Key benchmark indices edged lower in choppy trade on concern foreign capital inflow will slow after the US Federal Reserve further reduced monetary stimulus for the US economy and signaled US interest rates will be raised. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets over the past few years. Foreign institutional investors (FIIs) have bought Indian stocks worth Rs 9845.20 crore ($1.616 billion) and Indian bonds worth Rs 38245 crore ($6.2099 billion) in this calendar year so far (till 18 March 2014). The barometer index, the S&P BSE Sensex, was provisionally down 79.74 points or 0.37%, off about 100 points from the day's high and up close to 50 points from the day's low. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in almost a week. The market breadth, indicating the overall health of the market was negative.
Capital goods stocks declined. Realty stocks also declined. Shares of car major Maruti Suzuki India edged lower in choppy trade after Japanese carmaker Nissan Motors on Wednesday, 19 March 2014, launched its low-cost Datsun brand in India by rolling out its GO hatchback at an aggressive price to revive its fortunes after a tough year.
The market edged lower in early trade on weak Asian stocks. The Sensex extended initial losses and hit fresh intraday low in morning trade. The Sensex trimmed intraday losses in mid-morning trade. A bout of volatility was witnessed as the Sensex once again slipped into the red after briefly moving into positive zone from negative zone in early afternoon trade. Key benchmark indices languished in negative zone in mid-afternoon trade. The Sensex trimmed losses after hitting fresh intraday low in late trade.
As per provisional figures, the S&P BSE Sensex was down 79.74 points or 0.37% to 21,753.12. The index declined 128.20 points at the day's low of 21,704.66 in late trade, its lowest level since 14 March 2014. The index rose 20.39 points at the day's high of 21,853.25 in early afternoon trade.
The CNX Nifty was down 38.20 points or 0.59% to 6,485.85, as per provisional figures. The index hit a low of 6,473.25 in intraday trade, its lowest level since 14 March 2014. The index hit a high of 6,523.65 in intraday trade.
The BSE Mid-Cap index was off 24.64 points or 0.37% at 6,714.94. The fall in the index in percentage terms matched that of the Sensex's. The BSE Small-Cap index was up 3.17 points or 0.05% at 6,725.52, outperforming the Sensex.
The total turnover on BSE amounted to Rs 2368 crore, lower than Rs 2578.92 crore on Wednesday, 19 March 2014.
The market breadth, indicating the overall health of the market was negative. On BSE, 1,528 shares fell and 1,273 shares rose. A total of 139 shares were unchanged.
GAIL (India) (down 2.55%), HDFC (down 2.15%) and AXIS Bank (down 2.03%) edged lower from the Sensex pack.
Shares of car major Maruti Suzuki India edged lower in choppy trade after Japanese carmaker Nissan Motors on Wednesday, 19 March 2014, launched its low-cost Datsun brand in India by rolling out its GO hatchback at an aggressive price to revive its fortunes after a tough year. Priced aggressively at Rs 3.12 lakh onwards, the GO will challenge Maruti Alto and Hyundai Eon at the entry level segment with a bigger 1,200-cc engine, more cabin space and superior mileage. The stock lost 0.37% to Rs 1,863.60. The stock hit high of Rs 1,875 and low of Rs 1,847.95.
Capital goods stocks declined. L&T (down 2.22%), Bharat Heavy Electricals (Bhel) (down 2.37%), ABB India (down 1.14%), BEML (down 0.8%), Bharat Electronics (down 0.23%), Crompton Greaves (down 2.84%) and Thermax (down 2.44%) declined.
Cummins India fell 3.85% to Rs 560, with the stock declining on profit booking. Shares of Cummins India had gained 13.03% in four trading days to Rs 582.45 on 19 March 2014 from a recent low of Rs 515.30 on 12 March 2014.
Realty stocks dropped. DLF (down 3.82%), Housing Development Infrastructure (down 3.63%), Sobha Developers (down 1.27%) and Unitech (down 4.45%) declined.
In the foreign exchange market, the rupee edged lower against the dollar after the US Federal Reserve on Wednesday, 19 March 2014, announced a further reduction of monetary stimulus for the US economy and signaled US interest rates will be raised, potentially damping fund flows into emerging markets. The partially convertible rupee was hovering at 61.245, compared with its close of 60.95/96 on Wednesday, 19 March 2014.
Indian government bond prices dropped, tracking surge in yields on US Treasury notes on Wednesday, 19 March 2014, after the US Federal Reserve signaled it may raise US interest rates from the middle of next year. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.8219%, higher than its close of 8.7772% on Wednesday, 19 March 2014. Bond yield and bond prices move in opposite direction.
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 dropped on Thursday, 20 March 2014, after US Federal Reserve Chair Janet Yellen signaled benchmark interest rates could rise about six months after the central bank ends bond purchases. Key benchmark indices in France, Germany and UK shed 0.44% to 0.71%.
Asian stocks fell on Thursday, 20 March 2014, after the Federal Reserve signaled it may raise US interest rates from the middle of next year and as concern deepened that the Chinese economy is slowing. Key benchmark indices in China, Hong Kong, Taiwan, Singapore, South Korea, Indonesia and Japan were off 0.76% to 2.54%.
China will keep economic growth at a reasonable rate while keeping inflation stable, Premier Li Keqiang reportedly said on Wednesday. Li also told a regular meeting of the State Council, or the cabinet, that China will continue to push forward reforms.
New Zealand's annual economic growth exceeded 3% for a second straight quarter, buoyed by dairy exports, adding to signs of increasing inflation pressure that may require higher borrowing costs. Gross domestic product increased 3.1% in the fourth quarter from a year earlier, Statistics New Zealand said in Wellington today. That's slower than the revised 3.3% pace in the third quarter. GDP rose 0.9% from the third quarter.
Trading in US index futures indicated that the Dow could drop 11 points at the opening bell on Thursday, 20 March 2014. US stocks dropped on Wednesday, 19 March 2014, as the Federal Reserve's latest policy statement raised jitters about the prospect of interest rates rising sooner than anticipated.
The Federal Reserve announced a further reduction in its bond-buying program by $10 billion to $55 billion after the conclusion of a monetary policy review on Wednesday, 19 March 2014. The purchases will finish by year-end with a borrowing-cost increase to follow in "around six months," Chair Janet Yellen indicated on Wednesday, 19 March 2014. The Federal Open Market Committee said on Wednesday, 19 March 2014, it will no longer link borrowing costs to a specific unemployment rate, and will consider a broad range of indicators on the labor market, inflation and financial markets instead. Separately, the Fed released forecasts showing more officials predicting the benchmark rate, now close to zero, will rise at least to 1% at the end of 2015 and 2.25% by the end of the following year, higher than previously forecast.
The US and Europe are moving to increase sanctions on Russia after Russian President Vladimir Putin signed an accord setting in motion Crimea's accession to Russian territory. With visa bans and asset freezes on Russian officials failing to sway Putin, European Union leaders meet today, 20 March 2014, to consider their next move. Ukraine on Wednesday, 19 March 2014, ordered the removal of its military from the majority Russian-speaking Crimea and said it will strengthen its deployments on the country's border with Russia.
Russian Finance Minister Anton Siluanov today, 20 March 2014, said that Russia isn't planning to cut budget spending in the next three years as it will replace expensive borrowing with extra revenue from exports. Russia is expected to receive more for its exports thanks to the weaker ruble, which boosts incomes of commodity exporters and thus props up tax revenue. However the recent ruble weakening, which accelerated after the West threatened to impose sanctions against Moscow due to its ambitious plan to annex Crimea, also has a negative impact on the economy. Mr. Siluanov said the weaker ruble is set to push consumer prices higher, but inflation is likely to stabilize in the second half of 2014. If inflation slows, the central bank may lower interest rates, Mr. Siluanov said. He said 2014 inflation is now seen at between 5% and 6%, which is above the central bank's full-year target of 5%.
To support flagging economic growth, the government is mulling ways to boost industrial output. Mr. Siluanov said Russia may create a special fund to support producers, which will be funded by state-run bank VEB.
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