Key benchmark indices edged lower amid initial volatility after a Reserve Bank of India panel recommended that the central bank should start using a consumer-price inflation (CPI) target to determine monetary policy. The panel's recommendations if accepted by the central bank may result in interest rates staying higher for long given the current high level of consumer price inflation in India. The barometer index, the S&P BSE Sensex, was down 52.18 points or 0.25%, up about 30 points from the day's low and off close to 55 points from the day's high. The market breadth, indicating the overall health of the market, was positive.
Colgate Palmolive (India) fell after the company reported a muted growth in bottomline in Q3 December 2013. Tata Consultancy Services (TCS) rose after the company on Tuesday, 21 January 2014, announced the launch of the Digital Software & Solutions Group, a new business unit designed to help customers undergo critical digital transformations through modular, fully integrated, industry-tailored licensed software and solutions. HCL Technologies dropped as the stock turned ex-dividend today, 22 January 2014, for the second interim dividend of Rs 4 per share for the year ending 30 June 2014. Wipro edged lower as the stock turned ex-dividend today, 22 January 2014, for the interim dividend of Rs 3 per share for the year ending 31 March 2014. L&T rose ahead of its Q3 results today, 22 January 2014.
Foreign institutional investors (FIIs) sold shares worth a net Rs 43.74 crore on Tuesday, 21 January 2014, as per provisional data from the stock exchanges.
At 9:32 IST, the S&P BSE Sensex was down 52.18 points or 0.25% to 21,198.94. The index dropped 82.69 points at the day's low of 21,168.43 in early trade. The index rose 2.51 points at the day's high of 21,253.63 in early trade.
The CNX Nifty was down 21.65 points or 0.34% to 6,292.15. The index hit a low of 6,287.45 in intraday trade. The index hit a high of 6,312.05 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 795 shares gained and 577 shares fell. A total of 85 shares were unchanged.
Among the 30-share Sensex pack, 20 stocks fell and rest rose. AXIS Bank (down 1.02%), ICICI Bank (down 0.69%) and ITC (down 0.85%) edged lower from the Sensex pack.
HDFC dropped 0.47% ahead of its Q3 results today, 22 January 2014.
L&T rose 0.11% ahead of its Q3 results today, 22 January 2014.
HCL Technologies dropped 0.54% as the stock turned ex-dividend today, 22 January 2014 for the second interim dividend of Rs 4 per share for the year ending 30 June 2014.
Wipro shed 0.22% as the stock turned ex-dividend today, 22 January 2014 for the interim dividend of Rs 3 per share for the year ending 31 March 2014.
Tata Consultancy Services (TCS) rose 0.22% after the company announced after market hours on Tuesday, 21 January 2014, the launch of the Digital Software & Solutions Group, a new business unit designed to help customers undergo critical digital transformations through modular, fully integrated, industry-tailored licensed software and solutions. Initial industries served will be Retail, Communications and Banking and Financial Services, three sectors with a particularly urgent need to adopt emerging technologies to enhance digital commerce and customer intelligence capabilities, and rapidly shift product and service offerings to compete in highly competitive and customer-centric arenas, TCS said in a statement.
The Digital Software & Solutions Group's initial offerings include 'Digital Commerce' and 'Customer Intelligence & Insights'.
By providing fully integrated solutions, TCS reduces the total cost of ownership for customers, due to business engagement models that are flexible and structured around a customer's consumption patterns. At the same time, TCS also offers support programs to train customers to best utilize TCS' software and solutions.
Colgate Palmolive (India) fell after the company reported a muted growth in bottomline in Q3 December 2013. The stock was off 1.34%. The company's net profit rose 1.6% to Rs 112.83 crore on 14.05% growth in total income to Rs 907.35 crore in Q3 December 2013 over Q3 December 2012. Net sales jumped 16% to Rs 884 crore in Q3 December 2013 over Q3 December 2012. The growth in bottom line lagged top line growth as advertisement expenditure surged. The company's advertisement expenditure rose 21.64% to Rs 121.46 crore in Q3 December 2013 over Q3 December 2012. The operating profit margin (OPM) declined to 16.89% in Q3 December 2013, from 19.12% in Q3 December 2012. Colgate Palmolive (India) announced the results after trading hours on Tuesday, 21 January 2014.
During the quarter, the company achieved volume growth of 10% on year on year basis, led by a strong growth of 11% in toothpaste category wherein the company further enhanced its leadership position by registering a 56% volume market share for the period January-December 2013, compared to 54.5% for the period January-December 2012. Colgate Palmolive (India) said that the company further strengthened its leadership position in the toothbrush category by registering a volume market share of 41.5% for the period January-December 2013, as against 39.8% for the period January-December 2012.
A Reserve Bank of India panel has recommended that the central bank should start using a consumer-price inflation target to determine monetary policy. The panelset up soon after former International Monetary Fund chief economist Raghuram Rajan took over as RBI governor last yearwas created to come up with ways to make the country's monetary policy more transparent and predictable. In a 130-page report released on Tuesday, 21 January 2014, the panel recommended using a well-defined range of consumer-price index inflation to set monetary policy. The report suggested a CPI inflation rate target within two percentage points above or below 4%. The RBI panel said the central bank should move to lower India's consumer inflation, which has been close to 10% in recent months, to 8% within the next 12 months and to 6% in 24 months, before adopting the target. "This transition path should be clearly communicated to the public," the report said.
If accepted, the report's recommendation would bring India in line with global norms by placing less emphasis on wholesale price inflation, which India has used until now as its main indicator of price movements. Historically, the Indian central bank has followed a multifocus approach to monetary policy, setting interest rates based on how it sees inflation, growth and currency stability. It usually didn't have an official inflation target, which often left markets surprised by its moves.
The panel also suggested monetary policy be decided by a committee headed by the governor with final decisions through a vote of the committee members, as is the practice in some developed countries like the UK. Right now in India monetary policy decisions are made by the RBI governor alone, though he gets input from an advisory committee.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.
Asian stocks were mixed on Wednesday, 22 January 2014, after the Bank of Japan pledged to maintain economic stimulus and the International Monetary Fund raised its global growth forecast. Key benchmark indices in China, Taiwan, Hong Kong and Indonesia were up 0.04% to 1.67%. Key benchmark indices in Japan, Singapore, and South Korea were down 0.03% to 0.23%.
The Bank of Japan (BOJ) today, 22 January 2014, pledged to maintain economic stimulus after a two-day monetary policy review. The BOJ said it will keep plans to increase the monetary base annually by 60 trillion to 70 trillion yen and maintained its inflation target for 2015.
US stocks closed mostly higher on Tuesday, 21 January 2014, though disappointing earnings results from Verizon Communications Inc and the Travelers Cos. Inc. weighed on the Dow. The S&P 500's cyclical sectors energy and natural resources were among the biggest gainers after the People's Bank of China on Tuesday, 21 January 2014, said it provided emergency funding support for commercial banks as they gear up to meet demands for cash ahead of the Lunar New Year.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
The International Monetary Fund raised its forecast for global growth this year as expansions in the US and UK accelerate, and urged advanced economies to maintain monetary accommodation to strengthen the recovery. The global economy will grow 3.7% this year, compared with an October estimate of 3.6%, the IMF said in revisions to its World Economic Outlook released in Washington.
US gross domestic product will expand 2.8%, compared with 2.6%; Japan will gain 1.7% versus 1.2%; and the UK will increase 2.4% from 1.9%, the report showed. "In advanced economies, output gaps generally remain large and, given the risks, the monetary policy stance should stay accommodative while fiscal consolidation continues," the Washington-based organization said in the report. "In many emerging market and developing economies, stronger external demand from advanced economies will lift growth, although domestic weaknesses remain a concern." Central banks in the US, Japan and the euro area face inflation levels under their targets while trying to accelerate growth with policies including benchmark interest rates near zero and bond-buying programs. While it raised the outlook for advanced nations, the IMF said "downside risks remain," including financial-market volatility in emerging markets.
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