Key benchmark indices cut losses after hitting fresh intraday low in morning trade. The barometer index, the S&P BSE Sensex, was down 58.51 points or 0.24%, up 37.31 points from the day's low and off 96.25 points from the day's high. Weakness in Asian stocks and a decline in US stocks on Tuesday, 20 May 2014, hit sentiment on the domestic bourses adversely.
Sesa Sterlite reversed direction after hitting a 52-week high in volatile trade. Private sector bank stocks were mixed. PSU bank stocks declined after Reserve Bank of India Governor Raghuram Rajan on Tuesday, 20 May 2014, said that the privatization of state-run banks isn't necessary but how the government-backed lenders are managed needs to change to allow them the flexibility to remain competitive.
The market breadth, indicating the overall health of the market was strong.
Key benchmark indices edged lower amid initial volatility on weak Asian stocks. Key benchmark indices cut losses after hitting fresh intraday low in morning trade.
Foreign institutional investors (FIIs) sold shares worth a net Rs 104.53 crore on Tuesday, 20 May 2014, as per provisional data from the stock exchanges.
At 10:15 IST, the S&P BSE Sensex was down 58.51 points or 0.24% to 24,318.37. The index fell 95.82 points at the day's low of 24,281.06 in morning trade, its lowest level since 19 May 2014. The index gained 37.74 points at the day's high of 24,414.62 in early trade.
The CNX Nifty was down 12.55 points or 0.17% to 7,262.95. The index hit a low of 7,246 in intraday trade, its lowest level since 19 May 2014. The index hit a high of 7,287.15 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,482 shares gained and 758 shares fell. A total of 75 shares were unchanged.
The total turnover on BSE amounted to Rs 1106 crore by 10:15 IST, compared with Rs 356 crore by 09:30 IST.
Among the 30-share Sensex pack, 18 stocks declined and rest of them gained.
Bharat Heavy Electricals (Bhel) (down 1.4%), L&T (down 1.41%) and Tata Power Company (down 1.18%) edged lower from the Sensex pack.
Sesa Sterlite was off 2.18% at Rs 240.25. The stock was volatile. The stock reversed direction after hitting a 52-week high of Rs 249.45 in intraday trade. The stock hit a low of Rs 235.40 in intraday trade so far during the day. The stock had gained 26.98% in three trading days to settle at Rs 245.65 on Tuesday, 20 May 2014, from recent low of Rs 193.45 on 15 May 2014.
Private sector bank stocks were mixed. IndusInd Bank (down 0.41%), HDFC Bank (down 0.82%) and ICICI Bank (down 0.35%) declined.
Axis Bank (up 0.34%), Federal Bank (up 2.79%), Kotak Mahindra Bank (up 0.17%) and Yes Bank (up 0.23%) gained.
Among PSU bank stocks, Canara Bank (down 0.97%), Union Bank of India (down 1.81%), Punjab National Bank (down 0.33%), State Bank of India (SBI) (down 1.35%) and Bank of India (down 0.8%), declined.
Bank of Baroda rose 0.76%.
Reserve Bank of India Governor Raghuram Rajan on Tuesday, 20 May 2014, said that the privatization of state-run banks isn't necessary but how the government-backed lenders are managed needs to change to allow them the flexibility to remain competitive. Mr. Rajan said a healthy public-sector banking system should be free from too much government influence but not from fulfilling the public's needs. His comment comes days after a panel appointed by the Reserve Bank of India recommended that Government of India should either privatize the national banks or put in place a new structure to keep government officials from interfering in how they are managed. There are a total 27 public sector banks in which the government has at least a 51% stake. The panel formed to review the governance of bank boards suggested the government move all its holdings in banks to a new investment company. The panel is accepting feedback on the recommendations until 12 June 2014. The panel recommendations have received strong opposition from bank unions.
In the foreign exchange market, the rupee edged lower against the dollar as importers stepped in to buy dollars to pay bills. The partially convertible rupee was hovering at 58.81, compared with its close of 58.63/64 on Tuesday, 20 May 2014.
Reserve Bank of India Governor Raghuram Rajan on Tuesday, 20 May 2014, reiterated his call for fiscal discipline, saying it is essential for India to achieve sustainable economic growth. Rajan said India would not always be able to rely on banks to buy a large portion of its government debt as it usually does. "(Bank) deposits will not continue to be cheap, while the government cannot continue to pre-empt financing at the scale it has in the past if we are to have a modern entrepreneurial economy. This is yet another reason why fiscal discipline will be central to sustainable growth going forward," Rajan said at an event in New Delhi. Rajan suggested the need for India to offer more specialised banking licences that would result in smaller banks offering niche services. The RBI on April granted two new commercial banking licences, its first new ones in 10 years.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June 2014. The RBI left its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review on 1 April 2014, as consumer-price inflation eased to a two-year low and as the rupee firmed up against the dollar.
After Bharatiya Janata Party (BJP) led National Democratic Alliance's (NDA) landslide victory in the recently concluded Lok Sabha election, investors are expecting measures from the incoming government to revive the Indian economy. There are expectations that Gujarat chief minister and Prime Minister-designate Narendra Modi will be in a position to replicate the economic success he enjoyed in Gujarat state when he takes over as the country's Prime Minister. Gujarat's economy expanded by 10.1% a year, on average and adjusting for inflation, from 2001 and 2012, compared with 7.7% growth a year for India's economy as a whole. India's GDP growth slowed sharply at 4.7% in Q3 December 2013. Investors hope that a BJP-led government would be able to accelerate policy reforms and overhaul the country's poor infrastructure. Investors will now be keenly watching policy announcements from the new government to drive a turnaround in the investment cycle.
Modi will be sworn in as India's next Prime Minister on Monday, 26 May 2014, evening at the Rashtrapati Bhawan.
Ever since NDA's victory in the election last week, speculation has been rife about the likely allocation of key ministerial portfolios in the Modi-led NDA government.
The first budget of the new government is expected by July 2014. An interim budget was presented by P. Chidambaram in February this year. Essentially, in the nature of a vote on account, the interim budget was intended to get Parliament approval for expenditure to be incurred during the first few months of fiscal year 2014-15 due to Lok Sabha elections.
Asian markets edged lower on Wednesday, 21 May 2014, tracking overnight decline in US markets. Key benchmark indices in Taiwan, South Korea, Singapore, Hong Kong, Japan and Indonesia were off 0.09% to 0.68%. China's Shanghai Composite index was up 0.14%.
The Bank of Japan refrained from boosting stimulus as the economy shows signs of weathering the impact of the first sales-tax increase since 1997. The central bank will continue to expand the monetary base at a pace of 60 trillion yen to 70 trillion yen per year, it said in a statement in Tokyo today, 21 May 2014.
Japan posted a trade deficit of 808.9 billion yen ($8 billion) for April, data showed today, 21 May 2014. Exports gained 5.1% year on year, while imports increased 3.4%.
Trading in US index futures indicated a flat opening of US stocks on Wednesday, 21 May 2014. US stocks ended Tuesday with broad-based losses after disappointing earnings from TJX Companies, Inc, Staples, Inc. and weak sales numbers from Caterpillar Inc. weighed on investor sentiment. Selling intensified in the afternoon after comments from Philadelphia Fed President Charles Plosser, who said that Fed may need to act sooner rather than later should the economy accelerate.
New York Fed President William Dudley, who gets a vote at every Federal Open Market Committee meeting and is vice chairman of the interest-rate setting committee, told the New York Association for Business Economics on Tuesday, 20 May 2014, that there will be a considerable period of time between the end of its asset purchases and the first rate hike.
The Federal Reserve releases minutes from the April 29-30 meeting of Federal Open Market Committee today, 21 May 2014. The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 17-18 June 2014. The Fed on 30 April 2014 said after a monetary policy review that it will keep the benchmark interest-rate target at almost zero for a "considerable time" after its bond-buying program ends. The FOMC also reduced monthly debt purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in "measured steps" if the economy continues to improve.
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