Key benchmark indices extended gains and hit fresh intraday high in mid-afternoon trade. The barometer index, the S&P BSE Sensex, hit fresh record high above the psychological 22,000 level. The 50-unit CNX Nifty also scaled fresh record high. The Sensex was up 300.40 points or 1.38%, off 18.62 points from the day's high and up 228.22 points from the day's low.
Indian stocks surged today, 24 March 2014, after the government exceeded its $3.1 billion asset sales target for this fiscal year and as investors bet that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) will be able to form the next government at Centre.
The Indian government has reportedly raised about $905.7 million by selling 9% stake in Axis Bank through block deals on BSE on Friday, 21 March 2014. The stake sale is expected to help shrink the government's fiscal deficit. Finance Minister P. Chidambaram has forecast that the deficit won't exceed 4.6% of gross domestic product for the fiscal year ending 31 March 2014. The government earlier had planned to raise Rs 40000 crore by selling stakes in several state-run companies, but has subsequently lowered its expectations.
Investors are betting that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) will be able to form the next government at the centre with support from some regional parties after Lok Sabha elections in April-May this year. The BJP with its prime ministerial candidate Narendra Modi is considered more pro-business and a more pro-reform party than the Congress party.
Index heavyweight and cigarette major ITC extended intraday gain in volatile trade. Many PSU stocks gained on renewed buying. Bharat Heavy Electricals (Bhel) edged higher after the company said it has bagged a large contract worth Rs 3000 crore from NTPC for the supply of 2x800 MW steam generators (boilers) with supercritical parameters for an upcoming power project in Odisha. United Spirits fell on profit booking.
The market breadth, indicating the overall health of the market was negative.
Key benchmark indices edged higher in early trade on firm Asian stocks. Key benchmark indices extended initial gains in morning trade. The Sensex and the 50-unit CNX Nifty, both, hit record high. Firmness continued on the bourses in early afternoon trade. Key benchmark indices extended intraday gains in early afternoon trade. Key benchmark indices extended gains and hit fresh intraday high in mid-afternoon trade. The Sensex hit fresh record high above the psychological 22,000 level. The 50-unit CNX Nifty also scaled fresh record high.
Indian stocks may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near-month March 2014 series to April 2014 series. The near-month March 2014 F&O contracts expire on Thursday, 27 March 2014.
At 14:15 IST, the S&P BSE Sensex was up 300.40 points or 1.38% to 22,055.72. The index jumped 319.02 points at the day's high of 22,074.34 in mid-afternoon trade, a record high for the barometer index. The index rose 72.18 points at the day's low of 21,827.50 in opening trade.
The CNX Nifty was up 89 points or 1.37% to 6,583.90. The index hit a high of 6,591.50 in intraday trade, a record high. The index hit a low of 6,510.50 in intraday trade.
The BSE Mid-Cap index was up 6.76 points or 0.1% at 6,798.91. The BSE Small-Cap index was up 13.10 points or 0.19% at 6,845.09. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,451 shares fell and 1,260 shares rose. A total of 151 shares were unchanged.
Among the 30-share Sensex pack, 23 stocks gained and rest of them declined.
Dr. Reddy's Laboratories (down 1.01%), NTPC (down 0.79%) and Infosys (down 0.62%) edged lower from the Sensex pack.
Index heavyweight and cigarette major ITC was up 1.68% at Rs 362.70. The stock hit high of Rs 362.80 and low of Rs 355.15 so far during the day.
Many PSU stocks gained on renewed buying. GAIL (India) (up 4.58% to Rs 369.55), NMDC (up 3.55%), Bharat Electronics (up 4.04%), ONGC (up 3.98%), Power Finance Corporation (up 4.1%) gained.
BEML jumped 8.51% to Rs 290 after hitting a 52-week high of Rs 304 in intraday trade.
Bharat Heavy Electricals (Bhel) edged higher after the company said it has bagged a large contract worth Rs 3000 crore from NTPC for the supply of 2x800 MW steam generators (boilers) with supercritical parameters for an upcoming power project in Odisha. The stock was up 1.02%.
With this order, Bhel has taken its tally of supercritical boilers of 660 MW, 700 MW and 800 MW ratings to 32 sets, cementing its leadership position in supercritical technology, the state-run power equipment major said in a statement. The order also reinforces BHEL's position at the forefront of the Indian power equipment manufacturing industry, the company said.
Bhel's scope of work in the contract envisages design, engineering, manufacture, supply, erection, testing and commissioning of the Steam Generators and associated auxiliaries.
MOIL jumped 4.65% to Rs 252.15 after the company said that prospecting licence deeds were executed and registered for grant of prospecting licence by Government of Maharashtra over an area of 597.44 hectares in Nagpur and Bhandara districts. The stock hit 52-week high of Rs 259.95 in intraday trade. The announcement was made during trading hours today, 24 March 2014.
MOIL had on 10 July 2013 announced the grant of prospecting licence (PL) by Government of Maharashtra over an area of 597.44 hectares in Nagpur and Bhandara districts of Maharashtra. For MOIL, the grant of PL is a major achievement and will go a long way in not only increasing the life of the existing mines but also considerably improve the business prospects of the company to meet the growing demand of steel industry in India, the company said at that time.
United Spirits fell 2.28% to Rs 2,635 on profit booking after the stock rose 9.35% in the preceding five trading sessions to Rs 2,696.40 on 22 March 2014, from a recent low of Rs 2,465.95 on 14 March 2014.
Geometric lost 2.93% after the company clarified that it is not planning to sell its stake to any private equity firm. The company made the clarification during trading hours today, 24 March 2014.
Geometric clarified that has not entered into any discussion with any private equity (PE) firm or any other entity to change or modify its equity structure. The company added that it is not its policy to comment on market rumors or speculation.
Last week, a media reports suggested that private equity players are eyeing Godrej group stake in Geometric.
In the foreign exchange market, the rupee edged higher against the dollar, tracking gains in most other Asian units versus the greenback. The partially convertible rupee was hovering at 60.69, compared with its close of 60.895/905 on Friday, 21 March 2014.
The Reserve Bank of India will announce the First Bi-monthly Monetary Policy Statement, 2014-15 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.
The next major trigger for the stock market is the outcome of the upcoming Lok Sabha elections. Lok Sabha elections 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. 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 (AP), 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.
European stocks edged lower on Monday, 24 March 2014, as invesors watched the development of the Ukraine crisis. Key benchmark indices in UK, Germany and France were off 0.19% to 0.41%.
Investors are watching the development of the Ukraine crisis as world leaders gather in The Hague to discuss tension over Ukraine. Leaders of the US, the European Union, China, Japan and others meet today, 24 March 2014, as concern grows that Russia is massing soldiers on Ukraine's border. UK Foreign Secretary William Hague wrote in Sunday Telegraph that Russia's troop buildup means the crisis may worsen, calling the situation the most serious risk to European security in the 21st century.
Asian stocks edged higher on Monday, 24 March 2014, shrugging off weak Chinese economic data. Key benchmark indices in Taiwan, Hong Kong, China, Singapore, Japan, Indonesia and South Korea were up 0.52% to 1.77%.
A preliminary gauge of China's factory activity fell to an eight-month low. The "flash" edition of HSBC's China manufacturing Purchasing Managers' Index (PMI) dropped to 48.1 from February's 48.5, remaining below the 50 level separating expansion from contraction. "Weakness is broadly-based with domestic demand softening further. We expect Beijing to launch a series of policy measures to stabilize growth. Likely options include lowering entry barriers for private investment, targeted spending on subways, air-cleaning and public housing, and guiding lending rates lower," Qu Hongbin, Hong Kong-based chief China economist at HSBC, said in a statement.
China issued rules on 21 March 2014 for a trial program allowing companies to sell preferred stock, expanding financing options for the country's banks as they seek to address tougher capital requirements. Companies will be able to issue the shares if they are included in the Shanghai Stock Exchange 50 A-Share Index, the China Securities Regulatory Commission said in a statement on its official microblog.
Asian Development Bank (ADB) President Takehiko Nakao today, 24 March 2014, said that China's economy may still grow around 7.5% this year despite signs of a slowdown, and there is no immediate need for the government to roll out fresh stimulus measures. Nakao said in an interview to a news agency that he expects China's economic growth to be roughly in line with the government's target. China's government has set a target of 7.5% GDP growth for 2014. ADB is revising its forecast on China's growth for 2014, currently at 7.5%, he said, but did not elaborate
Nakao said Chinese leaders face a challenge to keep the economy on an even keel while forging ahead with a long list of market-based reforms announced at a key party meeting late last year. He said that some short-term stimulus might be needed to smooth out ups and downs in the economy, but there was no immediate need as growth remains healthy due to the country's ongoing urbanisation and rising consumption. Nakao said he was impressed by Chinese leaders' commitment to market-oriented reforms to help put the economy on a more sustainable footing, but they needed time to implement them. Liberalising interest rates and the currency regime in China should "go hand in hand", and interest rate liberalisation could be carried out in a step by step manner to ward off possible banking risks, he said.
Nakao said Asian economies are more prepared to cope with any economic turbulence and the region's fundamentals are much stronger than there were during the Asian financial crisis in the late 1990s.
International Monetary Fund (IMF) Managing Director Christine Lagarde urged China to boost financial-sector competition and open its borders further to foreign financial flows as a way to bolster the country's economic prospects. Such moves would "help to better intermediate the vast pool of domestic savings to the most productive uses," she said in remarks prepared for a Monday session of the China Development Forum, an annual gathering of corporate and government leaders. "It would also prepare Chinese banks to play a bigger role globally." Ms. Lagarde said that China needs to prepare for what she called the country's "next transformation" from an economy based on exports, capital intensive industries and infrastructure spending to one that relies more on services and innovation, consumer spending and also produces less pollution. "The challenge is clear," she said, "to make the growth more inclusive, friendlier to the environment and more sustainable."
The financial sector will play an important role in the remaking of the economy, she stressed. China's banking sector is widely criticized inside and outside of China for being too dependent on massive, state-owned banks that lend primarily to other state-owned firms, while leaving smaller private companies begging for loans from so-called shadow lenders. Chinese regulators have started to approve a handful of privately owned banks as a way to bring more capital into the system and focus lending on smaller firms.
The IMF chief also urged a "gradual opening" of the capital account to allow foreigners to invest more in Chinese firms and ordinary Chinese to invest abroad. Such an opening "would also strengthen the potential role of the renminbi as a global currency," she said--a priority of the Chinese government.
On the global economy, Ms. Lagarde said that prospects for growth are strengthening. But she warned that the euro area and other wealthy economies face the "risk of prolonged low inflation," which needs to be addressed, including through "unconventional monetary policies," among other measures.
Trading in US index futures indicated that the Dow could advance 30 points at the opening bell on Monday, 24 March 2014. US stocks dropped on Friday, 21 March 2014, pressured by a sell-off in the health-care sector, but major equity indexes still posted solid weekly gains.
Federal Reserve Governor Jeremy Stein on Friday, 21 March 2014, said monetary policy should be less accommodative when bond markets are overheated even if it raises the risk of higher unemployment. "All else being equal, monetary policy should be less accommodative -- by which I mean that it should be willing to tolerate a larger forecast shortfall of the path of the unemployment rate from its full-employment level -- when estimates of risk premiums in the bond market are abnormally low," Stein said. He didn't comment on the current stance of policy. Stein said pursuing lower levels of unemployment with low interest rates may also entail costs if they raise financial instability that could affect jobs and growth at later time if yields shoot back up. "There is a cost to be weighed alongside the benefit" of an accommodative policy, Stein said at a forum on monetary policy at Georgetown University in Washington. Financial stability matters "insofar as it affects the degree of risk around the employment leg of the Federal Reserve's mandate."
As one measure of financial overheating, Stein pointed to risk premiums on longer-term debt, or the component of the bond's yield that compensates investors for owning a longer-term security as opposed to a short-term security. He said that in the spring of 2013 in the US when yields on US 10-year notes were around 1.6 percent, estimates of the term premium were around negative 0.80 percentage point. "Applied to this period, my approach would suggest a lesser willingness to use large-scale asset purchases to push yields down even further," he said. Stein said the "dark side" of collapsed risk premiums occurs if they return to normal abruptly in a way that causes "larger economic effects than the initial compression."
Minneapolis Fed President Narayana Kocherlakota, the sole dissenter on the Federal Open Market Committee (FOMC), released a statement on Friday, 21 March 2014, in which he criticized the Fed's new guidance, saying it "weakens the credibility of FOMC's commitment to target 2% inflation" and "fosters policy uncertainty and thereby suppresses economic activity."
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 29-30 April 2014. The Federal Reserve on 19 March 2014 said after the conclusion of a monetary policy review that it will trim its monthly bond purchases by $10 billion to $55 billion. The Federal Reserve will end its bond-buying program before the end of the year with an interest-rate increase likely to follow in "around six months," Chair Janet Yellen said on 19 March 2014. Quarterly Fed forecasts on 19 March 2014 showed more officials predicting that the benchmark interest rate, now close to zero, will rise to at least 1% by the end of 2015 and 2.25% a year later.
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