37. Both these indices outperformed the Sensex.
The S&P BSE Metal index (up 2.2%), the S&P BSE Realty index (up 4.28%), the S&P BSE Capital Goods index (up 1.51%), the S&P BSE Auto index (up 1.44%), and the S&P BSE Bankex (up 2.5%), outperformed the Sensex.
The S&P BSE FMCG index (up 0.49%), the S&P BSE Consumer Durables index (up 0.15%), the S&P BSE Oil & Gas index (up 1.23%), the S&P BSE IT index (up 0.18%), the S&P BSE Teck index (up 0.45%), and the S&P BSE Healthcare index (up 0.76%) underperformed the Sensex.
The S&P BSE Power index rose 1.27%, matching with Sensex's performance in percentage terms.
The total turnover on BSE amounted to Rs 3526 crore, higher than Rs 2684.29 crore on Tuesday, 15 July 2014.
Among the 30-share Sensex pack, 24 stocks gained and rest of them declined.
Index heavyweight Reliance Industries (RIL) rose 1.73% to Rs 989.05. The stock hit high of Rs 991.50 and low of Rs 975. The oil ministry is reportedly seeking Cabinet nod to allow RIL to retain three gas discoveries which hold an estimated 345 billion cubic feet of reserves in the eastern offshore KG-D6 block even after expiry of timelines. The oil ministry feels that taking away the discoveries and rebidding the finds may lead to delay in development, according to reports. There is also a possibility of RIL going for arbitration if oil ministry takes away the discoveries which may lead to further delay in production and extra cost associated with the arbitration for the government.
PSU OMCs edged higher as crude oil prices declined. Indian Oil Corporation (IOC) (up 1.94%), HPCL (up 1.41%) and BPCL (up 1.41%) gained.
Brent crude oil futures for August delivery were up 11 cents or 0.1% to $106.13 a barrel in electronic trading today, 16 July 2014. The contract fell 96 cents to settle at $106.02 a barrel on Tuesday, 15 July 2014, recovering from a low of $104.39, the weakest point since 2 April 2014. The August contract expires today, 16 July 2014. Brent crude oil futures for September delivery were up 18 cents at $107.06 a barrel.
Lower crude oil prices could decrease under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. The government has adopted the policy of gradually increasing diesel prices to eliminate under recovery and deregulate the diesel prices. The government has already freed pricing of petrol.
The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas reviewed international prices of crude oil and petroleum products during the first fortnight of July 2014. Accordingly, the under-recovery on High Speed Diesel (HSD) applicable for second fortnight of July effective 16 July 2014 will go down to Rs 2.49 per litre. This was Rs 3.40 per litre during first fortnight of July 2014. In the case of PDS Kerosene and Domestic LPG, the under-recoveries for the second fortnight of 2014 continue to be Rs 33.07 per litre and Rs 449.17 per cylinder respectively, as in the last fortnight.
PSU OMCs, effective 16 July 2014, are now incurring combined daily under-recovery of about Rs 261 crore on the sale of Diesel, PDS Kerosene and Domestic LPG. This is lower than Rs 271 crore daily under-recoveries during previous fortnight. The under-recoveries for the financial year 2014-15 are projected to be Rs 91665 crore while the figure was Rs 139869 crore in 2013-14.
Meanwhile, IOC on Tuesday, 15 July 2014, reduced the price of diesel sold in bulk for direct consumers across the country as international prices of diesel dropped and after the rupee appreciated slightly during the last fortnight. The price has been cut by Rs 1.09 a litre to Rs 1.20 a litre in the four metros.
Sun Pharmaceutical Industries rose 0.67% to Rs 743.65 after hitting record high of Rs 753 in intraday trade. Sun Pharmaceutical Industries today, 16 July 2014, announced the acquisition of Pharmalucence Inc., by one of its subsidiaries. Pharmalucence has sterile injectable capacity in the US, supported by strong R&D capabilities. The announcement was made before market hours today, 16 July 2014.
Banking and infrastructure stocks rose after the Reserve Bank of India (RBI) on Tuesday, 15 July 2014, announced incentives to raise long term bonds for infrastructure financing. Among private bank stocks, Axis Bank (up 3.98%), IndusInd Bank (up 0.79%), HDFC Bank (up 1.14%), Yes Bank (up 1.94%), and ICICI Bank (up 4.81%) gained.
Kotak Mahindra Bank rose 1.37% to Rs 883.35. The stock was volatile. The stock hit high of Rs 886.80 and low of Rs 866.15. Kotak Mahindra Bank's net profit rose 6.69% to Rs 429.80 crore on 1.27% growth in total income to Rs 2686.11 crore in Q1 June 2014 over Q1 June 2013. The result was announced during market hours today, 16 July 2014.
The bank's ratio of gross non-performing assets (NPA) to gross advances stood at 1.88% as on 30 June 2014 as against 1.98% as on 31 March 2014 and 1.95% as on 30 June 2013. The ratio of net NPA to net advances stood at 0.98% as on 30 June 2014 as against 1.08% as on 31 March 2014 and 0.98% as on 30 June 2013.
Among PSU bank stocks, Punjab National Bank (up 0.42%), Bank of Baroda (up 0.8%), Bank of India (up 2.59%) and Union Bank of India (up 3.09%) gained.
State Bank of India (SBI) gained 2.1%, with the stock extending Tuesday's 4.32% rally triggered by the bank's announcement of reduction in interest rates on bulk and retail term deposit interest rates for select maturities which will bring down the cost of funds for the bank. The state-run bank during market hours on Tuesday, 15 July 2014, said it has revised downwards its bulk term deposit interest rates (Rs 1 crore and above) to 6.25% from 6.5% for deposits between 7 days to 60 days with effect from 18 July 2014. SBI also revised downwards its bulk term deposit interest rates to 6.75% from 7% for deposits between 61 days to less than 1 year.
SBI also revised downwards its retail term deposit interest rates (below Rs 1 crore) to 7% from 7.5% for deposits between 7 days to 179 days with effect from 18 July 2014.
Among the infrastructure developers, L&T (up 2.24%), Jaiprakash Associates (up 5.12%), Punj Lloyd (up 4.92%), IVRCL (up 4.9%), GVK Power Infrastructure (up 4.7%), Lanco Infratech (up 4.98%), GMR Infrastructure (up 2.94%) and IRB Infrastructure Developers (up 6.09%) gained.
The RBI on Tuesday said that banks can issue long-term bonds with a minimum maturity of seven years to raise resources for lending to long term projects in infrastructure sub-sectors and affordable housing. The minimum maturity period of the long-term bonds shall be seven years. These bonds will be exempted from computation of net demand and time liabilities (NDTL) and would not be subjected to cash reserve ratio (CRR)/statutory liquidity ratio (SLR) requirements. This exemption will be subject to a ceiling of the eligible credit which has been decided by the RBI.
RBI's regulatory incentives for infrastructure financing come after Finance Minister Arun Jaitley on 10 July 2014 said at the time of presentation of Union Budget 2014-15 that banks will be permitted to raise long-term funds for lending to infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and Priority Sector Lending.
The RBI on Tuesday also said that it has issued a number of instructions to banks, specifying the operational guidelines and incentives in the form of flexibility in loan structuring and refinancing so as to mitigate the Asset-Liability Management (ALM) problems faced by banks in extending project loans to infrastructure and core industries sectors.
Shares of power finance companies also declined on worries competition to raise long-term bonds could push up long-term rates. REC (down 4.95%) and Power Finance Corporation (down 5.66%) declined.
Shares of IDFC, which is in the process of converting into a bank and which has a large exposure to the infrastructure sector, jumped after RBI's announcement of incentives to raise long term bonds for infrastructure financing. The stock jumped 8.7% at Rs 163.05 after hitting a 52-week high of Rs 164.60 in intraday trade.
Realty stocks edged higher after the Reserve Bank of India (RBI) on Tuesday, 15 July 2014, announced incentives to raise long term bonds for infrastructure financing, including affordable housing.
DLF (up 6.31%), Hubtown (up 2.75%), Indiabulls Real Estate (up 4.32%), Housing Development and Infrastructure (up 3.38%), D B Realty (up 4.52%), Unitech (up 6.82%), Godrej Properties (up 2.91%), Oberoi Realty (up 4.93%) and Parsvnath Developers (up 2.13%) gained.
Interest rate sensitive auto stocks extended Tuesday's gains triggered by data showing that retail inflation eased in June 2014. Easing inflation provides space for the Reserve Bank of India (RBI) to cut policy rates to revive stalled economic growth. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. TVS Motor Company (up 3.68%) and Hero MotoCorp (up 1.03%) gained.
Bajaj Auto shed 0.85%. The company announces its Q1 June 2014 results tomorrow, 17 July 2014.
Maruti Suzuki India rose 2.24%. The company said during market hours on Tuesday, 15 July 2014, that it has introduced Ertiga Limited Edition to mark the milestone of 1.5 lakh unit sales of the Ertiga model in the Indian market. Ertiga Limited Edition petrol version has been priced at Rs 6.76 lakh ex-showroom Delhi. The CNG version has been priced at Rs 7.34 lakh ex-showroom Delhi. The diesel version has been priced at Rs 8.05 lakh ex-showroom Delhi.
Mahindra & Mahindra (M&M) (up 1.92%), Tata Motors (up 1.58%), and Ashok Leyland (up 0.61%) gained. The announcement in the budget on 10 July 2014 of investment in National Highways Authority of India and State Roads of an amount of Rs 37880 crore, which includes Rs 3000 crore for the North East is positive for the auto sector.
Before the Union Budget, the government had on 25 June 2014 extended concessional excise duty on automobiles by six months up to 31 December 2014.
Metal and mining stocks gained after the latest data showed that China's GDP growth accelerated to 7.5% in Q2 June 2014, from 7.4% in Q1 March 2014. China is the world's largest consumer of copper and aluminum.
NMDC (up 1.43%), Hindustan Zinc (up 1.04%), National Aluminium Company (up 1.83%) and Hindustan Copper (up 4.58%) edged higher.
Hindalco Industries rose 4.56% after a foreign brokerage upgraded the stock to buy from underperform. The brokerage cited positive outlook for aluminium prices, better margins at Hindalco's US subsidiary Novelis and balance sheet deleveraging as key reasons for upgrading shares of Hindalco Industries.
The government raised export duty on bauxite from 10% to 20% in Union Budget 2014-15. Increase in export duty on bauxite will be favourable for aluminium smelters like Hindalco and Sesa Sterlite who will benefit from the resultant increase in domestic bauxite supply.
Shares of Sesa Sterlite jumped 4.01%.
Steel stocks gained across the board as higher outlay for housing, road, port, urban and rural housing and infrastructure development in Union Budget 2014-15 would help improve steel consumption.
Jindal Steel & Power (up 2.87%), JSW Steel (up 2.16%), Tata Steel (up 3.71%), and Steel Authority of India (Sail) (up 1.06%) gained.
Tyre stocks rallied. Apollo Tyres (up 3.94%), JK Tyre & Industries (up 4.26%), MRF (up 3.78%) Goodyear India (up 1.98%), and CEAT (up 7.17%) gained.
A bout of volatility was seen in early trade as key benchmark indices trimmed initial gains. Volatility continued as the key benchmark indices recovered from lower level after trimming intraday gains in morning trade. Key benchmark indices extended gains in mid-morning trade after the latest data showed a decent growth in merchandise exports in June 2014. Volatility ruled the roost as the key benchmark indices trimmed gains in early afternoon trade. Key benchmark indices continued to hover in green in mid-afternoon trade. A rally in European stocks helped Indian stocks extend gains in late trade.
Indian stocks rose for the second day in a row today, 16 July 2014. From a recent low of 25,006.98 on 14 July 2014, the Sensex has risen 542.74 points or 2.17% in two trading sessions. The Sensex has risen 135.94 points or 0.532% in this month so far (till 16 July 2014). The Sensex has gained 4,379.04 points or 20.68% in calendar year 2014 so far (till 16 July 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 8,101.01 points or 46.42%. From a record high of 26,190.44 on 8 July 2014, the Sensex has fallen 640.72 points or 2.44%.
In the foreign exchange market, the rupee edged lower against the dollar in choppy trade. The partially convertible rupee was hovering at 60.145, compared with its close of 60.12/13 on Tuesday, 15 July 2014.
India's merchandise exports jumped 10.22% to $26.48 billion in June 2014 over June 2013, data released by the government today, 16 July 2014, showed. Imports rose 8.33% to $38.24 billion in June 2014 over June 2013. The trade deficit stood at $11.76 billion in June 2014, which was higher than trade deficit of $11.28 billion in June 2013.
At a summit in Brazil, the five BRICS nations -- Brazil, Russia, India, China and South Africa -- on Tuesday, 15 July 2014, announced the signing of an agreement establishing the New Development Bank (NDB), with the purpose of mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging and developing economies. The bank will have an initial authorized capital of $100 billion. The initial subscribed capital will be $50 billion, equally shared by the five BRICS nations. The five BRICS nations also announced the signing of the treaty for the establishment of the BRICS Contingent Reserve Arrangement (CRA) with an initial size of $100 billion. This arrangement will have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements, according to a statement issued on Tuesday. The agreement is a framework for the provision of liquidity through currency swaps in response to actual or potential short-term balance of payments pressures.
European stocks edged higher today, 16 July 2014, after a report showed China's economy expanded in second quarter in line with the government's target. Key benchmark indices in France, Germany and UK rose by 0.91% to 1.41%.
UK unemployment slid to the lowest in 5 1/2 years and the number of people in work rose to a record as the economic recovery strengthened. The jobless rate fell to 6.5% in the three months through May, the lowest since the fourth quarter of 2008, from 6.6% in period ending April, the Office for National Statistics said in London today.
Asian stocks edged higher today, 16 July 2014, as a slide in oil prices to the lowest in over three months on Tuesday, 15 July 2014, was taken as a potential positive for global growth. Key benchmark indices in Hong Kong, Singapore, Indonesia, and South Korea rose by 0.04% to 0.85%. Key benchmark indices in China, Japan and Taiwan fell by 0.1% to 0.88%.
China today, 16 July 2014 reported second-quarter GDP growth of 7.5% compared with 7.4% in the previous three months. Other data showed retail sales gained 12.4% in June from a year earlier and industrial production jumped 9.2%. Fixed asset investment, a mainstay driver of the Chinese economy, climbed 17.3% in the first six months.
Chinese Premier Li Keqiang said in March during annual meeting of parliament that China has set its gross domestic product (GDP) growth target for 2014 at 7.5%, the same as for 2013, and will keep consumer inflation at 3.5%.
Trading in US index futures indicated that the Dow could rise 49 points at the opening bell on Wednesday, 16 July 2014. US markets saw mixed trend on Tuesday, 15 July 2014, after the US Federal Reserve raised concerns about social-media and biotech companies' valuations.
Federal Reserve Chair Janet Yellen reportedly indicated in testimony before US lawmakers on Tuesday, 15 July 2014, that stimulus is still required for the US economy. A high degree of monetary policy accommodation continues to be appropriate, Yellen said in her semi-annual address to the Senate Banking Committee.
Powered by Capital Market - Live News
