A rally in European stocks helped Indian stocks extend gains in late trade. The barometer index, the S&P BSE Sensex, was provisionally up 365.21 points or 1.45%, up 347.11 points from the day's low and off 8.92 points from the day's high. The Sensex and the 50-unit CNX Nifty, both, hit their highest level in almost a week. The market sentiment was positive after the Reserve Bank of India (RBI) on Tuesday, 15 July 2014, announced incentives to raise long term bonds for infrastructure financing and after the latest data showed a decent growth in merchandise exports in June 2014. 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.
As per provisional closing, the S&P BSE Sensex was up 365.21 points or 1.45% to 25,593.86. The index jumped 374.13 points at the day's high of 25,602.78 in late trade, its highest level since 10 July 2014. The index rose 18.10 points at the day's low of 25,246.75 in early afternoon trade.
The CNX Nifty was up 112.55 points or 1.5% to 7,639.20. The index hit a high of 7,640.10 in intraday trade, its highest level since 10 July 2014. The index hit 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, 1,980 shares gained and 967 shares fell. A total of 98 shares were unchanged.
The BSE Mid-Cap index was up 121 points or 1.34% at 9,165.92. The BSE Small-Cap index was up 201.37 points or 2.04% at 10,057.37. Both these indices outperformed the Sensex.
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.
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 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 8.77% at Rs 163.15 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 7.01%), Godrej Properties (up 2.91%), Oberoi Realty (up 4.93%) and Parsvnath Developers (up 2.13%) gained.
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.
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. The Sensex and the Nifty, both, hit their highest level in almost a week.
In the foreign exchange market, the rupee was slightly higher against the dollar. The partially convertible rupee was hovering at 60.115, 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 0.89% to 1.32%.
Asian stocks edged higher on 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 0.02% 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 51 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.
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